HW_3_Tort.Sp08

HW_3_Tort.Sp08 - 5. What are the advantages and...

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ECO325: Economics of Law Spring 2008 Homework Assignment #3 Due Date: Friday, Name:_________________________________ Type your answers . Each question is worth 5 points. 1. indicate on the graph below, the optimal level of precaution. 2. For the graph below, what levels of precaution would a rational, potential tortfeasor take for each expected cost curves 1 (top), 2 (middle) and 3 (bottom). Assume curve number one represents perfect compensation and the other two represent judicial errors in which damages awards are less than perfect. SC = wx + p(x)A wx P(x)A precautio $ w x 1 x 2 x 3 precaution
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3. Question 8.16 on page 353 of textbook (page 336 of 4 th edition). 4. Under what conditions is strict liability efficient?
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Unformatted text preview: 5. What are the advantages and disadvantages of comparative negligence. 6. Assume 20 physicians, that with precaution the expected harm is $100 per physician, and that not taking precaution leads to $200 of expected harm per physician. Let C = cost of precaution. Also assume that C < 100 per physician, so that taking precaution is efficient. What is the greatest value of C that Dr. Smith is will to spend on precaution. Is he behaving efficiently? Is he behaving rationally? All other physicians Precaution No Precaution Precaution (Dr. Smith) No Precaution 100+C 195+C 105 105+C 195 200 200 7. Question 9.9, page 392 (question 9.7, page 371 in 4 th edition)...
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HW_3_Tort.Sp08 - 5. What are the advantages and...

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