ECO 320 FINAL EXAM ( ACTUAL 2025)Q u u u u u u u
UESTIONS AND ANSWERS. u u
Restitution - <<<<Answers>>>- u u
occurs in deferred exchangeswhen a principal gives something in
u u u u u u u u u u u
exchange for an agent doing something later u u u u u u
- i.e., returning a down payment when a sale falls through
u u u u u u u u u
Disgorgement - <<<<Answers>>>- u u
occurs when the behaviorof the agent makes perfect compensatio
u u u u u u u u u u
n preferential instead of indifferent
u u u u
Perfect Disgorgement (criminal law) - <<<<Answers>>>-
u u u u u
asum of money that leaves the injurer indifferent between theinj
u u u u u u u u u u u u
ury with disgorgement or no injury
u u u u u
- identical to perfect compensation with the roles of injurer &vict u u u u u u u u u u
im revered u
- injurer receives no gain from wrongdoing net of perfectdis u u u u u u u u u
gorgement
The plaintiff who brings a suit to establish a more efficient preced
u u u u u u u u u u u
ent enjoys only a fraction of its social value. Does this fact show th
u u u u u u u u u u u u u
at the government should subsidize lawsuits by paying part of the
u u u u u u u u u u u
cost of litigation? - <<<<Answers>>>*Yes
u u u u
- Precedents are a public good u u u u
-Plaintiff's would under- u u
invest in precedents in the absence ofa subsidy
u u u u u u u u
, ECO 320 FINAL EXAM ( ACTUAL 2025)Q u u u u u u u
UESTIONS AND ANSWERS. u u
Price regulation prevents some people from buying a good who va
u u u u u u u u u u
lue that good more than it costs to supply it. Apply thisproposition t
u u u u u u u u u u u u u
o Figure 11.3, assuming that the state sets the price at p1 and S' give
u u u u u u u u u u u u u u
s the supply. - <<<<Answers>>>-
u u u u
In a free market, where supply and demand determine prices, an in
u u u u u u u u u u u u
crease in the number of lawyers shifts the supply curve out, as depi
u u u u u u u u u u u u
cted in Figure 11.3. u u u
- The shift in the supply curve from S to S' should cause theprice
u u u u u u u u u u u u u u
of lawyers' services to fall from p1 to p2
u u u u u u u u
- Thus, the increase in the supply of lawyers should lower thecost u u u u u u u u u u u u
of filing suits.u u
- If the government were to establish a price floor at p1, and supply
u u u u u u u u u u u u u
of lawyers is S', we would end up with some lawyers being overpai
u u u u u u u u u u u u
d, some lawyers being unemployed, poorer clients would be exclu
u u u u u u u u u
ded from legal services by price, because clients who would pay p, s
u u u u u u u u u u u u
uch that p2 < p < p1 cannotget lawyers who would be willing to char
u u u u u u u u u u u u u u u
ge p2, but are by lawrequired to charge p1.
u u u u u u u u u
Litigation insurance shifts the legal costs of plaintiffs or defendant u u u u u u u u u
s to insurers. How do you think this insurance wouldaffect the num
u u u u u u u u u u u u
ber of suits filed? - <<<<Answers>>>-
u u u u u
If the insurance company hires the lawyers and files the suits, the nu
u u u u u u u u u u u u u
mber of suits filed would not change. u u u u u u
Explain the effects of class actions on the number of suits,usin u u u u u u u u u u u
g our distinction of causes, into (1) injuries, (2) filing
u u u u u u u u u
, ECO 320 FINAL EXAM ( ACTUAL 2025)Q u u u u u u u
UESTIONS AND ANSWERS. u u
costs, and (3) expected value of the legal claim. -
u u u u u u u u u
<<<<Answers>>>Economies of scale applies to class actionsui u u u u u u u
ts:
(1) Injuries have to be uncomplicated u u u u
(2) Filing costs of many small claims would go down u u u u u u u u
(3) Expected value of claims increases u u u u
(a) If the plaintiff is more averse to risk than his or her lawyer,woul
u u u u u u u u u u u u u
d this fact incline the client to prefer a contingency fee oran hourly f
u u u u u u u u u u u u u u
ee?
