Show irrelevance of liability rule for equilibrium output

Reference no: EM131227480

Consider the market for a dangerous product in which the supply curve is upward sloping.

(a) Use a supply and demand diagram to show the irrelevance of the liability rule for equilibrium output.

(b) Show that when the rule is no liability, consumer perceptions of risk affect both output and price.

Reference no: EM131227480

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