Andy's Oyster Bar in Maine sells raw oysters in a perfectly competitive Oyster Bar market. While...

     

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Andy's Oyster Bar in Maine sells raw oysters in a perfectly competitive Oyster Bar market. While delicious, eating them may come at a risk. Suppose the odds of a person getting sick from oysters depends on the level of care Andy provides when shucking them. The cost of producing a plate of oysters depends on how much care Andy provides according to the following table: Probability of Illness Level of Care Low High Person A B C The harm when getting sick from eating oysters is $100. Andy serves six customers who have the following value of a plate of oysters (not including the potential illness) D 10% E F 1% Cost of Shucking per Serving 8 14 Value of Oysters 25 19 17 16 12 9 What is the efficient level of care when preparing oysters? [Select] What is the efficient quantity of oysters to sell? [Select] Suppose food laws require sellers to be strictly liable for illness resulting from oysters sold. What level of care does Andy provide? [Select] What price does Andy charge? [Select] How many oysters does he sell? [Select] It is a perfectly competitive market. Pro-business lobbyists in Maine successfully get legislatures to remove all liability for oyster related illnesses for oyster bars. This is an attempt to boost the industry and profits. What happens with no liability? Assume customers can see perfectly the level of care being provided in an oyster bar (shucking is done in front of them), and can perfectly determine risk as a result. What level of care does Andy provide? [Select] What price does Andy charge? [Select] How many oysters does he sell? [Select] Assume there is no liability for oyster bars as above, but perhaps customers aren't all that good at assessing the risk of oyster illness themselves. Suppose customers assume the risk of getting sick from oysters is 10%, regardless of how much care is provided. What level of care does Andy provide? [Select] What price does Andy charge? [Select] How many oysters does he sell? [Select] Andy's Oyster Bar in Maine sells raw oysters in a perfectly competitive Oyster Bar market. While delicious, eating them may come at a risk. Suppose the odds of a person getting sick from oysters depends on the level of care Andy provides when shucking them. The cost of producing a plate of oysters depends on how much care Andy provides according to the following table: Probability of Illness Level of Care Low High Person A B C The harm when getting sick from eating oysters is $100. Andy serves six customers who have the following value of a plate of oysters (not including the potential illness) D 10% E F 1% Cost of Shucking per Serving 8 14 Value of Oysters 25 19 17 16 12 9 What is the efficient level of care when preparing oysters? [Select] What is the efficient quantity of oysters to sell? [Select] Suppose food laws require sellers to be strictly liable for illness resulting from oysters sold. What level of care does Andy provide? [Select] What price does Andy charge? [Select] How many oysters does he sell? [Select] It is a perfectly competitive market. Pro-business lobbyists in Maine successfully get legislatures to remove all liability for oyster related illnesses for oyster bars. This is an attempt to boost the industry and profits. What happens with no liability? Assume customers can see perfectly the level of care being provided in an oyster bar (shucking is done in front of them), and can perfectly determine risk as a result. What level of care does Andy provide? [Select] What price does Andy charge? [Select] How many oysters does he sell? [Select] Assume there is no liability for oyster bars as above, but perhaps customers aren't all that good at assessing the risk of oyster illness themselves. Suppose customers assume the risk of getting sick from oysters is 10%, regardless of how much care is provided. What level of care does Andy provide? [Select] What price does Andy charge? [Select] How many oysters does he sell? [Select]