(b) Under a contingency fee, the plaintiff bears none of the lawyer' u u u u u u u u u u
s costs of a trial. Consequently, the plaintiff can take a hard position
u u u u u u u u u u u u u
in bargaining over a settlement. Explain why theplaintiff's lawyer
u u u u u u u u u u
might also benefit from this commitment to hard bargaining. -
u u u u u u u u u
<<<<Answers>>>(a) A contingency fee allows risk averse plaint
u u u u u u u u
iffs to transfer the risk of losing to their lawyers.
u u u u u u u u u
(b) Since hard bargaining means the plaintiff's threat point inbar
u u u u u u u u u u
gaining for a settlement increases, then the lawyer's shareof a hig
u u u u u u u u u u u
her settlement that results increases.
u u u u
In what ways do you think a "rent-a-
u u u u u u u
judge" who sought to maximize income might decide cases diff
u u u u u u u u u
erently from an independent public judge? - u u u u u u
<<<<Answers>>>-
u
Proponentssay that everyone benefits: People who rent judges
u u u u u u u u u u
benefit
, ECO 320 FINAL EXAM ( ACTUAL 2025)Q u u u u u u u
UESTIONS AND ANSWERS. u u
from a speedy trial, and others benefit indirectly fromreli
u u u u u u u u u
eving the congestion in the public courts
u u u u u u
- The income that a judge enjoyed as a public judge wasunre
u u u u u u u u u u u
lated to how that judge decided cases.
u u u u u u
-Now that has changed. u u u
-
The judges' income is directly determined by how often thatjudg
u u u u u u u u u u
e is "rented." To be rented, the judge must be chosen by both partie
u u u u u u u u u u u u u
s to a potential dispute.
u u u u
Disgorgement Damages (criminal law) - <<<<Answers>>>- u u u u u
damages paid to the victim to eliminate the injurer's profit form w
u u u u u u u u u u u u
rongdoing
Specific Performance - <<<<Answers>>>- u u u
occurs when thespecialized nature of what the agent does is a ver
u u u u u u u u u u u u u
y imperfectsubstitute
u u
- An equitable remedy requiring the breaching party to perform as
u u u u u u u u u u
promised under the contract; usually granted only when money da u u u u u u u u u
mages would be an inadequate remedy and thesubject matter of the
u u u u u u u u u u u u
contract is unique (for example, real property). u u u u u u
Liquidated Damages - <<<<Answers>>>- u u u
occur in contracts that stipulate an amount of damages for breach o
u u u u u u u u u u u u
f contract thatdoes not exceed the actual harm
u u u u u u u u
UESTIONS AND ANSWERS. u u
Restitution - <<<<Answers>>>- u u
occurs in deferred exchangeswhen a principal gives something in
u u u u u u u u u u u
exchange for an agent doing something later u u u u u u
- i.e., returning a down payment when a sale falls through
u u u u u u u u u
Disgorgement - <<<<Answers>>>- u u
occurs when the behaviorof the agent makes perfect compensatio
u u u u u u u u u u
n preferential instead of indifferent
u u u u
Perfect Disgorgement (criminal law) - <<<<Answers>>>-
u u u u u
asum of money that leaves the injurer indifferent between theinj
u u u u u u u u u u u u
ury with disgorgement or no injury
u u u u u
- identical to perfect compensation with the roles of injurer &vict u u u u u u u u u u
im revered u
- injurer receives no gain from wrongdoing net of perfectdis u u u u u u u u u
gorgement
The plaintiff who brings a suit to establish a more efficient preced
u u u u u u u u u u u
ent enjoys only a fraction of its social value. Does this fact show th
u u u u u u u u u u u u u
at the government should subsidize lawsuits by paying part of the
u u u u u u u u u u u
cost of litigation? - <<<<Answers>>>*Yes
u u u u
- Precedents are a public good u u u u
-Plaintiff's would under- u u
invest in precedents in the absence ofa subsidy
u u u u u u u u
, ECO 320 FINAL EXAM ( ACTUAL 2025)Q u u u u u u u
UESTIONS AND ANSWERS. u u
Price regulation prevents some people from buying a good who va
u u u u u u u u u u
lue that good more than it costs to supply it. Apply thisproposition t
u u u u u u u u u u u u u
o Figure 11.3, assuming that the state sets the price at p1 and S' give
u u u u u u u u u u u u u u
s the supply. - <<<<Answers>>>-
u u u u
In a free market, where supply and demand determine prices, an in
u u u u u u u u u u u u
crease in the number of lawyers shifts the supply curve out, as depi
u u u u u u u u u u u u
cted in Figure 11.3. u u u
- The shift in the supply curve from S to S' should cause theprice
u u u u u u u u u u u u u u
of lawyers' services to fall from p1 to p2
u u u u u u u u
- Thus, the increase in the supply of lawyers should lower thecost u u u u u u u u u u u u
of filing suits.u u
- If the government were to establish a price floor at p1, and supply
u u u u u u u u u u u u u
of lawyers is S', we would end up with some lawyers being overpai
u u u u u u u u u u u u
d, some lawyers being unemployed, poorer clients would be exclu
u u u u u u u u u
ded from legal services by price, because clients who would pay p, s
u u u u u u u u u u u u
uch that p2 < p < p1 cannotget lawyers who would be willing to char
u u u u u u u u u u u u u u u
ge p2, but are by lawrequired to charge p1.
