ECON 303 LAW and ECONOMICS Semester ONE 2022

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LAW and ECONOMICS

ECON 303: Take Home Test, Semester ONE, 9 June 2022

Please Answer ALL SEVEN Questions: MAXIMUM 400 WORDS per Question

Each question is worth 10 MARKS

Where there are several parts to a question, each part carries equal weight

QUESTION 1: Do the aims of the law always align with good economic outcomes? Can they conflict with one another? Give examples to back up your arguments.

QUESTION 2: Give a definition of the word “institutions”. Explain why countries that have weak

property rights may not always try to reform them in order to promote economic growth. NZ is regarded as having high quality institutions … so could there be another reason why our  economic growth has been disappointing compared to other OECD countries?

QUESTION 3: Assuming property rights are defined over all goods & services and no market

failures exist, can free markets achieve a welfare optimum? Choose one market failure and explain how it could be potentially corrected by a government regulation. Could it still not be beneficial to attempt such an intervention?

QUESTION 4: Explain how the common law of torts can be used to help resolve market failures. Even without tort law, could it still be possible for private citizens and markets to resolve situations where one party can potentially harm the other one? Could there be any relation between the criminal law and people’s beliefs about how the economy works?

QUESTION 5: Could legal interventions that affect our economic life and take the form of either  taxes or regulations by the government not be motivated by solving market failures? Give some examples.

QUESTION 6: Could corporate social responsibility reduce social welfare? Is it best to leave

attempts to increase the social good to law-makers (that is, politicians) rather than corporate managers? Give arguments both for and against the banning of highly controversial figures from social media by corporate bosses, even when their writings do not break the law.

QUESTION 7: Does the case of China lend weight to an argument that the rule of law is not important to building long-term economic prosperity?