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Consider the unilateral precaution model presented in class and in CU. SC=social cost; w=cost of each unit of precaution; x=amount of precaution I take; p(x)=probability accident happens as a function of precaution; A=constant cost associated with an accident Let SC = wx + p (x)A Cooter and Ulen tell us the cost minimizing function is w= -p'(x)A Unlike Cooter and Ulen, let's assign a real functional form to the probability function: p (x) = 1 - √x where permissible values for x satisfy: 0 ≤ x ≤ 1. Solve the social planner (SP) problem (minimize total social cost of an accident) to find the efficient level of precaution, x*, as a function of w and A. Solve the victim's problem under a rule of "no liability"; define the victim's optimal level of precaution as xvNL Solve the victim's problem under a rule of "strict liability" with perfect compensation (D = A); define the victim's optimal level of precaution as xvSL Repeat parts 2 and 3 for the injurer (i.e., find xiNL and xiSL). Compare your answers in 2 - 4. to the efficient level of precaution, x*, that you found in part 1. Which liability rule induces the victim to take positive precaution? Which liability rule induces the injurer to take positive precaution? Under what circumstances should the law prescribe "no liability"? How about "strict liability"?
Consider the preferred prices of the authors and publishers of the electronic book, whose marginal cost of production is close to zero? Would the two disagree regarding the price to be charged for book?
You manage the plant the mass produces engines by teams of workers using assembly machines. The technology is summarized by production: Find out the short run production function? Find out the total cost function for your plant to produce q engines ..
Show the change in Q if L changes from 1 to 2, and 2 to 3, and does the production function exhibit diminishing returns? If so, when does the law of diminishing returns begin to operate? Could we ever get negative returns?
Many factors determine the supply and demand for labor. Identify and explain two factors that would increase or decrease the demand for labor. Identify and explain two factors that would increase or decrease the supply of labor.
in 1970 lyle bought a hand calculator for 200. the calculator was more accurate in its four functions of addition
Relative to managers in more monopolistic industries, are managers in more competitive industries more probable to spend their time on reducing costs or on pricing strategies?
Farmers are often heard to complain about the high costs of machinery, labor, and fertilizer, suggesting that these costs drive down their profits
Who bears the cost of import barriers protecting a job where the industry employing labor has lost its comparative advantage Consider the use of tariffs on steel imports into the U.S. during the recent Bush Administration.
cite three example of recent decisions which you made in which you at least implicitly weighed marginal costs amp
using the aggregate demandaggregate supply model and the information in the below quote present a rationale for why the
how many major wireless phone handset manufacturers are present? find the market structure? what pricing strategies do
Efficiency can mean many things to many people. Even in economics, there are different types of efficiency. Here we are discussing productive efficiency. An economy is productively efficient whenever it is producing the maximum output with given t..
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