Draw the ATC/AVC/AFC/MC diagram for a firm. Illustrate the effects of an increase the salary of the CEO.
September 3, 2020
Thebank rateis the interest rate on loans that the Bank of Canada makes to banks. Banks occasionally borrow from the Bank of Canada when they find…
September 3, 2020

#1) In general, raising the standard of proof (the evidence required to convict an accused wrongdoer) will

a)    Reduce the chance of acquitting a guilty defendant, but increase the chance of convicting an innocent one.

b)   Reduce the chance of convicting an innocent defendant, but increase the chance of acquitting a guilty one.

c)    Increase the chance of acquitting a guilty defendant and increase the chance of convicting an innocent one.

d)   Reduce the chance of acquitting an innocent defendant, but increase the chance of convicting a guilty one.

e)    None of the above.

#2) According to Marshall’s solution to aggregation, a policy increases economic efficiency if

a)    The sum of willingness to pay for the policy change over those who benefit outweighs the sum of the willingness to pay for the policy change over    those who lose.

b)   The total (sum) willingness to pay for the policy change for society is positive.

c)    Social surplus increases.

d)   All of the above.

e)    None of the above.

#3)      A written promise of a gift to be delivered in the future

a) Under the doctrine of consideration is never a legally binding contract

b) Under the doctrine of consideration is always a legally binding contract.

c) Under the doctrine of consideration is normally not a legally binding contract but may be under the doctrine of detrimental reliance.

d) Under the doctrine of detrimental reliance is normally a binding contract but  may not be under the doctrine of consideration.

e) None of the above.

SKIP QUESTIONS 4-6

#7)      In a situation of dual causality, the legal rule of strict liability with contributory negligence provides

a) The potential accident victim with no incentive to take precautions to avoid the accident.

b) The potential accident victim with the incentive to take unobservable precautions but not observable precautions to avoid the accident.

c) The potential accident victim with the incentive to take observable   precautions but not unobservable precautions to avoid the accident.

d) An accident victim with the right to sue for the damage done.

e) c) and d).

#8) Consider a policy that makes ten people better off by the equivalent of $50 per person and one person worse off by $100. Then this policy constitutes an  increase in economic efficiency by

a)    Marshall’s criterion, but not Pareto’s criterion.

b)   Pareto’s criterion, but not Marshall’s criterion.

c)    Neither Marshall’s criterion nor Pareto’s criterion.

d)   Both Marshall’s criterion and Pareto’s criterion.

e)    The question does not provide enough information to come to a firm conclusion under either criterion.

#9)  The doctrine of consideration is that

a) A tortfeasor is deemed not to be negligent if he gave due consideration to the  probability that his action would cause the accident.

b) A gift of real property is not a binding contract.

c) A contract is not binding unless it benefits both parties.

d) In a tort case, a judge must give consideration to a plaintiff’s need when deciding on the amount of the damage award.

e) None of the above.

#10) According to the book, (David Freidmans “Law and Order”) the best legal rule to deal with a class of legal situations is the one that

a) On average has the best incentive effects.

b) Has the lowest expected litigation costs.

c) On average allocates risk in the most efficient way.

d) Is the simplest to apply.

e) Maximizes the expected “size of the pie”.

#11)    Plea bargaining

a) Reduces the expected cost to the criminal of committing a crime.

b)  Is unconstitutional.

c) Is consistent with the efficient allocation of prosecutorial resources.

d) Discourages prosecutorial fraud.

e) None of the above.

#12) If everyone has the same cardinal utility function and if there is diminishing marginal utility of income, then all other things being equal other than income, a fine of $1000 will, in utility terms

a)    Hurt a rich person more than a poor person.

b)   Hurt a poor person more than a rich person.

c)    Does equal harm to either a rich or a poor person since they both would lose the same amount of income.

d)   None of the above.

#13) For a positive externality

a)    The private marginal cost exceeds the social marginal cost.

b)   The social marginal cost exceeds the private marginal cost.

c)    The social and private marginal benefits are identical.

d)   The private marginal benefit exceeds the social marginal benefit.

e)    None of the above.

#14) Real property differs from other types of property in that

a) Property rights apply to it.

b) It is tangible.

c) Its property rights may be unbundled.

d) Its property rights may be bundled.

e) None of the above.

#15) Assuming that outside prison rich people earn a higher hourly wage than poor people, then a prison sentence of one month will, in dollar terms

a)    Hurt a poor person more than a rich person.

b)   Hurt a rich person more than a poor person.

c)    Hurt both a rich and a poor person equally.

d)   Will hurt no one in dollar terms since no fine is paid.

e)  None of the above.

#16) Marginal deterrence

a) Refers to deterrence of the marginal crime.

b) Is related to the proverb “As well hang from a tree as from the gallows”.

c) Is related the proverb “As well hang for a sheep as for a cow”.

d) Refers to the additional deterrence from punishing a more serious crime more harshly.

e) Would be achieved by executing all criminals.

#17) Mrs. Smith has a cottage property without direct access to the lake, and purchases an easement from Mrs. Jones to cross Mrs. Jones’ property in order to obtain direct access to the lake. The easement remains in effect:

a) Until Mrs. Smith sells her property.

b) Until Mrs. Jones sells her property.

c) Until both Mrs. Smith and Mrs. Jones sell their properties.

d) The fixed term that is specified in the easement contract has expired.

e) Until Mrs. Smith or a future owner of Mrs. Smith’s property sells the easement back to Mrs. Jones or a future owner of Mrs. Jones’ property.

#18) Which of the following is most likely to be a sound defense for a tort committed in a situation where the legal rule of strict liability is typically applied?

a) Compliance with the Hand Rule.

b) Unforseeability.

c) Caveat venditor.

d) The defendant’s ignorance of the scientifically established danger of his actions that caused the tort.

e) The principle of the least cost avoider.

#19) Traditional tort law awarded punitive damages when

a) The tort violated a property right.

b) It was likely that the tort caused costs that are difficult to document, such as pain and suffering.

c) It was deemed appropriate to signal public condemnation of the actions that caused the tort .

d) The plaintiff did not have insurance against the damage caused by the tort.

e) The tort was deliberate and/or reckless.

#20) The court might choose not to enforce a contract when

a) The contract is a verbal contract.

b) The contract contains penalties for breach of contract that exceed the damage  done by the breach.

c) The contract is incomplete.

d) Both a) and b).

e) None of the above.

KM
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