Suppose an accident will cause $200 in damages if it occurs. Assume that potential injurers can choose between the following four levels of precaution: Spend $5, and the accident will occur with 50% probability; • Spend $20, and the accident will occur with 10% probability; Spend $50, and the accident will occur with 1% probability; • Spend $100, and the accident will occur with 0.1% probability. 8. What negligence standard would be set by following the Learned Hand formula? a) $5. b) $20. c) $50. d) $100.

Suppose an accident will cause $200 in damages if it occurs. Assume that potential injurers can choose between the following four levels of precaution: Spend $5, and the accident will occur with 50% probability; • Spend $20, and the accident will occur with 10% probability; Spend $50, and the accident will occur with 1% probability; • Spend $100, and the accident will occur with 0.1% probability. 8. What negligence standard would be set by following the Learned Hand formula? a) $5. b) $20. c) $50. d) $100.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

Could Question 8 be answered?

Suppose an accident will cause $200 in damages if it occurs. Assume that potential
injurers can choose between the following four levels of precaution:
• Spend $5, and the accident will occur with 50% probability;
• Spend $20, and the accident will occur with 10% probability;
• Spend $50, and the accident will occur with 1% probability;
Spend $100, and the accident will occur with 0.1% probability.
8.
What negligence standard would be set by following the Learned Hand formula?
a) $5.
b) $20.
c) $50.
d) $100.

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