ECO 320 FINAL EXAM ( ACTUAL 2025) QUES
g g g g g g g
TIONS AND ANSWERS. g g
Restitution - <<<<Answers>>>- g g
occurs in deferred exchanges when a principal gives somethin
g g g g g g g g g
g in exchange for an agent doing something later
g g g g g g g g
- i.e., returning a down payment when a sale falls through
g g g g g g g g g
Disgorgement - <<<<Answers>>>- g g
goccurs when the behavior of the agent makes perfect compensa
g g g g g g g g g
tion preferential instead of indifferent
g g g g
Perfect Disgorgement (criminal law) - <<<<Answers>>>-
g g g g g
a sum of money that leaves the injurer indifferent between th
g g g g g g g g g g g
e injury with disgorgement or no injury
g g g g g g
- identical to perfect compensation with the roles of injurer &
g g g g g g g g g g
victim revered g
- injurer receives no gain from wrongdoing net of perfect
g g g g g g g g g
disgorgement
The plaintiff who brings a suit to establish a more efficient prec
g g g g g g g g g g g
edent enjoys only a fraction of its social value. Does this fact sh
g g g g g g g g g g g g
ow that the government should subsidize lawsuits by paying pa
g g g g g g g g g
rt of the cost of litigation? - <<<<Answers>>>*Yes
g g g g g g g
- Precedents are a public good g g g g
-Plaintiff's would under- g g
invest in precedents in the absence of a subsidy
g g g g g g g g
, ECO 320 FINAL EXAM ( ACTUAL 2025) QUES
g g g g g g g
TIONS AND ANSWERS. g g
Price regulation prevents some people from buying a good who
g g g g g g g g g
value that good more than it costs to supply it. Apply this propo
g g g g g g g g g g g g g
sition to Figure 11.3, assuming that the state sets the price at p1
g g g g g g g g g g g g g
and S' gives the supply. - <<<<Answers>>>-
g g g g g g
In a free market, where supply and demand determine prices, a
g g g g g g g g g g g
n increase in the number of lawyers shifts the supply curve out,
g g g g g g g g g g g g
as depicted in Figure 11.3.
g g g g
- The shift in the supply curve from S to S' should cause the p
g g g g g g g g g g g g g
rice of lawyers' services to fall from p1 to p2
g g g g g g g g g
- Thus, the increase in the supply of lawyers should lower the c
g g g g g g g g g g g
ost of filing suits.
g g g
- If the government were to establish a price floor at p1, and sup
g g g g g g g g g g g g
ply of lawyers is S', we would end up with some lawyers being
g g g g g g g g g g g g g
overpaid, some lawyers being unemployed, poorer clients woul
g g g g g g g
d be excluded from legal services by price, because clients who
g g g g g g g g g g g
would pay p, such that p2 < p < p1 cannot get lawyers who woul
g g g g g g g g g g g g g g
d be willing to charge p2, but are by law required to charge p1.
g g g g g g g g g g g g g
Litigation insurance shifts the legal costs of plaintiffs or defend
g g g g g g g g g
ants to insurers. How do you think this insurance would affect t
g g g g g g g g g g g
he number of suits filed? - <<<<Answers>>>-
g g g g g g
If the insurance company hires the lawyers and files the suits, t
g g g g g g g g g g g g
he number of suits filed would not change.
g g g g g g g
Explain the effects of class actions on the number of suits, usin
g g g g g g g g g g g
g our distinction of causes, into (1) injuries, (2) filing
g g g g g g g g g
, ECO 320 FINAL EXAM ( ACTUAL 2025) QUES
g g g g g g g
TIONS AND ANSWERS. g g
costs, and (3) expected value of the legal claim. -
g g g g g g g g g
<<<<Answers>>>Economies of scale applies to class action su g g g g g g g
its:
(1) Injuries have to be uncomplicated g g g g
(2) Filing costs of many small claims would go down
g g g g g g g g
(3) Expected value of claims increases g g g g
(a) If the plaintiff is more averse to risk than his or her lawyer,
g g g g g g g g g g g g g
would this fact incline the client to prefer a contingency fee or a
g g g g g g g g g g g g
n hourly fee?
g g
(b) Under a contingency fee, the plaintiff bears none of the law
g g g g g g g g g g
yer's costs of a trial. Consequently, the plaintiff can take a hard
g g g g g g g g g g g g
position in bargaining over a settlement. Explain why the plaint
g g g g g g g g g
iff's lawyer might also benefit from this commitment to hard ba
g g g g g g g g g g
rgaining. - g
g<<<<Answers>>>(a) A contingency fee allows risk averse pla g g g g g g g
intiffs to transfer the risk of losing to their lawyers.
