ECO 320 FINAL EXAM ( ACTUAL 2025) QUES
h h h h h h h
TIONS AND ANSWERS. h h
Restitution - <<<<Answers>>>- h h
occurs in deferred exchanges when a principal gives something i
h h h h h h h h h h
n exchange for an agent doing something later
h h h h h h h
- i.e., returning a down payment when a sale falls through
h h h h h h h h h
Disgorgement - <<<<Answers>>>- h h
occurs when the behavior of the agent makes perfect compensati
h h h h h h h h h h
on preferential instead of indifferent
h h h h
Perfect Disgorgement (criminal law) - <<<<Answers>>>-
h h h h h
ha sum of money that leaves the injurer indifferent between the
h h h h h h h h h h h
injury with disgorgement or no injury
h h h h h
- identical to perfect compensation with the roles of injurer & vi
h h h h h h h h h h
ctim revered h
- injurer receives no gain from wrongdoing net of perfect di
h h h h h h h h h
sgorgement
The plaintiff who brings a suit to establish a more efficient prece
h h h h h h h h h h h
dent enjoys only a fraction of its social value. Does this fact show
h h h h h h h h h h h h
hthat the government should subsidize lawsuits by paying part of
h h h h h h h h h h
the cost of litigation? - <<<<Answers>>>*Yes
h h h h h
- Precedents are a public good h h h h
-Plaintiff's would under- h h
invest in precedents in the absence of a subsidy
h h h h h h h h
, ECO 320 FINAL EXAM ( ACTUAL 2025) QUES
h h h h h h h
TIONS AND ANSWERS. h h
Price regulation prevents some people from buying a good who
h h h h h h h h h h
value that good more than it costs to supply it. Apply this proposi
h h h h h h h h h h h h
tion to Figure 11.3, assuming that the state sets the price at p1 and
h h h h h h h h h h h h h
hS' gives the supply. - <<<<Answers>>>-
h h h h h
hIn a free market, where supply and demand determine prices, an
h h h h h h h h h h h
increase in the number of lawyers shifts the supply curve out, as
h h h h h h h h h h h h
depicted in Figure 11.3. h h h
- The shift in the supply curve from S to S' should cause the pri
h h h h h h h h h h h h h
ce of lawyers' services to fall from p1 to p2
h h h h h h h h h
- Thus, the increase in the supply of lawyers should lower the co
h h h h h h h h h h h
st of filing suits.
h h h
- If the government were to establish a price floor at p1, and supp
h h h h h h h h h h h h
ly of lawyers is S', we would end up with some lawyers being ove
h h h h h h h h h h h h h
rpaid, some lawyers being unemployed, poorer clients would be
h h h h h h h h h
excluded from legal services by price, because clients who woul h h h h h h h h h
d pay p, such that p2 < p < p1 cannot get lawyers who would be wi
h h h h h h h h h h h h h h h h
lling to charge p2, but are by law required to charge p1.
h h h h h h h h h h h
Litigation insurance shifts the legal costs of plaintiffs or defenda h h h h h h h h h
nts to insurers. How do you think this insurance would affect the
h h h h h h h h h h h h
number of suits filed? - <<<<Answers>>>- h h h h h
If the insurance company hires the lawyers and files the suits, the
h h h h h h h h h h h h
number of suits filed would not change.
h h h h h h h
Explain the effects of class actions on the number of suits, using
h h h h h h h h h h h h
our distinction of causes, into (1) injuries, (2) filing
h h h h h h h h
, ECO 320 FINAL EXAM ( ACTUAL 2025) QUES
h h h h h h h
TIONS AND ANSWERS. h h
costs, and (3) expected value of the legal claim. -
h h h h h h h h h
<<<<Answers>>>Economies of scale applies to class action sui h h h h h h h
ts:
(1) Injuries have to be uncomplicated h h h h
(2) Filing costs of many small claims would go down
h h h h h h h h
(3) Expected value of claims increases h h h h
(a) If the plaintiff is more averse to risk than his or her lawyer, wo
h h h h h h h h h h h h h
uld this fact incline the client to prefer a contingency fee or an ho
h h h h h h h h h h h h h
urly fee? h
(b) Under a contingency fee, the plaintiff bears none of the lawy
h h h h h h h h h h
er's costs of a trial. Consequently, the plaintiff can take a hard po
h h h h h h h h h h h h
sition in bargaining over a settlement. Explain why the plaintiff's
h h h h h h h h h
hlawyer might also benefit from this commitment to hard bargain
h h h h h h h h h
ing. - h
h<<<<Answers>>>(a) A contingency fee allows risk averse plai h h h h h h h
ntiffs to transfer the risk of losing to their lawyers.
