Suppose that courts begin imposing higher fines on car manufacturers that build cars that occasionally malfunction and harm consumers. Car manufacturers can make expenditures that decrease the likelihood of malfunctioning. Does the change in the court’s behavior change the expected marginal benefit of avoiding an accident or the marginal cost of avoiding an accident? What happens to the rate of product malfunctions? Research and provide one example of a car manufacturer that recalled vehicles. What was the impact on profit, reputation? Where they fined by the courts? Was there litigation involved? Did they settle? (500 Words)

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The detailed answer for the above question is provided below The marginal cost of averting an accident would go up for automakers due to the shift in ... View the full answer