g g g g g g g g g
(b) Since hard bargaining means the plaintiff's threat point in
g g g g g g g g g g
bargaining for a settlement increases, then the lawyer's share
g g g g g g g g g
of a higher settlement that results increases.
g g g g g g
In what ways do you think a "rent-a-
g g g g g g g
judge" who sought to maximize income might decide cases diff
g g g g g g g g g
erently from an independent public judge? -
g g g g g g
g<<<<Answers>>>-
gProponents say that everyone benefits: People who rent judges
g g g g g g g g g
benefit
, ECO 320 FINAL EXAM ( ACTUAL 2025) QUES
g g g g g g g
TIONS AND ANSWERS. g g
from a speedy trial, and others benefit indirectly from relievin
g g g g g g g g g
g the congestion in the public courts
g g g g g g
-
gThe income that a judge enjoyed as a public judge was u
g g g g g g g g g g g
nrelated to how that judge decided cases.
g g g g g g
-Now that has changed. g g g
-
The judges' income is directly determined by how often that j
g g g g g g g g g g
udge is "rented." To be rented, the judge must be chosen by b
g g g g g g g g g g g g
oth parties to a potential dispute.
g g g g g
Disgorgement Damages (criminal law) - <<<<Answers>>>- g g g g g
damages paid to the victim to eliminate the injurer's profit for
g g g g g g g g g g g
m wrongdoing
g
Specific Performance - <<<<Answers>>>- g g g
occurs when the specialized nature of what the agent does is
g g g g g g g g g g g g
a very imperfect substitute
g g g
- An equitable remedy requiring the breaching party to perform
g g g g g g g g
gas promised under the contract; usually granted only when mo
g g g g g g g g g
ney damages would be an inadequate remedy and the subject m
g g g g g g g g g g
atter of the contract is unique (for example, real property).
g g g g g g g g g
Liquidated Damages - <<<<Answers>>>- g g g
occur in contracts that stipulate an amount of damages for brea
g g g g g g g g g g g
ch of contract that does not exceed the actual harm
g g g g g g g g g
g g g g g g g
TIONS AND ANSWERS. g g
Restitution - <<<<Answers>>>- g g
occurs in deferred exchanges when a principal gives somethin
g g g g g g g g g
g in exchange for an agent doing something later
g g g g g g g g
- i.e., returning a down payment when a sale falls through
g g g g g g g g g
Disgorgement - <<<<Answers>>>- g g
goccurs when the behavior of the agent makes perfect compensa
g g g g g g g g g
tion preferential instead of indifferent
g g g g
Perfect Disgorgement (criminal law) - <<<<Answers>>>-
g g g g g
a sum of money that leaves the injurer indifferent between th
g g g g g g g g g g g
e injury with disgorgement or no injury
g g g g g g
- identical to perfect compensation with the roles of injurer &
g g g g g g g g g g
victim revered g
- injurer receives no gain from wrongdoing net of perfect
g g g g g g g g g
disgorgement
The plaintiff who brings a suit to establish a more efficient prec
g g g g g g g g g g g
edent enjoys only a fraction of its social value. Does this fact sh
g g g g g g g g g g g g
ow that the government should subsidize lawsuits by paying pa
g g g g g g g g g
rt of the cost of litigation? - <<<<Answers>>>*Yes
g g g g g g g
- Precedents are a public good g g g g
-Plaintiff's would under- g g
invest in precedents in the absence of a subsidy
g g g g g g g g
, ECO 320 FINAL EXAM ( ACTUAL 2025) QUES
g g g g g g g
TIONS AND ANSWERS. g g
Price regulation prevents some people from buying a good who
g g g g g g g g g
value that good more than it costs to supply it. Apply this propo
g g g g g g g g g g g g g
sition to Figure 11.3, assuming that the state sets the price at p1
g g g g g g g g g g g g g
and S' gives the supply. - <<<<Answers>>>-
g g g g g g
In a free market, where supply and demand determine prices, a
g g g g g g g g g g g
n increase in the number of lawyers shifts the supply curve out,
g g g g g g g g g g g g
as depicted in Figure 11.3.
