In what way can liability rules lead to a more efficient outcome?
What will be an ideal response?
Liability rules are designed to force decision makers to internalize an externality. They provide an incentive for individuals to weigh both the actual and potential costs and benefits of their actions.
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Refer to the above figure. The top two arrows of the figure refer to the product markets. The bottom arrows refer to the factor markets. Which arrow represents factor services?
A) Arrow A B) Arrow B C) Arrow C D) Arrow D
Refer to the table below. Busy Betty sells her cakes for $20 each and her constant marginal cost to produce each cake is $12, which is equal to her (constant) average total cost. If she does not sell a cake the day she makes it, she sells it as day-old cake for $10. What is her expected marginal cost of holding the 22nd cake in inventory?
The above table shows the probability distribution of cake sales at Busy Betty's Bakery.
A) $0.40
B) $1.20
C) $0.80
D) $2.00
What is a brief definition of economics? What are the conditions that give rise to this definition?
Please provide the best answer for the statement.
In the insider-outsider theory:
A. insiders are workers who retain employment during recession. B. insiders are managers who have more information about their firm's performance than outsiders. C. insiders are "principals" and outsiders are "agents" D. outsiders are foreigners.