8.Sanctions are costly to impose and lead to societal costs if imposed on individuals who will otherwise be undeterred.There are three types of parties:A's, who obtain a benefit of $500 from committing an act that causes harm of $100; B's who obtain a benefit of $40 from committing the act; and C's who obtain a benefit of 70 from committing the act.Assume that the maximum feasible sanction creates a disutility for the actor (whether A, B or C) of $50.If the state possesses perfect information,

a.all three parties actors should be sanctioned for committing undesirable acts because the acts have a net loss of $100.

b.only the A's should be punished with the maximum feasible sanction.

c.only the B's will be deterred by the maximum feasible sanction.

d.only the C's will be deterred by the maximum feasible sanction.

e.all parties should be punished with some sanction less than the maximum feasible one.

9.Same basic facts as question 8.If the state now has imperfect information and cannot distinguish between the B's and the C's.

a.If there are 100 A's, only 1 B and 1,000 C's, a reasonable sanction might be $0.

b.If there are 100 A's, 1,000 B's and only 1 C, a reasonable sanction might be $70, so as to deter 1,001 individuals.

c.If there are 100 A's, 1,000 B's and only 1 C, a reasonable sanction is $0.

d.If there are 100 A's, 1,000 B's and only 1 C, a reasonable sanction is $40.

e.All of the above are reasonable and feasible sanctions.

f.None of the above distributions and sanctions make sense.

g.Both (a) and (d) are possible feasible sanctions, but (b) and (c) are not.