ECO 320 FINAL EXAM ( ACTUAL 2025)
P P P P P P P
QUESTIONS AND ANSWERS. P P
Restitution - <<<<Answers>>>- P P
Poccurs in deferred exchangeswhen a principal gives something
P P P P P P P P P
in exchange for an agent doing something later
P P P P P P P
- i.e., returning a down payment when a sale falls through
P P P P P P P P P
Disgorgement - <<<<Answers>>>- P P
Poccurs when the behaviorof the agent makes perfect compensat
P P P P P P P P P
ion preferential instead of indifferent
P P P P
Perfect Disgorgement (criminal law) - <<<<Answers>>>-
P P P P P
Pasum of money that leaves the injurer indifferent between the
P P P P P P P P P P P
injury with disgorgement or no injury
P P P P P
- identical to perfect compensation with the roles of injurer &vi
P P P P P P P P P P
ctim revered P
- injurer receives no gain from wrongdoing net of perfectd
P P P P P P P P P
isgorgement
The plaintiff who brings a suit to establish a more efficient prec
P P P P P P P P P P P
edent enjoys only a fraction of its social value. Does this fact sh
P P P P P P P P P P P P
ow that the government should subsidize lawsuits by paying pa
P P P P P P P P P
rt of the cost of litigation? - <<<<Answers>>>*Yes
P P P P P P P
- Precedents are a public good P P P P
-Plaintiff's would under- P P
invest in precedents in the absence ofa subsidy
P P P P P P P P
, ECO 320 FINAL EXAM ( ACTUAL 2025) P P P P P P P
QUESTIONS AND ANSWERS. P P
Price regulation prevents some people from buying a good who
P P P P P P P P P P
value that good more than it costs to supply it. Apply thisproposi
P P P P P P P P P P P P
tion to Figure 11.3, assuming that the state sets the price at p1 an
P P P P P P P P P P P P P
d S' gives the supply. - <<<<Answers>>>-
P P P P P P
PIn a free market, where supply and demand determine prices, an
P P P P P P P P P P
Pincrease in the number of lawyers shifts the supply curve out, as
P P P P P P P P P P P P
depicted in Figure 11.3. P P P
- The shift in the supply curve from S to S' should cause thepri
P P P P P P P P P P P P P
ce of lawyers' services to fall from p1 to p2
P P P P P P P P P
- Thus, the increase in the supply of lawyers should lower theco
P P P P P P P P P P P
st of filing suits.
P P P
- If the government were to establish a price floor at p1, and supp
P P P P P P P P P P P P
ly of lawyers is S', we would end up with some lawyers being ov
P P P P P P P P P P P P P
erpaid, some lawyers being unemployed, poorer clients would b
P P P P P P P P
e excluded from legal services by price, because clients who wo
P P P P P P P P P P
uld pay p, such that p2 < p < p1 cannotget lawyers who would be
P P P P P P P P P P P P P P P P
willing to charge p2, but are by lawrequired to charge p1.
P P P P P P P P P P P
Litigation insurance shifts the legal costs of plaintiffs or defenda
P P P P P P P P P
nts to insurers. How do you think this insurance wouldaffect the
P P P P P P P P P P P P
number of suits filed? - <<<<Answers>>>- P P P P P
If the insurance company hires the lawyers and files the suits, th
P P P P P P P P P P P P
e number of suits filed would not change.
P P P P P P P
Explain the effects of class actions on the number of suits,us
P P P P P P P P P P P
ing our distinction of causes, into (1) injuries, (2) filing
P P P P P P P P P
, ECO 320 FINAL EXAM ( ACTUAL 2025)
P P P P P P P
QUESTIONS AND ANSWERS. P P
costs, and (3) expected value of the legal claim. -
P P P P P P P P P
<<<<Answers>>>Economies of scale applies to class actions P P P P P P P
uits:
(1) Injuries have to be uncomplicated P P P P
(2) Filing costs of many small claims would go down P P P P P P P P
(3) Expected value of claims increases P P P P
(a) If the plaintiff is more averse to risk than his or her lawyer,w
P P P P P P P P P P P P P
ould this fact incline the client to prefer a contingency fee oran h
P P P P P P P P P P P P P
ourly fee? P
(b) Under a contingency fee, the plaintiff bears none of the lawy
P P P P P P P P P P
er's costs of a trial. Consequently, the plaintiff can take a hard po
P P P P P P P P P P P P
sition in bargaining over a settlement. Explain why theplaintiff's
P P P P P P P P P
lawyer might also benefit from this commitment to hard bargai
P P P P P P P P P P
ning. - P
<<<<Answers>>>(a) A contingency fee allows risk averse plai
P P P P P P P P
ntiffs to transfer the risk of losing to their lawyers.
