Question

#37)     In the context of product liability, the principle of the least cost avoider

            a)         Explains product warranties.

            b)         Implies that the producer should bear all the costs associated with                                                  accidents related to its product's use.

            c)         Implies that the producer should bear none of the costs associated with                                             accidents related to its product's use

            d)         Implies that the producer should bear the costs associated with accidents                                           related to its product's use if it can reduce the probability of an                                                accident at a lower cost than consumers.

            e)         None of the above      

#38) The “real” problem with public goods is

1. The holdout problem
2. Transactions costs
3. Externalities
4. Free riders
5. None of the above

#39) A contract of adhesion

            a) Is unenforceable because it deals with servitude.

            b) May not be enforceable because it contains a penalty clause.

            c) Is a form contract.

            d) Is a contract signed under duress.

            e) May not be enforceable since it requires specific performance.

#40) Anyone who commits an illegal act should be

            a) punished to the full extent of the law.

            b) punished only if it is established that the act caused harm.

            c) punished only if the plaintiff argues successfully that not punishing the act has                                adverse incentive effects.

            d) punished only if the plaintiff argues successfully that the applicable law is just.

            e) None of the above.

Answer 1

37) b) Implies that the producer should bear all the costs associated with accidents related to its product's use.

The least cost avoider or the customer may imply that the producer is liable for the defaulted product which has caused the injury. In this case, the producer is strict liable for placing a defective product into the hands of the customers and thus held responsible for the cause of the accident. To recover the damages, the producer or any seller in the distribution chain should bear all the cost associated with the accident.

38) c) Externalities :-

The problem with the public goods can be negative Externalities. Fresh air can be considered as public goods and this is polluted by factories which affects public lives and that is a negative Externalities. When economy impacts the third party or the public when they are not actually linked with the the situation then it is called Externalities.

39) a) Is unenforceable because it deals with servitude.

A contract of adhesion is when a party has little or no negotiation point in a contract and where the other parties has decided the contract obligations. This type of contract is not enforceable as it would be unfair for the other party. This contract includes servitude as the other party is more powerful or influencial. It is not signed by parties in duress.

40) b) Punished only if it is established that the act caused harm.

It can be said that not every illegal activity is a crime. Illegal acts counted as a violation lo laws which can be done in private laws where if the defendant didn't harm anybody then it would not be considered as a crime. This type of issues can be sorted through civil procedures.

Hope this helps :)