Law & Econ Midterm Review
A. Background: Law & Economics
- Why Microeconomics?
Microeconomic theory provides answers to the economic problem (unlimited wants, limited
Microeconomic theory highlights the role
Law & Econ
30 September 2013
Ch. 2 Problems
2.2) Productive efficiency: its not possible to produce the same amount of
output using a lower-cost combo of inputs or its not possible to produce more
output using the same combo of
HW Ch 4 # 3, 8, 9, 10
4.3. If transaction costs are zero, then the initial distribution of property rights over land
will not bar the efficient outcome. The efficient solution will be reached whether the
law protects the farmer and the railroad pays the c
Law & Econ HW#1 &2
Due September 14th,2015
Yichen Luo (Ericka)
1. Answer Review Qs # 2.3, 2.7 and 2.8 at end of chapter
-what are consumers assumed to maximize?
-what are some constraints under which this maximization take place?
31. Is the externality in Boomer private or public?
32. Are the transaction costs of bargaining among the parties low or high?
33. Suppose the households had a right to enjoin the cement company to stop polluting. What obstacles would
law and economics
chapter 8 # 2,3,4; 7,8,9.
2. Explain why the economic theory of contracts would enforce a firm offer to sell a Chevrolet
and the promise of a gift to Old Swish University?
Since both selling a car and sending a gift to
Ch 5 # 11, 15, 18, 27
5.11. Consider the problems that might arise if copyrights carried an indefinite duration. Would it be possible to
keep track of all the copyrights ever issued? Recently, as one of the Web Notes indicates, Landes and Posner
November 15th, 2015
Law and Economics
6. Hand rule problem A firm can take precautions which cost $100 per unit. The effect of precautions on the
probability of an accident is shown in the following table:
Units Precaution Tak
Economic Theory of Tort Law
What is Tort Law?
! 3rd Major Body of Law
! Concerns compensable wrongs that do not arise from
breach of C & cannot be remedied by an injunction against
! Situations where no promise was made or broken
Economic Theory of Contract
A Contract is an Enforceable Promise
! Promises are enforceable when courts provide remedies for
! Economic Analysis of Contracts considers:
1. What sort of promises should be enforceable?
2. What remedies
Economic Analysis of Property Law
What can be Privately Owned?
The 4 Questions
What can be privately owned?
Goods that are rivalrous & excludible
How are ownership rights established?
Because rights contribute to
1. Importance: modern economy
Y = C+I+G+Xn
Ex: employment, building, job, loans, rental, marriage
2. Definition: promises/agreements that create legal obligations that are enforceable in a court of law
3. Economic functions
o Exchange of g/s
Oil firm loses pollution suit
Jury awards $120 million to Blue Island residents
A Cook County jury has awarded $120.1 million to Blue Island residents and
former high school students on whose behalf a lawsuit was filed 10 years ago
against the Clark Oil r
Law & Economics
10 October 2013
Problem Set #2
A. Common Law: this is a bottom-up system; there is a judge who makes
law by interpreting legislation through decisions of courts and similar tribunals;
made case law b
Ch. 2 / A Brief Review of Microeconomic Theory
I. Overview: The Structure of Microeconomic Theory
a. Decision-making by small groups / individuals
b. How scarce resources are allocated among competing ends
II. Some Fundamental Concepts: Maximization, Equi
HW Ch 5 Intellectual Property
1)! Read the Boldrin Levine article in BB Readings. Come up with 3 good points they make and
bad: monopoly, patent as wapon
briefly explain each.
ineffective: firm improve anyway, 1st mover advantage,
-There is no statistical