Can Question 10 be answered? Assume that there are two parties, I and V.I engages in an activity that tends toinjure V. V and I both can take care to reduce the expected harm from accidents.Specifically, suppose that if I takes no care (i.e., spends $0 on accident precautions),expected injury to V is $250. If I spends $40 on accident precautions, however, theexpected injury to V is reduced to $175. Further suppose that V has a choicebetween taking no care or spending $50 in care to avoid accidents. If V spends $50in care, V's expected harm falls by $20 regardless of the level of care that I takes.Assume that courts adopt the socially-optimal level of injurer care as thenegligence standard. That is, if I takes less than the socially-optimal level of care,she will be found negligent and must pay for all damages to V. If I takes at least thesocially optimal level of care, she will not have to compensate V for his damages.Under a negligence standard, what is l's dominant strategy?a)b)c)d)e)I does not have a dominant strategy.Spend $0 on precautions.Spend $40 on precautions.Spend $40 on precautions only if V takes no precautions.None of the above.10.Following question 9, under a negligence standard, what is V's dominant strategy?a)c)d)e)V does not have a dominant strategy.Spend $50 on precautions.Spend $50 on precautions only if I takes no precautions.b) Spend $0 on precautions.None of the above.9.

Dominant strategy refers to the situation where the person can maximize his benefit regardless of the other person decision.10 The person I can maximize his pay-off by selecting the option of paying $50 regardless of the other person’s choice. Thus, option ‘c’ is correct. Sine all other options value does not equal to $50, all other options are incorrect.

Business

Economics

Following question 9, under a negligence standard, what is V's dominant strategy? a) c) d) e) 10. V does not have a dominant strategy. Spend $50 on precautions. Spend $50 on precautions only if I takes no precautions. b) Spend $0 on precautions. None of the above.

Following question 9, under a negligence standard, what is V's dominant strategy? a) c) d) e) 10. V does not have a dominant strategy. Spend $50 on precautions. Spend $50 on precautions only if I takes no precautions. b) Spend $0 on precautions. None of the above.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

How is the Rational decision making a complex process?
Can you please give me more details for each questions. I need more information. Thanks
Answer this question
evaluate if the United States has been a leader in the global economy in recent decades. answer in 3 to 5 sentences
What is an Economist
economic factors thst affect healthy eating
please provide explanation. answer is incorrect
so am I correct?