h h h h h h h h h
(b) Since hard bargaining means the plaintiff's threat point in ba
h h h h h h h h h h
rgaining for a settlement increases, then the lawyer's share of a
h h h h h h h h h h h
higher settlement that results increases.
h h h h
In what ways do you think a "rent-a-
h h h h h h h
judge" who sought to maximize income might decide cases diffe
h h h h h h h h h
rently from an independent public judge? - <<<<Answers>>>-
h h h h h h h
Proponents say that everyone benefits: People who rent judges b
h h h h h h h h h h
enefit
, ECO 320 FINAL EXAM ( ACTUAL 2025) QUES
h h h h h h h
TIONS AND ANSWERS. h h
from a speedy trial, and others benefit indirectly from relieving t
h h h h h h h h h h
he congestion in the public courts
h h h h h
-
The income that a judge enjoyed as a public judge was unr
h h h h h h h h h h h h
elated to how that judge decided cases.
h h h h h h
-Now that has changed. h h h
-
The judges' income is directly determined by how often that jud
h h h h h h h h h h
ge is "rented." To be rented, the judge must be chosen by both p
h h h h h h h h h h h h h
arties to a potential dispute. h h h h
Disgorgement Damages (criminal law) - <<<<Answers>>>- h h h h h
damages paid to the victim to eliminate the injurer's profit form
h h h h h h h h h h h h
wrongdoing
Specific Performance - <<<<Answers>>>- h h h
occurs when the specialized nature of what the agent does is a
h h h h h h h h h h h h h
very imperfect substitute
h h
- An equitable remedy requiring the breaching party to perform
h h h h h h h h h
as promised under the contract; usually granted only when mone
h h h h h h h h h
y damages would be an inadequate remedy and the subject matte
h h h h h h h h h h
r of the contract is unique (for example, real property).
h h h h h h h h h
Liquidated Damages - <<<<Answers>>>- h h h
occur in contracts that stipulate an amount of damages for breach
h h h h h h h h h h h
of contract that does not exceed the actual harm
h h h h h h h h h
h h h h h h h
TIONS AND ANSWERS. h h
Restitution - <<<<Answers>>>- h h
occurs in deferred exchanges when a principal gives something i
h h h h h h h h h h
n exchange for an agent doing something later
h h h h h h h
- i.e., returning a down payment when a sale falls through
h h h h h h h h h
Disgorgement - <<<<Answers>>>- h h
occurs when the behavior of the agent makes perfect compensati
h h h h h h h h h h
on preferential instead of indifferent
h h h h
Perfect Disgorgement (criminal law) - <<<<Answers>>>-
h h h h h
ha sum of money that leaves the injurer indifferent between the
h h h h h h h h h h h
injury with disgorgement or no injury
h h h h h
- identical to perfect compensation with the roles of injurer & vi
h h h h h h h h h h
ctim revered h
- injurer receives no gain from wrongdoing net of perfect di
h h h h h h h h h
sgorgement
The plaintiff who brings a suit to establish a more efficient prece
h h h h h h h h h h h
dent enjoys only a fraction of its social value. Does this fact show
h h h h h h h h h h h h
hthat the government should subsidize lawsuits by paying part of
h h h h h h h h h h
the cost of litigation? - <<<<Answers>>>*Yes
h h h h h
- Precedents are a public good h h h h
-Plaintiff's would under- h h
invest in precedents in the absence of a subsidy
h h h h h h h h
, ECO 320 FINAL EXAM ( ACTUAL 2025) QUES
h h h h h h h
TIONS AND ANSWERS. h h
Price regulation prevents some people from buying a good who
h h h h h h h h h h
value that good more than it costs to supply it. Apply this proposi
h h h h h h h h h h h h
tion to Figure 11.3, assuming that the state sets the price at p1 and
h h h h h h h h h h h h h
hS' gives the supply. - <<<<Answers>>>-
h h h h h
hIn a free market, where supply and demand determine prices, an
h h h h h h h h h h h
increase in the number of lawyers shifts the supply curve out, as
h h h h h h h h h h h h
depicted in Figure 11.3. h h h
- The shift in the supply curve from S to S' should cause the pri
h h h h h h h h h h h h h
ce of lawyers' services to fall from p1 to p2
h h h h h h h h h
- Thus, the increase in the supply of lawyers should lower the co
h h h h h h h h h h h
st of filing suits.
