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Unit 1
Deadweight Loss Problem 1
2/2 points (graded) Vera and Vladimir live in the Arctic. Vera is an expert ice fisher, and Vladimir is an excellent hunter. Neither is any good at the other activity – Vera is a terrible hunter, and Vladimir is awful at fishing.
Vera can only ice fish in the winter, but she can freeze what she catches to eat during the summer. Vladimir can only hunt in the summer, but he can’t freeze what he kills.
It’s winter, and all of the meat that Vladimir killed during the summer has been eaten or has spoiled. He’s hungry. He sees that Vera is still slowly but surely catching fish, and that she isn’t eating all of them – she’s freezing the extras. He asks her if he can have some of her extra fish, but she says no, because she needs to freeze them so she’ll have something to eat in the summer, when she can’t fish. As a result, Vladimir doesn’t have anything to eat.
What is the deadweight loss in this situation?
Vera is freezing her extra fish. Vladimir has nothing to eat in the winter. correct Vera won't have anything to eat in the summer. Vladimir will be unable to eat all of the meat he catches. Answer
Correct:
You are correct. The food is inefficiently allocated between Vladimir and Vera, so Vladimir does not have anything to eat during the winter.
Why is this deadweight loss happening?
Vera and Vladimir do not trust each other; therefore, Vladimir cannot make a promise to give Vera meat in the summer in exchange for fish.
Vladimir cannot fish; therefore, Vladimir is going hungry. They cannot agree on a fair price for fish, therefore Vera does not want
to sell her fish.
Schlumberger-Private
Answer Correct:
This is the correct answer. If Vladimir and Vera figured out a way to trade
their surplus food, they could both have enough to eat throughout the year.
Deadweight Loss Problem 2
2/2 points (graded) Alex and Amy are at a company dinner, where there is exactly one roll of silverware per person.
Amy picks up a roll that accidentally contains two knives and no spoon, and discovers she has no way of eating her soup. Amy buttered and ate her bread.
Meanwhile, Alex opens his roll to see that he has two spoons and no knife. He has some trouble buttering his bread, but he figures out a way to butter it with the spoon. This draws disapproving frowns from those around him. He has no trouble eating his soup.
The dinner is very large, and Amy tries to search the room for someone with an extra spoon. But there are too many people, so she gives up.
What are the deadweight losses in this situation? (Select 2 Answers)
Amy could not eat her soup. Amy ate her bread. Alex made a mess buttering his bread. Amy wasted her time looking for a spoon without any success. Alex ate his soup. correct
Answer
Correct :
Correct. If Amy had the extra spoon, she could have eaten her soup.
Correct. If Alex had Amy's extra knife, he could have buttered his bread
without making a mess.
What is causing it? (Select 1 Answer)
Each person has only one roll of
silverware. Alex has made both of his
spoons dirty.
What were the promises made? Check All That
Apply Professor Fried will attend dinner. Vincent will meet Professor Fried. Professor Fried will contact Portia if his plans change.
Portia will pay Professor Fried $500 for attending dinner. correct Was there an intent to create legal relations? Why or Why Not?
Yes, there was an intent to create legal relations because there was a bargain between Professor Fried and Portia. correct
No, there no intent to create legal relations, because there was no formal agreement between Professor Fried and Portia.
Frolic and Banter?
1/1 point (graded) The law won't enforce contracts that are merely "frolic and banter" -- that neither side takes seriously. Why do you think that is? Please choose the option you think is best, and explain your reasoning in the discussion below.
Courts do not like being in the business of determining what is a joke and what is not, so the burden should be on the people making the agreement to make it clear that the agreement is not a joke. correct
People should be free to be silly without fear of legal retribution. It would be ridiculous for courts to enforce contracts meant as jokes, and society wouldn't stand for it if courts tried to enforce them.
Other reason (please explain in the discussion below)
Legally Enforceable Contracts?
3/3 points (graded) Which of these three situations could be a legally enforceable contract? Read through each situation and decide for yourself.
You and your father have been discussing Bill, a friend of yours whom your father has always considered quite dimwitted. You defend Bill's drive, capabilities, and prospects at his new job, but your father says to you, "If Bill ever gets promoted, I'll give you a million dollars."