u u u u u u u u u
Litigation insurance shifts the legal costs of plaintiffs or defendant u u u u u u u u u
s to insurers. How do you think this insurance wouldaffect the num
u u u u u u u u u u u u
ber of suits filed? - <<<<Answers>>>-
u u u u u
If the insurance company hires the lawyers and files the suits, the nu
u u u u u u u u u u u u u
mber of suits filed would not change. u u u u u u
Explain the effects of class actions on the number of suits,usin u u u u u u u u u u u
g our distinction of causes, into (1) injuries, (2) filing
u u u u u u u u u
, ECO 320 FINAL EXAM ( ACTUAL 2025)Q u u u u u u u
UESTIONS AND ANSWERS. u u
costs, and (3) expected value of the legal claim. -
u u u u u u u u u
<<<<Answers>>>Economies of scale applies to class actionsui u u u u u u u
ts:
(1) Injuries have to be uncomplicated u u u u
(2) Filing costs of many small claims would go down u u u u u u u u
(3) Expected value of claims increases u u u u
(a) If the plaintiff is more averse to risk than his or her lawyer,woul
u u u u u u u u u u u u u
d this fact incline the client to prefer a contingency fee oran hourly f
u u u u u u u u u u u u u u
ee?
(b) Under a contingency fee, the plaintiff bears none of the lawyer' u u u u u u u u u u
s costs of a trial. Consequently, the plaintiff can take a hard position
u u u u u u u u u u u u u
in bargaining over a settlement. Explain why theplaintiff's lawyer
u u u u u u u u u u
might also benefit from this commitment to hard bargaining. -
u u u u u u u u u
<<<<Answers>>>(a) A contingency fee allows risk averse plaint
u u u u u u u u
iffs to transfer the risk of losing to their lawyers.
u u u u u u u u u
(b) Since hard bargaining means the plaintiff's threat point inbar
u u u u u u u u u u
gaining for a settlement increases, then the lawyer's shareof a hig
u u u u u u u u u u u
her settlement that results increases.
u u u u
In what ways do you think a "rent-a-
u u u u u u u
judge" who sought to maximize income might decide cases diff
u u u u u u u u u
erently from an independent public judge? - u u u u u u
<<<<Answers>>>-
u
Proponentssay that everyone benefits: People who rent judges
u u u u u u u u u u
benefit
, ECO 320 FINAL EXAM ( ACTUAL 2025)Q u u u u u u u
UESTIONS AND ANSWERS. u u
from a speedy trial, and others benefit indirectly fromreli
u u u u u u u u u
eving the congestion in the public courts
u u u u u u
- The income that a judge enjoyed as a public judge wasunre
u u u u u u u u u u u
lated to how that judge decided cases.
u u u u u u
-Now that has changed. u u u
-
The judges' income is directly determined by how often thatjudg
u u u u u u u u u u
e is "rented." To be rented, the judge must be chosen by both partie
u u u u u u u u u u u u u
s to a potential dispute.
u u u u
Disgorgement Damages (criminal law) - <<<<Answers>>>- u u u u u
damages paid to the victim to eliminate the injurer's profit form w
u u u u u u u u u u u u
rongdoing
Specific Performance - <<<<Answers>>>- u u u
occurs when thespecialized nature of what the agent does is a ver
u u u u u u u u u u u u u
y imperfectsubstitute
u u
- An equitable remedy requiring the breaching party to perform as
u u u u u u u u u u
promised under the contract; usually granted only when money da u u u u u u u u u
mages would be an inadequate remedy and thesubject matter of the
u u u u u u u u u u u u
contract is unique (for example, real property). u u u u u u
Liquidated Damages - <<<<Answers>>>- u u u
occur in contracts that stipulate an amount of damages for breach o
u u u u u u u u u u u u
f contract thatdoes not exceed the actual harm
u u u u u u u u