h h h
- If the government were to establish a price floor at p1, and supp
h h h h h h h h h h h h
ly of lawyers is S', we would end up with some lawyers being ove
h h h h h h h h h h h h h
rpaid, some lawyers being unemployed, poorer clients would be
h h h h h h h h h
excluded from legal services by price, because clients who woul h h h h h h h h h
d pay p, such that p2 < p < p1 cannot get lawyers who would be wi
h h h h h h h h h h h h h h h h
lling to charge p2, but are by law required to charge p1.
h h h h h h h h h h h
Litigation insurance shifts the legal costs of plaintiffs or defenda h h h h h h h h h
nts to insurers. How do you think this insurance would affect the
h h h h h h h h h h h h
number of suits filed? - <<<<Answers>>>- h h h h h
If the insurance company hires the lawyers and files the suits, the
h h h h h h h h h h h h
number of suits filed would not change.
h h h h h h h
Explain the effects of class actions on the number of suits, using
h h h h h h h h h h h h
our distinction of causes, into (1) injuries, (2) filing
h h h h h h h h
, ECO 320 FINAL EXAM ( ACTUAL 2025) QUES
h h h h h h h
TIONS AND ANSWERS. h h
costs, and (3) expected value of the legal claim. -
h h h h h h h h h
<<<<Answers>>>Economies of scale applies to class action sui h h h h h h h
ts:
(1) Injuries have to be uncomplicated h h h h
(2) Filing costs of many small claims would go down
h h h h h h h h
(3) Expected value of claims increases h h h h
(a) If the plaintiff is more averse to risk than his or her lawyer, wo
h h h h h h h h h h h h h
uld this fact incline the client to prefer a contingency fee or an ho
h h h h h h h h h h h h h
urly fee? h
(b) Under a contingency fee, the plaintiff bears none of the lawy
h h h h h h h h h h
er's costs of a trial. Consequently, the plaintiff can take a hard po
h h h h h h h h h h h h
sition in bargaining over a settlement. Explain why the plaintiff's
h h h h h h h h h
hlawyer might also benefit from this commitment to hard bargain
h h h h h h h h h
ing. - h
h<<<<Answers>>>(a) A contingency fee allows risk averse plai h h h h h h h
ntiffs to transfer the risk of losing to their lawyers.
h h h h h h h h h
(b) Since hard bargaining means the plaintiff's threat point in ba
h h h h h h h h h h
rgaining for a settlement increases, then the lawyer's share of a
h h h h h h h h h h h
higher settlement that results increases.
h h h h
In what ways do you think a "rent-a-
h h h h h h h
judge" who sought to maximize income might decide cases diffe
h h h h h h h h h
rently from an independent public judge? - <<<<Answers>>>-
h h h h h h h
Proponents say that everyone benefits: People who rent judges b
h h h h h h h h h h
enefit
, ECO 320 FINAL EXAM ( ACTUAL 2025) QUES
h h h h h h h
TIONS AND ANSWERS. h h
from a speedy trial, and others benefit indirectly from relieving t
h h h h h h h h h h
he congestion in the public courts
h h h h h
-
The income that a judge enjoyed as a public judge was unr
h h h h h h h h h h h h
elated to how that judge decided cases.
h h h h h h
-Now that has changed. h h h
-
The judges' income is directly determined by how often that jud
h h h h h h h h h h
ge is "rented." To be rented, the judge must be chosen by both p
h h h h h h h h h h h h h
arties to a potential dispute. h h h h
Disgorgement Damages (criminal law) - <<<<Answers>>>- h h h h h
damages paid to the victim to eliminate the injurer's profit form
h h h h h h h h h h h h
wrongdoing
Specific Performance - <<<<Answers>>>- h h h
occurs when the specialized nature of what the agent does is a
h h h h h h h h h h h h h
very imperfect substitute
h h
- An equitable remedy requiring the breaching party to perform
h h h h h h h h h
as promised under the contract; usually granted only when mone
h h h h h h h h h
y damages would be an inadequate remedy and the subject matte
h h h h h h h h h h
r of the contract is unique (for example, real property).
h h h h h h h h h
Liquidated Damages - <<<<Answers>>>- h h h
occur in contracts that stipulate an amount of damages for breach
h h h h h h h h h h h
of contract that does not exceed the actual harm
h h h h h h h h h
