may omit all of any numbered question
or questions for 20% credit)
What is rent seeking? Why does it lead to
inefficient outcomes? Briefly explain the relevance of rent seeking to
inefficiencies associated with two of the following: (10 points)
The law protects some entitlements (such as my
ownership of my car) with a property rule, and others (such as my right not to
have people run into my car) with a liability rule. (10 points)
explain the difference between the two kinds of rules.
What are the advantages of each? How should we
decide which to use in each case?
Answer either A or B (5 points)
might measure the value of your life to you either by the price you would
accept to sell your heart for immediate transplant or by the costs you are
willing to bear in exchange for a small reduction of some life threatening
riskŠbuying better brakes, say. Why do those two approaches give such
strikingly different results?
Shooting at someone and missing does no harm, so
why do we punish it?
What are the advantages of treating something as
property rather than as commons? The disadvantages? What are the implications
of your answer for the differences between copyright law and patent law? (10 points)
What problems will arise with each of the
following divorce laws? In each case, how are the parties likely to modify
their behavior in response to the law? (10 points)
Divorce by mutual consent.
at the request of either party.
in C, but with a large penalty paid by the breaching party to the other party.
Explain how negligence liability solves the
problem of giving the right incentives to both parties to an accident, provided
that a court has sufficient information. How does the result change if some
precautions are unobservable by the courtŠand, in this context, what does
"unobservable" mean? (10 points)
People using power lawnmowers are sometimes
injured by them. What determines whether a rule of caveat emptor (the consumer
bears the cost of the injury) is better or worse than a rule of caveat venditor (the seller is liable for damages)? Explain. (10 points)
both parts: (15 points)
catching and punishing criminals is costless, what is the efficient level of
expected punishment? Why?
If catching and punishing criminals is costly,
is the efficient level of punishment higher than the answer to part A, lower,
or sometimes higher and sometimes lower? Explain briefly.
problem with private enforcement of law is that low probabilities of deterrence
must be balanced by large penalties, which defendants may be unable to pay.
What were the ways in which the legal system of saga period Iceland dealt with
Briefly explain the economic analysis of either
tie-in sales or retail price maintenance (just one of the two). Include both
the conventional incorrect analysis (and what is wrong with it) and a more
plausible explanation of what is going on. (10 points)
Briefly explain (10 points)
it means to say that one legal rule is more efficient than an alternative rule.
Evidence for and against the claim that common
law legal rules are efficient (answer briefly--two or three examples on each
side are plenty). Extra points for examples not in the book.
Question for those who have free time at the end of the exam]
Describe one important element in the problem of
designing an efficient legal system that the textbook does not deal with.
Suggest how it might be incorporated into the economic analysis of law. (0