P P P P P P P P P
(b) Since hard bargaining means the plaintiff's threat point inb
P P P P P P P P P P
argaining for a settlement increases, then the lawyer's shareof
P P P P P P P P P P
a higher settlement that results increases.
P P P P P
In what ways do you think a "rent-a-
P P P P P P P
judge" who sought to maximize income might decide cases di
P P P P P P P P P
fferently from an independent public judge? -
P P P P P P
P<<<<Answers>>>-
PProponentssay that everyone benefits: People who rent judgeP P P P P P P P
s benefit
P
, ECO 320 FINAL EXAM ( ACTUAL 2025)
P P P P P P P
QUESTIONS AND ANSWERS. P P
from a speedy trial, and others benefit indirectly fromre
P P P P P P P P P
lieving the congestion in the public courts
P P P P P P
- The income that a judge enjoyed as a public judge wasu
P P P P P P P P P P P
nrelated to how that judge decided cases. P P P P P P
-Now that has changed. P P P
-
The judges' income is directly determined by how often thatju
P P P P P P P P P P
dge is "rented." To be rented, the judge must be chosen by both
P P P P P P P P P P P P P
parties to a potential dispute. P P P P
Disgorgement Damages (criminal law) - <<<<Answers>>>- P P P P P
damages paid to the victim to eliminate the injurer's profit for
P P P P P P P P P P P
m wrongdoingP
Specific Performance - <<<<Answers>>>- P P P
occurs when thespecialized nature of what the agent does is a
P P P P P P P P P P P P P
very imperfectsubstituteP P
- An equitable remedy requiring the breaching party to perform
P P P P P P P P P
as promised under the contract; usually granted only when mone
P P P P P P P P P
y damages would be an inadequate remedy and thesubject matte
P P P P P P P P P P
r of the contract is unique (for example, real property).
P P P P P P P P P
Liquidated Damages - <<<<Answers>>>- P P P
occur in contracts that stipulate an amount of damages for breac
P P P P P P P P P P P
h of contract thatdoes not exceed the actual harm
P P P P P P P P P
P P P P P P P
QUESTIONS AND ANSWERS. P P
Restitution - <<<<Answers>>>- P P
Poccurs in deferred exchangeswhen a principal gives something
P P P P P P P P P
in exchange for an agent doing something later
P P P P P P P
- i.e., returning a down payment when a sale falls through
P P P P P P P P P
Disgorgement - <<<<Answers>>>- P P
Poccurs when the behaviorof the agent makes perfect compensat
P P P P P P P P P
ion preferential instead of indifferent
P P P P
Perfect Disgorgement (criminal law) - <<<<Answers>>>-
P P P P P
Pasum of money that leaves the injurer indifferent between the
P P P P P P P P P P P
injury with disgorgement or no injury
P P P P P
- identical to perfect compensation with the roles of injurer &vi
P P P P P P P P P P
ctim revered P
- injurer receives no gain from wrongdoing net of perfectd
P P P P P P P P P
isgorgement
The plaintiff who brings a suit to establish a more efficient prec
P P P P P P P P P P P
edent enjoys only a fraction of its social value. Does this fact sh
P P P P P P P P P P P P
ow that the government should subsidize lawsuits by paying pa
P P P P P P P P P
rt of the cost of litigation? - <<<<Answers>>>*Yes
P P P P P P P
- Precedents are a public good P P P P
-Plaintiff's would under- P P
invest in precedents in the absence ofa subsidy
P P P P P P P P
, ECO 320 FINAL EXAM ( ACTUAL 2025) P P P P P P P
QUESTIONS AND ANSWERS. P P
Price regulation prevents some people from buying a good who
P P P P P P P P P P
value that good more than it costs to supply it. Apply thisproposi
P P P P P P P P P P P P
tion to Figure 11.3, assuming that the state sets the price at p1 an
P P P P P P P P P P P P P
d S' gives the supply. - <<<<Answers>>>-
P P P P P P
PIn a free market, where supply and demand determine prices, an
P P P P P P P P P P
Pincrease in the number of lawyers shifts the supply curve out, as
P P P P P P P P P P P P
depicted in Figure 11.3. P P P
- The shift in the supply curve from S to S' should cause thepri
P P P P P P P P P P P P P
ce of lawyers' services to fall from p1 to p2
P P P P P P P P P
- Thus, the increase in the supply of lawyers should lower theco
P P P P P P P P P P P
st of filing suits.
