.1 MIDTERM STUDY QUESTIONS
1. Explain what we mean by efficiency in law and economics? How does it differ with other
potential definitions? What problems have been identified, if any, with this definition?
a. Efficacy in Law: Efficiency means that the eco
What was the issue in William v. Walker-Thomas Furniture Co.? Do you agree or disagree with the 9th
a. The furniture store allows for customer to buy furniture on credit. In order to protect
themselves the furniture says that for each pi
Show that expectation damages are efficient with respect to breach, but not efficient with respect to
a. Expectation damages are efficent with respect to breach because it puts the promissee
and promiser in the same position if no breach had occ
What is the economic purpose of consideration in contact law? What are the costs and benefits of the
a. 1. Offer - One of the parties made a promise to do or refrain from doing some
specified action in the future.
2. Consideration - Something of val
Explain the benefits and costs of each of the two rules for assigning property rights to fugitive property.
a. The two main ways of assigning property rights to fugitive property are the rules of first
possession and tied ownership. While first possession
1. Explain what the Coase theorem states. Use at least two cases we discussed or read to illustrate
the Coase theorem. What shortcomings, if any, are there to the Coase theorem?
a. The Coase Theorem states that externality problems will be solved efficien
Explain why innovation faces a public good problem, how patents are supposed to solve this problem,
and whether you think patents have been successful in the software market.
a. Give a definition of public good and how innovation is a public good
i. The d
In your opinion should a thief be able to convey good title? Justify your answer on economic grounds.
No, the thief should be able to convey good title, if we just take an example A -> B C
A= Person good was stolen from
C= Person who purchased fr
1. Explain the economic purposes of property law and contract law with illustrations.
a. As long as there exists a change in the terms of our deal that would produce net
benefits, there is a way of making that change that benefits both of us. Hence we
1. Explain why the negligence rule creates efficient incentives for the victim, but strict liability does
not. What is the Hand rule for defining reasonable care? How does it compare to the rule in
economics for optimal behavior?
a. In situati