Is this a situation that can be a legally enforceable contract?
Yes No correct You are a fan of Argentina's soccer team and your friend is a fan of Germany's. After heatedly discussing the strengths and weaknesses of the two teams for 45 minutes, you each make a bet with the other that if your team wins the World Cup, the other will pay
Mike signs and returns his employment contract to Delivery Services, Inc., but the company refuses to give him any shifts after learning of the regulation.
If Mike sues Delivery Services, Inc. for enforcement of the contract, what is the result?
He would win the lawsuit. The agreement is both legal and moral. Delivery Services Inc. guaranteed at least three shifts each week between the hours specified.
He would win the lawsuit. The agreement is both legal and moral. Delivery Services Inc. is obligated to provide alternative work.
He would lose the lawsuit. The agreement is illegal but moral. Delivery Services Inc. is not obligated to perform its duties under the contract. correct
Which scenarios are enforceable bargains?
1/1 point (graded) Read the scenarios presented below, and select the ones you believe to be enforceable bargains that the law will stand behind.
(Select 2 Answers)
A) Caroline tells her sister Jean that if Jean will run Caroline's business for a month while Caroline is away on vacation, Caroline will make the down payment on a new car for Jean. Jean has wanted a new car ever since she got her Driver's License.
B) Mickey promises his son Michael, while he is dropping him off at his first day of college, that Mickey will give him $200 of spending money every month.
C) A grandfather tells his granddaughter that if she quits her job, he will provide her with an income.
D) Elsa promises her nephew Edgar that if he leaves his job to go back to business school, she will pay his expenses for the two years he is in school, as long as he chooses to attend a school in Boston, where Elsa lives, and agrees to visit Elsa once a week. correct
Scenario 1
2/2 points (graded) Beth gets the following email from her best friend Anne:
On Thursday, April 3, at 2:52 PM, annelovescookies@email.com wrote:
Oh my gosh, Beth, I NEED your help. I forgot that I am hosting a party for my niece’s graduation this weekend. I don’t have any sort of food arranged.
If Beth responds, agreeing to bake the 100 cookies, can she hold Anne to her side of the bargain?
Yes No correct
Why or why not? Apply the principles Professor Fried has discussed thus far. Which two principles are most relevent to this case?
Is there an Intent to Create Legal Relations? Are Both Sides Serious? Is this a Gift or a Bargain? Is this a Legal and Moral contract?
Multiple Choice
0/1 point (graded) Why did Mrs. Demotsis argue that this was not an enforceable bargain?
The exchange rate was awful. Mrs. Demotsis proposed the exchange and Mr. Batsakis agreed to it without asking for any additional terms, so there was no bargaining.
Mr. Batsakis hadn’t given the drachmae in exchange for anything, so this was a gift. The two parties hadn’t intended to create legal relations.
Multiple Choice
1/1 point (graded) The court decided that Mrs. Demotsis and Mr. Batsakis’ deal was a bargain (although maybe a bad one). What was Mr. Batsakis compensated for?
A. Bargaining expenses B. Compounding interest from the date he made the loan to Mrs. Demotsis C. Risk correct D. Litigation expenses
Drag and Drop
1/1 point (graded)
Is an auction a fair way to settle on a price for something? Which details might imply that an auction is fair or unfair? Label each detail using fair or unfair.
Detail Fair or Unfair?
Advertising the Auction in a populous city correct
Fair
Advertising the Auction in a deserted area correct
Unfair
Holding the auction in a deserted area correct
Unfair
Holding the auction in a populous city correct
Fair
Limited number of bidders (^) correct
Unfair
Sellers Designating a minimum bid price for their items
correct
Fair
Winning bid is much less than the item’s actual value
correct
Unfair
Numerical Input
2/2 points (graded)
General Average Problem
You’ve just learned about the concept of general average. Try applying it to the following hypothetical:
Take into account special and changing circumstances
correct
Good Bargain
Have unequal exchanges (something for nothing)
correct
Sad Bargain
Take into account risk (^) correct
Good Bargain
Comprehension Check
1/3 points (graded) In Batsakis v. Demotsis, the circumstances that lead to the agreement were no fault of either party. In this case, who caused the difficulties that led to this bargain?
