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# Negligence as Determined by the Marginal Hand Rule

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Consider a barge owner who is deciding whether to post an attendant on his barge to make sure that it remains properly moored to the pier. The following table gives the total cost of hiring the attendant,the probability of an accident, and the ...xed cost of an accident:
Cost of care Probability Damage
No attendant posted \$0 0.25 \$400
Attendant posted for 24 hours \$94 0 \$400

(a) Calculate the marginal cost and marginal bene...t of posting the attendant. According to the marginal Hand Rule, would the barge owner be found negligent for failing to post an attendant?
Now suppose that the barge owner had a third option: post the attendant only during the day. The data for this option are as follows: Cost of care \$50, Probability of an accident 0.10, and Damages \$400.
(b) Assume that the barge owner's only two options are "no attendant"and "post an attendant during the day." In this case, would the owner's failure to post an attendant be judged negligent by the marginal Hand Rule?
(c) Assume that, prior to the accident, the owner had posted an attendant during the day. Suppose that the victim claims that the owner is negligent for not having posted the attendant for 24 hours. Use the marginal Hand Rule to evaluate the merits of this claim.
(d) For each of the three options: "no attendant," "attendant during the day,"and "attendant for 24 hours," calculate total expected costs (costs of care plus expected damages). Which option minimizes this total? Reconcile the result with your answers to (a)-(c).

https://brainmass.com/economics/economic-analysis-of-law/negligence-as-determined-by-the-marginal-hand-rule-105836

#### Solution Preview

The Hand Rule for determining negligence was formulated by Judge Learned Hand in U.S. v. Carroll Towing Co. The defendant is considered negligent if the burden of the undertaken precaution is less than the expected harm. The marginal Hand Rule states that the defendant is negligent if the marginal cost of the precaution against damage is less than the resulting marginal benefit. Mathematically, this is stated as B <PL, where B is the burden (marginal cost) of the precaution, P is the marginal probability of damage, and L is the liability (cost of the accidental harm).

In the first case the cost of marginal social benefit of ...

#### Solution Summary

Negligence as determined by the marginal Hand Rule.

\$2.19

## Global Economics in Mexico after NAFTA

Scenario: Acme Automotive is one of the major US producers of automobiles in Mexico. You have been sent to the Acme automotive plant in Nuevo Laredo, Tamaulipas, Mexico as the new Operations Manager to respond to recent declines in employee morale, productivity, and cost effectiveness at the Nuevo Laredo plant in the past 12 months. Talk of union organizing is of utmost concern to your supervisor in terms of short run and long run costs of production. Your job is to investigate the productivity/cost effectiveness problem and make recommendations to top management for goals and strategies in line with the Acme Vision.

Your first day at the job, you receive the following letter from a disgruntled employee:

(Note- the 'Maquiladoras' to which the writer refers, is the word for companies that process Mexico-imported components, then export them.)

Dear Sir:

I've been working in Maquiladoras since I was 20 years old, and now I'm 27. I've gotten more and more worried, because my job is ruining my health and I have no way out.

Now I work at Acme, where I've been for about a month and a half. "You could say it's forced labor, considering how the foremen talk to the workers and how much psychological pressure they put on people. We work an average of 14-15 hours a day. There's no transport service to and from work, and we get off the shift at 4 o'clock in the morning. Usually we have to wait until 7 AM before we can catch a public bus. And when a bus does come, getting home costs 20 pesos. That makes a very big dent in your take-home pay - 380 to 400 pesos a week (\$40-43).

My job is bending steel cables...which are about a centimeter thick, and I have to bend about 3500 a day. Because of what's passing through my hands every day, I can hardly sleep at night - the pain is so bad. Then I have to get up in the morning to do it again. In the future, I know that I can get carpal tunnel problems, which is a very scary idea. I've asked to change to another position, but no one wants to change because whoever works in this job gets a lot of pain in his wrists.

I feel that in three or four years my hands are going to be useless. I've been thinking that I'll have to get another job. What else can I do? They say work in the Maquiladoras is the best paid work here in the city. But there's not much difference from one factory to another.

This is all just normal - the standard. Really, I'm living my whole life in the factory. Because of the time and money pressure, I have no ability to develop myself even as a worker, much less as a human being."

After I had been working in Acme for a month, I went to my supervisor with my concerns about health and safety problems at the plant. He told me that I was putting the Maquiladora workers in danger by making waves. I know that the company's goal is to cut production costs and increase the profits from the engines we produce, but I am hoping you will consider the plight of the poor Mexican workers. I am hoping you will see through our eyes as well as from the eyes of the company officials.

Yours truly,

Enrique Santiago

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***Deliverable Length: 4-5 pages, proper APA formatting, list all reference cited sources.

Details: You are laying the groundwork for Acme's deployment of key lead operations managers and top level personnel to international manufacturing plants. As such, one expectation the company has for you is that you will research and write relevant economic white papers for the pre-orientation of future deployed employees.

Write a 4-5 page white paper which will help employees understand the economic experience of Mexico since NAFTA. Issues you may want to cover include, but are not limited to, trade liberalization, national sovereignty, worker rights, World Trade Organization and committees, relationship with World Bank and IMF, types of economic development.

References:

World Bank Group. Global development finance 2001. Retrieved January 7, 2004, from http://www.worldbank.org/prospects/gdf2001/vol1.htm

World Bank Group. (2001). Mexico - A comprehensive development agenda for the new era. Retrieved January 7, 2004, from http://wbln0018.worldbank.org/External/lac/lac.nsf/Publications/9364AB8A25BABD6085256A4C004B3963?OpenDocument

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