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Title: Week 5 ECO FOR DETR1

Question Details
Q:

 

 

According to economists, an individual who tries to derive utility from the consumption of a good without paying for it is called:

 

 

     

Under low-cost contracting like that between beekeepers and farmers, the agreement between the two parties is not self-enforcing because:

     

 

 

               

Which of the following exemplifies inefficient legal assignment of rights with high transaction costs?

           

 

     

_____ refers to an enforceable set of promises to take certain actions over the future.

     

 

 

 

 

     

 

 

Investments that are specific to a relationship (i.e. of lower value elsewhere) are considered risky and require:

     

 

       

 

     

The _____ is both a forum where farmers decide what their dues will purchase, and an organization that informally coerces payments from them.

         

 

 

     

 

     

For which of the following investment activities does the law clearly define the parties’ underlying rights?

       

 

           

Which of the following is a new law on fishing imposed by the government to increase the total supply of fish?

       

Governments have issued licenses that limit catches and fishing seasons.

 

 

           

Inclusive property rights provide an investor:

         

 

 

           

If the costs of negotiating and enforcing contracts are _____ relative to the benefits, buyers and sellers have incentives to make economically efficient arrangements that _____ value.

                         

 

     

How can the government cut the cost of negotiation among car owners regarding LoJack installation?

       

 

 

 

     

 

 

     

Farmers can avoid the free rider problem associated with the benefits received from beekeepers by:

             

 

     

Value-creating contracts require underlying laws that:

     

 

 

 

 

     

 

     

Suppose an individual discovers the mouth of a previously unknown cave (expected to contain a single large diamond) on his property that extends under land owned by others. To arrive at an economically efficient outcome with low transaction cost, the law will:

             

 

 

_____ is an example of human specificity which raises the risks associated with opportunism.

     

 

       

 

     

_____ is a contract that specifies actions to be taken if various situations come to prevail.

         

 

 

     

 

     

Assume that James owns a wheat farm that produces an annual crop of 500 bushels. His only choice is to store it in a nearby grain elevator owned by Martin, whose facility will be empty unless James is using it. Martin contracts with James to provide storage at $5 per bushel every month. In this example James and Martin are in:

             

 

     

If parties to a contract can anticipate the court’s decision in the event of a dispute with some degree of certainty:

         

 

 

     

 

     

_____ is an arrangement between an attorney and the plaintiff, in which the latter agrees to pay a certain fraction of the money he/she wins to the former.

       

Contingency

 

 

     

 

     

Which of the following investments can be classified as specific assets?

     

 

 

         

 

     

In which of these situations is vertical integration most likely?

           

 

     

 

     

Refer to Table 10-1. What would be the combined gain of the two if both breach the unitization contract? The matrix given below represents the payoffs to oil well owners Mike and Frasel if they enter into a unitization contract. Each of the owners know the exact amount of oil in the pool and the market price of oil. Table 10-1

     

 

 

 

 

$20

     

 

     

Which of the following contracts is considered self-enforcing?

       

 

A futures contract purchased through a NYSE broker.

 

 

           

Which of the following features was prominent in the airline industry during the 1950s?

       

 

The airlines served food prepared by their own employees or by other airlines.

 

 

                 

 

     

Which of the following exemplifies specific performance that a court might order from the party in breach of a contract?

       

 

A movie director ordered to work with an actress he had previously contracted with, instead of one he later found was available for a lower price.

 

 

     

 

 

A travel agency enters into a contract with a hotel chain which gives it priority access to 25 percent of its rooms in major tourist destinations throughout the year. The contract encourages the hotel chain to increase the number of rooms in each of these hotels. The investment made by the hotel chain corresponds to which of the following aspects of specificity?

       

 

     

 

     

Suppose Jonah and Carlos have a contract, which Carlos chooses to breach. Jonah sues, and a court orders Carlos to pay him the amount he expected to gain at the time they made the contract, net of any amount he actually did receive after the breach. The form of payment which the court specifies in this example is called:

         

 

 

     

 

     

Which of the following is a problem encountered in a transaction involving a principal/agent relationship?

     

 

 

 

 

     

 

 

A payment arrangement between an attorney and a plaintiff, in which the plaintiff agrees to pay a certain lump-sum amount at the outset and no more in the future, regardless of how the case develops is called:

       

 

     

 

 


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