ECO320 Final Exam (2025) ACTUAL EXAM
COMPREHENSIVE QUESTIONS AND VERIFIED
ACCURATE SOLUTION (DETAILED &
ELABORATED) |GET IT 100% ACCURATE!! 2025
TEST!!
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Terms in this set (284)
- optimality in the economic analysis of law
"Central Problem"
- maximize social surplus
- supplies the legal framework for allocating
resources & distributing wealth
- a bundle of rights describing what people may &
may not do with the resources they own: the extent to
which they may -->
Property Rights/Law possess/use/develop/improve/transform/consume/de
plete/destroy/sell/donate/bequeath/transfer/mortgag
e/lease/loan/exclude
- economic theory tries to predict the effects of
alternative forms of ownership, especially the effects
on efficiency & distribution
, - the first party to use an unowned resource acquires
claim to it
- an example of maintaining low transaction costs by
defining property rights clearly & simply
Rule of First Possession / - cost minimizing as it focuses on just a few simple
Rule of Capture facts
- encourages efficiency by emphasizing the
production of wealth over the transfer of wealth
- danger being that the rule may lead to over-
investment
- may occur when the Rule of First Possession can
Rule of Tied Ownership
lead to economic costs
When transaction costs are zero, an efficient (socially
optimal) use of resources results from private
Coase Theorem
bargaining, regardless of the legal assignment of
property rights
*Low Transaction Costs --> injunction is the more
efficient remedy:
- right to an injunction gives the parties a clearer
position from which to bargain, although parties may
Coase Theorem & eventually agree to a settlement based on
Damages vs. Injunction compensation
*High Transaction Costs (to prevent bargaining) -->
switching from injunction to damages makes the
injurer better off without making the victim worse off
- the farmer is responsible for keeping the cattle off
his property
- the farmer bears (must pay for) any damages caused
by the cattle
Open Range Rule -
- Rancher chooses optimal # of cattle & optimize their
Ranchers' Rights
own surplus
- Farmer has no legal recourse against damages done
by cattle
- Farmer must take precautions to reduce the damage
, - the rancher is responsible for keeping the cattle on
their property
Closed Range Rule - - the farmer bears (must pay for) any damages caused
Farmers' Rights by the battle
- Rancher chooses to optimize total social surplus
- Rancher must reduce damage to Farmer
- fairness requires the party who causes harm to pay
for it
Fairness vs. Efficiency
- efficiency requires allocating the right to the party
who values it most
COMPREHENSIVE QUESTIONS AND VERIFIED
ACCURATE SOLUTION (DETAILED &
ELABORATED) |GET IT 100% ACCURATE!! 2025
TEST!!
Save
Terms in this set (284)
- optimality in the economic analysis of law
"Central Problem"
- maximize social surplus
- supplies the legal framework for allocating
resources & distributing wealth
- a bundle of rights describing what people may &
may not do with the resources they own: the extent to
which they may -->
Property Rights/Law possess/use/develop/improve/transform/consume/de
plete/destroy/sell/donate/bequeath/transfer/mortgag
e/lease/loan/exclude
- economic theory tries to predict the effects of
alternative forms of ownership, especially the effects
on efficiency & distribution
, - the first party to use an unowned resource acquires
claim to it
- an example of maintaining low transaction costs by
defining property rights clearly & simply
Rule of First Possession / - cost minimizing as it focuses on just a few simple
Rule of Capture facts
- encourages efficiency by emphasizing the
production of wealth over the transfer of wealth
- danger being that the rule may lead to over-
investment
- may occur when the Rule of First Possession can
Rule of Tied Ownership
lead to economic costs
When transaction costs are zero, an efficient (socially
optimal) use of resources results from private
Coase Theorem
bargaining, regardless of the legal assignment of
property rights
*Low Transaction Costs --> injunction is the more
efficient remedy:
- right to an injunction gives the parties a clearer
position from which to bargain, although parties may
Coase Theorem & eventually agree to a settlement based on
Damages vs. Injunction compensation
*High Transaction Costs (to prevent bargaining) -->
switching from injunction to damages makes the
injurer better off without making the victim worse off
- the farmer is responsible for keeping the cattle off
his property
- the farmer bears (must pay for) any damages caused
by the cattle
Open Range Rule -
- Rancher chooses optimal # of cattle & optimize their
Ranchers' Rights
own surplus
- Farmer has no legal recourse against damages done
by cattle
- Farmer must take precautions to reduce the damage
, - the rancher is responsible for keeping the cattle on
their property
Closed Range Rule - - the farmer bears (must pay for) any damages caused
Farmers' Rights by the battle
- Rancher chooses to optimize total social surplus
- Rancher must reduce damage to Farmer
- fairness requires the party who causes harm to pay
for it
Fairness vs. Efficiency
- efficiency requires allocating the right to the party
who values it most