g g g g
- The shift in the supply curve from S to S' should cause the p
g g g g g g g g g g g g g
rice of lawyers' services to fall from p1 to p2
g g g g g g g g g
- Thus, the increase in the supply of lawyers should lower the c
g g g g g g g g g g g
ost of filing suits.
g g g
- If the government were to establish a price floor at p1, and sup
g g g g g g g g g g g g
ply of lawyers is S', we would end up with some lawyers being
g g g g g g g g g g g g g
overpaid, some lawyers being unemployed, poorer clients woul
g g g g g g g
d be excluded from legal services by price, because clients who
g g g g g g g g g g g
would pay p, such that p2 < p < p1 cannot get lawyers who woul
g g g g g g g g g g g g g g
d be willing to charge p2, but are by law required to charge p1.
g g g g g g g g g g g g g
Litigation insurance shifts the legal costs of plaintiffs or defend
g g g g g g g g g
ants to insurers. How do you think this insurance would affect t
g g g g g g g g g g g
he number of suits filed? - <<<<Answers>>>-
g g g g g g
If the insurance company hires the lawyers and files the suits, t
g g g g g g g g g g g g
he number of suits filed would not change.
g g g g g g g
Explain the effects of class actions on the number of suits, usin
g g g g g g g g g g g
g our distinction of causes, into (1) injuries, (2) filing
g g g g g g g g g
, ECO 320 FINAL EXAM ( ACTUAL 2025) QUES
g g g g g g g
TIONS AND ANSWERS. g g
costs, and (3) expected value of the legal claim. -
g g g g g g g g g
<<<<Answers>>>Economies of scale applies to class action su g g g g g g g
its:
(1) Injuries have to be uncomplicated g g g g
(2) Filing costs of many small claims would go down
g g g g g g g g
(3) Expected value of claims increases g g g g
(a) If the plaintiff is more averse to risk than his or her lawyer,
g g g g g g g g g g g g g
would this fact incline the client to prefer a contingency fee or a
g g g g g g g g g g g g
n hourly fee?
g g
(b) Under a contingency fee, the plaintiff bears none of the law
g g g g g g g g g g
yer's costs of a trial. Consequently, the plaintiff can take a hard
g g g g g g g g g g g g
position in bargaining over a settlement. Explain why the plaint
g g g g g g g g g
iff's lawyer might also benefit from this commitment to hard ba
g g g g g g g g g g
rgaining. - g
g<<<<Answers>>>(a) A contingency fee allows risk averse pla g g g g g g g
intiffs to transfer the risk of losing to their lawyers.
g g g g g g g g g
(b) Since hard bargaining means the plaintiff's threat point in
g g g g g g g g g g
bargaining for a settlement increases, then the lawyer's share
g g g g g g g g g
of a higher settlement that results increases.
g g g g g g
In what ways do you think a "rent-a-
g g g g g g g
judge" who sought to maximize income might decide cases diff
g g g g g g g g g
erently from an independent public judge? -
g g g g g g
g<<<<Answers>>>-
gProponents say that everyone benefits: People who rent judges
g g g g g g g g g
benefit
, ECO 320 FINAL EXAM ( ACTUAL 2025) QUES
g g g g g g g
TIONS AND ANSWERS. g g
from a speedy trial, and others benefit indirectly from relievin
g g g g g g g g g
g the congestion in the public courts
g g g g g g
-
gThe income that a judge enjoyed as a public judge was u
g g g g g g g g g g g
nrelated to how that judge decided cases.
g g g g g g
-Now that has changed. g g g
-
The judges' income is directly determined by how often that j
g g g g g g g g g g
udge is "rented." To be rented, the judge must be chosen by b
g g g g g g g g g g g g
oth parties to a potential dispute.
g g g g g
Disgorgement Damages (criminal law) - <<<<Answers>>>- g g g g g
damages paid to the victim to eliminate the injurer's profit for
g g g g g g g g g g g
m wrongdoing
g
Specific Performance - <<<<Answers>>>- g g g
occurs when the specialized nature of what the agent does is
g g g g g g g g g g g g
a very imperfect substitute
g g g
- An equitable remedy requiring the breaching party to perform
g g g g g g g g
gas promised under the contract; usually granted only when mo
g g g g g g g g g
ney damages would be an inadequate remedy and the subject m
g g g g g g g g g g
atter of the contract is unique (for example, real property).
g g g g g g g g g
Liquidated Damages - <<<<Answers>>>- g g g
occur in contracts that stipulate an amount of damages for brea
g g g g g g g g g g g
ch of contract that does not exceed the actual harm
g g g g g g g g g
