Economics

  1. The no-fault divorce law

Thelaw entails divorce whereby the party filing for it does notnecessarily need to prove faults on the other party or rather spouse[ CITATION Sim98 l 1033 ].

  1. They lower the implicit price of divorce. This is because, the courts do not have to undertake costly procedures to determine who is at fault.

  2. The quantity of marriages would tend to rise due to the relatively lower costs involved. Marriages are less binding with parties involved viewing it as a form of agreement. In that case, if one changes their mind he/she is allowed to back out. In that regard, the quality of marriages decreases since individuals enter marriages with cynical views. Soul mates do not commit 100% to the marriage like before the advent of the rules.

  3. The old laws would lead to reverse impacts. In other words, the quality of marriages will increase. It would mean couples will most likely get involved in marriages when they are sure of it. They would be reinforced with binding acts. It may also decrease the quantity of marriages since others may be scared of it. Generally, there would be fewer, more costly divorces and probably better quality marriages.

  1. Situations having high transaction costs

Therankings from the highest to lowest transaction cost may be asfollows

  1. Smoking on a commercial airline flight

  2. Smoking in a public area

  3. Smoking in hotel rooms

  4. Smoking in private rooms

Thetransaction cost on a commercial airline flight ought to be very highcosts of transaction thus requiring private bargaining.Individualswithin an airline are exposed directly to the smoke whether they aresmokers or not. Additionally, they may suffocate since airventilations are not sufficient. In that regard, a smoker not onlyposes a threat to non-smokers rights but affects their quality oflife. The non-smokers are forced to inhale low quality air at theexpense of smokers. Smoking in public area may also tend todetrimental enough to have rather high costs transactions almost asclose to the commercial airlines. A public area may be a place wherepeople convene, not by choice but necessity. Therefore, affecting thequality of air is not acceptable to non-smokers who have the right tobreathe quality air.

Smokingwithin a private residence has low transaction costs and does notelicit private bargaining. People have the right to own properties.In that regard, if a smoker smokes within his/her residence,questioning them is necessary. The smoker is within his/her premisesand not interfering with anyone’s rights. If a non-smoker is aroundthen he/she has no right to question the other party. A smokertherefore has the right to smoke without questioning from any otherparty.

  1. Economic function of contracts

Theone shot game contractual term. It entails a one-time agreementinvolving contracting parties that is not expected to happen again.In this agreement, the two parties agree on particular terms and arenot supposed to do it again in future. In that regard, the CEO shouldconsider the agreements made before the commencement of theirdealings and make decisions based on it [ CITATION Kru14 l 1033 ].

Therepeated game contractual term. This one entails current relationsinvolving the contracting parties which is equally beneficial. Thetwo contracting parties are continually involved in particular termsthat tend to benefit of them. Therefore, the CEO would consider thebeneficial aspects of the trade.

Therelations between the company and the other firms will determinewhether prices should be reduced or not. If it is a one-timerelation, then normal prices would be enforced since it cannot hurtfuture business relations. On the other hand if it is a continuousrelation and may affect future relations, then it is necessary toassist them to keep hold of the relationship [ CITATION ohi15 l 1033 ].

References

Krugman. (2014). Oligopoly. Oligopoly, 209-221.

ohiodec.org. (2015). Pricing, Quotations, and Terms. Pricing, Quotations, and Terms, 147-165.

Simmons, C. W. (1998). Readings on no-fault divorce. Readings on no-fault divorce.