The Boyfriend and His Associates correct The Boyfriend's Associates incorrect The man who caused the car accident No particular party was at fault
Answer Incorrect:
The boyfriend's associates were not the only parties to complicate this bargain. Explanation By contrast to Batsakis v. Demotsis, in the Car Accident, her boyfriend and his associates had caused the difficulties that led her to make the deal. The correct answer is boyfriend and associates, not just boyfriend.
I n Po s t v. J ones , we l e a rne d ab o ut wha t ma kes a g oo d b a rg a i n. When the woman sold her annuity, was this a good or bad bargain? Why?
Good Bargain: The boyfriend's associates paid a lower price to account for the risk that they might not be paid.
Good Bargain: The woman received a fair price for her annuity. Bad Bargain: The bargain was unequal, because the woman got nothing in exchange for the lower price she was paid. correct
Bad Bargain: The boyfriend's associates benefitted from pure luck.
Answer
Correct:
Correct. The bargain was unequal because the associates paid far less than
the annuity was worth-- she got nothing in return.
Based upon your answer to the two questions above and what you know from Batsakis v. Demotsis, how do you think this case worked out? Why?
The contract was enforceable, because both parties were serious about this bargain and intended to create legal relations.
The contract was enforceable, because neither party was at fault for the circumstances and the value paid was fair.
The contract was unenforceable, because the boyfriend's associates benefited from pure luck when the woman sold the annuity for less than it was worth.incorrect
The contract was unenforceable, because one party was at fault for the circumstances and the price paid was unfair. correct
Alaska Packers: Bargain?
1/1 point (graded) What makes Alaska Packers look like a bargain? (Select Two Answers)
A. The workers exchanged labor for payment. B. The new contract price ($100) was the customary rate to pay summer workers. C. The company and workers agreed to and signed new contracts. D. Neither party was at fault for the causing the other to enter the agreement.
Are they the same?
1/3 points (graded) The court in Alaska Packers decided that the workers’ new contract was not a bargain. Using the court’s reasoning in deciding the case, which of the following situations are analogous?
A. Alfred offers to sell Betty his car for $1,000. Betty decides she wants to do some comparison shopping before she accepts Alfred’s offer, so she tells him she’ll get back to him. After a week, Betty still cannot find as good a deal as Alfred offered her. She calls Alfred and tells him she’ll buy his car. However, Alfred now tells Betty that he’ll only sell if she pays him $2,500. Betty accepts.
Yes incorrect No correct Explanation A. Alfred and Betty’s situation is different because they have not formed a contract. When Betty tells Alfred that she’ll get back to him, that is a rejection of his offer. Although Betty later tells Alfred that she’d like to take him up on his original offer, Alfred is under no legal obligation to uphold this offer. B. Alfred places an ad in the newspaper saying he’ll sell his car for $1,000. Betty calls Alfred and says she’d like to buy the car if it’s still available. Alfred tells her it is and to come by to pay and pick it up. When Betty gets to Alfred’s house, Alfred asks her if she’d like to take the car on a test drive. Betty says “Of course!” and they drive 30 minutes into the desert. The two pull the car over and get out to admire the sun setting across the deserted stretch of sands. Betty turns around to find that Alfred has gotten back into his car and locked the doors. Alfred rolls down the window and tells Betty that he’ll leave her in the desert unless she now agrees to pay $2,500 for the car. Betty accepts.
Is it analogous?
Yes correct No incorrect Explanation B. This situation is analogous to Alaska Packers because Alfred and Betty have formed a contract when Betty calls to buy the car and Alfred accepts her offer. By threatening to leave Betty stranded in the desert at nightfall unless she agrees to an increased price, Alfred essentially has her over a barrel and sells her the same thing twice, similar to the workers in Alaska Packers. C. Alfred offers to sell Betty his car for $1,000. Betty accepts but tells Alfred she needs to sell her current car to get the money together, but will come to pay and pick up the car the next Wednesday and he says "Ok." When Betty shows up at Alfred’s door with the $1,000, Alfred tells her that he’ll only let her have the car if she pays him $2,500. With no other way to perform her job as a pizza delivery person, Betty agrees to pay the increased price.
Is it analogous?
Yes correct No
Self Assessment
8/10 points (graded)