P P P
- If the government were to establish a price floor at p1, and supp
P P P P P P P P P P P P
ly of lawyers is S', we would end up with some lawyers being ov
P P P P P P P P P P P P P
erpaid, some lawyers being unemployed, poorer clients would b
P P P P P P P P
e excluded from legal services by price, because clients who wo
P P P P P P P P P P
uld pay p, such that p2 < p < p1 cannotget lawyers who would be
P P P P P P P P P P P P P P P P
willing to charge p2, but are by lawrequired to charge p1.
P P P P P P P P P P P
Litigation insurance shifts the legal costs of plaintiffs or defenda
P P P P P P P P P
nts to insurers. How do you think this insurance wouldaffect the
P P P P P P P P P P P P
number of suits filed? - <<<<Answers>>>- P P P P P
If the insurance company hires the lawyers and files the suits, th
P P P P P P P P P P P P
e number of suits filed would not change.
P P P P P P P
Explain the effects of class actions on the number of suits,us
P P P P P P P P P P P
ing our distinction of causes, into (1) injuries, (2) filing
P P P P P P P P P
, ECO 320 FINAL EXAM ( ACTUAL 2025)
P P P P P P P
QUESTIONS AND ANSWERS. P P
costs, and (3) expected value of the legal claim. -
P P P P P P P P P
<<<<Answers>>>Economies of scale applies to class actions P P P P P P P
uits:
(1) Injuries have to be uncomplicated P P P P
(2) Filing costs of many small claims would go down P P P P P P P P
(3) Expected value of claims increases P P P P
(a) If the plaintiff is more averse to risk than his or her lawyer,w
P P P P P P P P P P P P P
ould this fact incline the client to prefer a contingency fee oran h
P P P P P P P P P P P P P
ourly fee? P
(b) Under a contingency fee, the plaintiff bears none of the lawy
P P P P P P P P P P
er's costs of a trial. Consequently, the plaintiff can take a hard po
P P P P P P P P P P P P
sition in bargaining over a settlement. Explain why theplaintiff's
P P P P P P P P P
lawyer might also benefit from this commitment to hard bargai
P P P P P P P P P P
ning. - P
<<<<Answers>>>(a) A contingency fee allows risk averse plai
P P P P P P P P
ntiffs to transfer the risk of losing to their lawyers.
P P P P P P P P P
(b) Since hard bargaining means the plaintiff's threat point inb
P P P P P P P P P P
argaining for a settlement increases, then the lawyer's shareof
P P P P P P P P P P
a higher settlement that results increases.
P P P P P
In what ways do you think a "rent-a-
P P P P P P P
judge" who sought to maximize income might decide cases di
P P P P P P P P P
fferently from an independent public judge? -
P P P P P P
P<<<<Answers>>>-
PProponentssay that everyone benefits: People who rent judgeP P P P P P P P
s benefit
P
, ECO 320 FINAL EXAM ( ACTUAL 2025)
P P P P P P P
QUESTIONS AND ANSWERS. P P
from a speedy trial, and others benefit indirectly fromre
P P P P P P P P P
lieving the congestion in the public courts
P P P P P P
- The income that a judge enjoyed as a public judge wasu
P P P P P P P P P P P
nrelated to how that judge decided cases. P P P P P P
-Now that has changed. P P P
-
The judges' income is directly determined by how often thatju
P P P P P P P P P P
dge is "rented." To be rented, the judge must be chosen by both
P P P P P P P P P P P P P
parties to a potential dispute. P P P P
Disgorgement Damages (criminal law) - <<<<Answers>>>- P P P P P
damages paid to the victim to eliminate the injurer's profit for
P P P P P P P P P P P
m wrongdoingP
Specific Performance - <<<<Answers>>>- P P P
occurs when thespecialized nature of what the agent does is a
P P P P P P P P P P P P P
very imperfectsubstituteP P
- An equitable remedy requiring the breaching party to perform
P P P P P P P P P
as promised under the contract; usually granted only when mone
P P P P P P P P P
y damages would be an inadequate remedy and thesubject matte
P P P P P P P P P P
r of the contract is unique (for example, real property).
P P P P P P P P P
Liquidated Damages - <<<<Answers>>>- P P P
occur in contracts that stipulate an amount of damages for breac
P P P P P P P P P P P
h of contract thatdoes not exceed the actual harm
P P P P P P P P P
