Under what circumstances might it be more effective for people experiencing a negative externality to file a class-action lawsuit than attempt to resolve the problem through bargaining?
What will be an ideal response?
When transactions costs are large, bargaining may not be the most effective way to negotiate a suitable agreement between a polluter and victim. With a class-action lawsuit, expensive legal fees can be spread among the many victims who are a party to the lawsuit, and this would make it much more feasible and affordable for people who have suffered damages to get together with other damaged parties and sue for recovery.
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Chapter 16 on "Financial System Design" calls the asymmetric information problem discussed in earlier chapters the __________ conflict
A) manager-stockholder B) stockholder-lender C) manager-lender D) profit-risk
If both supply and demand decrease and the shift in demand dominates, which of the following happens? a. The equilibrium quantity increases. b. The equilibrium price and the equilibrium quantity decrease. c. The equilibrium price decreases and equilibrium quantity increases. d. The equilibrium quantity increases and the equilibrium price change is indeterminate
e. The equilibrium price increases and the equilibrium quantity decreases.
A decrease in the number of dry cleaners in an area is represented by a(n):
A. downward movement along the dry cleaning supply curve. B. upward movement along the dry cleaning supply curve. C. leftward shift in the dry cleaning supply curve. D. rightward shift in the dry cleaning supply curve.
Torrie is thinking of starting up a small business selling hand-painted wine glasses. She asks her sister, Lisette, if she'd like to join her in setting up a partnership to start the business. What is one disadvantage in joining the partnership that
Lisette should consider? A) Lisette should realize that her profits in the partnership will always be less than Torrie's profits, since Torrie had the idea to start the business. B) Lisette should realize that, as an owner of the business, she will be personally responsible for the debts of the business. C) Lisette should realize that only Torrie will be allowed to own stock in the business as the founding partner. D) Lisette should realize that Torrie will have complete control over the business because it was her idea.