We examined in class empirical evidence about the cause of the dramatic decline in crime in the United States in 1990. (Do not be concerned that each of the studies had its critics)

1. What are two socio-economic factors that were found to be correlated with the decrease in crime cited above? Explain the economic theory behind the hypothesis in each case.

2. True, False, Uncertain and explain. Your grade depends on your explanation.

Answer A OR B:

A. A risk averse plaintiff would be more likely to settle under the English than American rule for recovery of litigation costs.

OR

B. Under strict liability, consumers pay for any expected tort damages the manufacturer is expected to incur in the future.