Question: 1. Use a graph to explain the efficiency consequences of a legal standard that exceeds the efficient level of care:
x¯ > x*.
2. "In general, the injurer's precaution responds to court errors in setting the legal standard under a negligence rule." Is this statement true for all forms of the negligence rule, or only for the simple negligence rule?
3. "Excessive damages increase expected liability under a negligence rule, which results in excess precaution." Explain the mistake in this proposition.