Midterm Study Guide

Midterm Study Guide - Summary before First Midterm I What...

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Summary before First Midterm I. What is economics, what does it have to do with law? II. What is economic efficiency (aka "wealth maximization")? o A. Important to L&E for two reasons: 1. The conjecture that legal rules tend to be efficient 2. The argument that legal rules ought to be efficient. o B. Judging rules, outcomes by the summed effect on everyone, where 1. The effect on each person is judged by how much he would, if necessary, pay to get or avoid the outcome. 2. Effects are summed across people in dollars. o C. Not a perfect measure of the good, but . .. 1. One which is part of the good for most people (people getting what they want) 2. And may be the part that legal rules are most capable of providing. III. Externalities: Why inefficiency happens and what to do about it. o A. If everyone bears the costs and receives the benefits of his action, then rationality for the individual implies the efficient set of actions. o
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This note was uploaded on 04/05/2012 for the course ECON 395 taught by Professor Beckett during the Fall '11 term at Rutgers.

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Midterm Study Guide - Summary before First Midterm I What...

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