Quiz 5 Chapters 9-10
According to Coasian reasoning, if negotiation is costless:
Inclusive property rights provide an investor:
An externality can occur when:r
Which of the following is an example of a possessory property right?
o park your car in your garage.
Lawyer Ayres and economist Levitt considered the net benefits of installing a LoJack from the society’s standpoint positive, because the annual installation and service charges on this equipment was:
Which of the following remedies can be used to prevent the beekeeper and the farmer from breaking the contract?
Assume that the market for executive travel is perfectly competitive. If the availability of time-sharing reduces transaction costs and the owner’s cost of negotiating for a single trip, which of the following situations must occur?
Which of the following exemplifies inefficient legal assignment of rights with high transaction costs?
Which of the following activities can create a beneficial externality?
Under low-cost contracting like that between beekeepers and farmers, the agreement between the two parties is not self-enforcing because:
The _____ gives a hunter ownership rights on a bird killed by him while it was flying over his property.
_____ refers to an enforceable set of promises to take certain actions over the future.
According to economists, an individual who tries to derive utility from the consumption of a good without paying for it is called:
Which of the following was an outcome of uncoordinated oil drilling in Huntington Beach, California?
Which of the following activities can create an external cost?
Fixing a payment schedule in an agreement:
Which of the following is an example of a principal/agent relationship?
Which of the following examples can be associated with the task specificity aspect of an asset?
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:
Which of the following will be an efficient payment scheme for a defendant’s attorney, who is experienced in handling similar cases in the past?
Which of the following may require the parties to renegotiate certain parts of a contract if market conditions change drastically?
_____ is an example of human specificity which raises the risks associated with opportunism.
_____ 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.
Refer to Table 10-1. Under expectation damages, Frasel’s breach of the contract would lower his net payoff to:
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.
_____ is a contract that specifies actions to be taken if various situations come to prevail.
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 contracts is considered self-enforcing?
According to the Coase theorem, if transactions and negotiations are costless:
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:
Escalators present in a contract must state:
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