Questions -

Q1. In December 1978 18 farmer families of the village Xiaogang in the province of Anhui divided secretly among them the land of the commune and allowed each family to grow what they preferred, to work how hard as they wanted and to keep their full harvest. The farmers promised also to care for each other children when one of them was caught by the police. This system was too successful to be kept secret. It was taken over by many villages of the province and finally the PRC- government endorsed in 1982 the system for the whole country.

How would you explain the success of this experiment in terms of costs and benefits?

Q2. Mobile phones are now considered by the law as mobile goods (chattel).

What is the prevailing verification rule for them in civil and common law? Give some economic reasons which are in favour either to maintain this rule or to switch to another verification rule.

Q3. Ms. Gang-Gang, a rich popstar, has acquired a beautiful virgin island in front of the bay of Naples. She has two children from her two former husbands. In her will for her children she made the following provisions: 1. The island is divided up in two equal parts, one for each child. 2. When one child builds a house on his/her parcel, also the others have the right to build.

Suppose the value of a parcel on island in virgin shape is 300 000 €. The value of a parcel with a house, the other parcel remaining unbuilt, is 400 000 €, but the value of the remaining parcel is then lowered to 100 000 €. When both build the value of both parcels is at 200 000 €.

a) Is there a guarantee that both children will choose for the most efficient option? Why or why not?

b) What kind of situations could provide more guarantee for an efficient outcome.

Q4. ' Hence on the morning of September 16, between 100,000 and 150,000 racers gathered along the borders of the outlet. Soldiers with rifles were stationed every 600 yards to stop anyone taking off before the signal. A deaf person thought the signal had occurred and was shot from his saddle as he started early. When the signal was given, at 12:00 noon, the racers surged forward, and the trains, with passengers filling the cars and clinging to the outsides, released their brakes'. (Anderson and Hill, Cowboys and Contracts, p. 511-512)

This passage is about the homesteading of the Cherokee Outlet, now northwest Oklahoma, a strip 226 miles long and 58 miles wide.

Does this passage suggest an efficient way of original assignment? Is there another and more efficient option? Explain.