ECO320 Midterm 1 Review Notes ( excellent study guide )

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ECO320 Midterm 1 Review Notes Lecture 1- ECO Law Introduction  The “central problem” is optimality in the economic analysis of law:  The “problem” for “lawmakers” is to maximize s... ocial surplus: What does one mean by a law?  A law is a rule that may or may not have economic consequences for an individual person or a group Where do “laws” actually come from?  Custom  Judicial Precedent (Common Law)  Statutory Legislation  Executive Decision – Making So some forms of economic analysis of laws use:  markets without private goods (Intellectual Property)  markets with “bads” (crime)  markets without prices (marriage, domestic contracts) Private Goods  Property Rights o Right To Pollute o Right To Enjoy Property Free of Pollution o Right To Contract on Property Rights o Right To Damages and/or an o Injunction for Breach of Contract  Private Bads o Torts o Intentional o Pollution o Assault o Fraud o Unintentional o Negligence Economics concerns questions like:  Will a reduction in the capital gains tax make the stock market rise?  Will higher tariffs make consumers better off?  Will increased prison terms reduce crime?  Will easier divorce improve the status of women?  Do stronger copyright laws promote creativity?  Will a high-price (meaning low volume of sales) strategy lead to more profit for a firm than a low-price strategy?October 12, 2018 In each area of the course, the following questions arise?  Does a law (rule), over time, become o More Efficient? o More Competitive? o More Optimal? Market Demand  Market Demand is less reactive to legal changes o (i) motivation of black markets or illegal markets o (ii) behavioural changes tend to be long term o (iii) population and income changes – both slope and positional shifts – economic analysis of criminal law  economic analysis of family law  In the simplest approach – one could choose the “benchmark” perfectly competitive market  Only “price is considered”  Example – A law that enhances the quality, safety or attractiveness of a good? [Show More]

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