Economics Analysis of Law

A complete guide to writing a Law and Economics assignment

Writing an assignment on Law and economics can be difficult for many. To write it, you need to do thorough research and have a clear understanding of the concepts. If you are struggling to write a winning Law and economics assignment, this blog will surely help you.

In this blog, I am going to discuss the following points

• What is Economic Analysis of Law? It’s Definition.
• The Basic Concepts of Economic analysis of law
• Types of Economic analysis of law
• Some examples of economic laws
• How to manipulate the law of demand and supply?
• How do you calculate supply and demand?
• The Book - A Brief Review of Microeconomic Theory

Now, let us get into the details of writing a stellar Law and economics assignment.

What is Economic Analysis of Law? It’s Definition.

The economic analysis of law, also known as the Law and Economics, is the application of microeconomic theory to the analysis of law. It primarily focuses on economic efficiency and predicts the legal rules that will be promulgated. It discusses the behaviour of the lawmakers, judges, district attorneys, and bureaucrats.

Law and economics answer to the following questions about legal rules:

• What are the effects of the legal rule on the behaviour of the legal actors?
• Are these effects of legal rules socially desirable?

The basic concept of economic analysis of law

Now that you know the meaning of economic analysis of law, let us proceed to know the basic concepts on the economic analysis of law.

Applying economics to the law can explain the consequences of legal outcomes and laws in terms of their economic and social impact. Therefore, the economic analysis of law uses economic principles and methods to evaluate how efficiently legal outcomes and laws advance legal and moral objectives. Economic analysis of law is usually divided into two subfields. They are Positive law and economics and Normative law and economics.

Types of economic analysis of law

There are two types of economic analysis of law. One is Positive analysis of law, and the other is Normative analysis of law.

1. Positive economic analysis of law – Positive analysis of law seeks to understand how the behaviour of the people is affected by incentives created by the law. The law uses fines, penalties, and many other measures to price the various forms of human behaviour.

Therefore, these factors alter the balance of costs and benefits that the individuals face while deciding whether to engage in a certain behaviour or not. The positive economic analysis of law can further be subdivided into the following:

• Positive theories of legal doctrine
• Legal impact analysis

2. Normative economic analysis of law – Normative economic analysis of law presents an efficiency criterion for shaping the legal system depending on wealth maximization. Wealth maximization is based upon a person’s willingness to pay for something. If you take it in the legal context, this approach questions how much an individual would be willing to pay to either keep certain rules and laws or get rid of it.

Are you still not clear with the concepts of Economic analysis of law? Read the book ‘A Brief Review of Microeconomic Theory’ for understanding the concepts better.

The Book - A Brief Review of Microeconomic Theory

This book deals with the Economic analysis of the law that draws upon the principles of microeconomic theories. Those who are struggling to write their assignments on Law and Economics can refer to this book for a better understanding of the concepts.

1. Overview: The Structure of Microeconomic Theory

In this section, you will get an overview of the structure of Microeconomic theories.

Microeconomic theories offer a theory on economic decisions and actions of individuals and firms. In this book, the study of Microeconomics has been divided into five sections. They are listed below:

1. The theory of consumer choice and demand
2. The choices made by business organisations or firms

iii.    How the consumers and the forms interact

1. The demand and supply for inputs into the productive process
2. Welfare economics

Other theories that are discussed in details in other sections are the game theory, the economic theory of decision making under uncertainty, growth theory, and behavioural economics. 

2. Some Fundamental Concepts: Maximization, Equilibrium, and Efficiency

Maximization, Equilibrium, and Efficiency are the fundamentals of explaining economic behaviour in markets that involves the interaction of different people.

There is an important link between Maximization and Equilibrium in Microeconomic theory. One has to characterise the behaviour of individuals and groups as maximizing something. This maximizing behaviour of the individuals or groups pushes them to the equilibrium. Though they do not intend for the equilibrium, they just try to maximise the things that interest them. Therefore, the interaction of the maximizing agents results in the equilibrium. 

As per the Economists, there are many definitions of efficiency. Pareto efficiency is one of a kind. A situation is said to be Pareto efficient if it is impossible to change it to make at least one person better off without making the other person worse off.

3. The Theory of Consumer Choice and Demand

In this particular section, you will learn how the theory of Consumer choice and demand explains the consumer’s choice of what services and goods to purchase and in what amount. This section is further divided into the following:

1. Consumer preference orderings
2. Utility Functions and Indifference Curves

iii.   The Consumer’s Optimum

1. A Generalization: The Economic Optimum as Marginal Cost Marginal Benefit
2. Individual Demand

4. General Equilibrium and Welfare Economics

Welfare Economics describes how the decision of individuals and firms interact to affect the well-being of individuals as a group. The great policy issues are raised, some of which are listed below:

• Is there any conflict between fairness and efficiency?
• When and how should the government intervene in the marketplace?
• To what extent can unregulated market maximise individual well-being?
• Can economics identify a just distribution of goods and services?

Hence, this material is fundamental to the economic analysis of the legal rules.

5. Decision Making Under Uncertainty: Risk and Insurance

In this section, you will learn that uncertainty should not cloud the decision. It is a simplifying assumption. The assumptions are listed below:

• Expected monetary value
• Maximization of Expected Utility: Attitudes toward Risk
• The Demand for Insurance
• The Supply of Insurance

Some examples of Economic laws

Now once you are clear about the types of Economic analysis of law, it is time to check out some examples of economic laws. A few of them are listed below:

• Baxter’s law
• Bowley’s law
• Campbell’s law
• Diminishing returns
• Engel’s law
• Gibrat’s law
• Gresham’s law
• Hotelling’s law
• Hicks-Marshall laws of derived demand
• Iron law of prohibition
• Law of one price
• Law of demand
• Law of supply
• Law of rent
• Lucas wedge
• Law of increasing cost
• Metcalfe’s law
• Marginal utility
• Monetae cudendae ratio
• Pizza principle
• Okun’s law
• Reed’s law
• Say’s law
• Supply and demand
• Varian rule
• Thirlwall’s law
• Verdoorn’s law
• Wagner’s law

Owing to the long list of the types of laws, students often find it hard to write a stellar paper. In case the efforts fall short, it is always wise to seek help from the professors.

How to manipulate the law of demand and supply?

The law of demand and supply explains the interaction between the supply of a good and the demand for that good. The theory defines the effect that the availability of a particular good and the demand for that good has on its price. Hence, low supply and a high demand increase the price, whereas a greater supply and a lower demand decrease the price. 

Manipulating supply and demand won’t be that difficult since there are only two variables involved, i.e. supply and demand. To gain control over the pricing and the profit margin you must gain control over the supply and the demand of the goods.

Let’s put the law of supply and demand into a real-world scenario.

• Price decreases if the supply increases and demand remains the same

Let’s take the example of Onions. If the weather is perfect for growing onions, it increases the supply. As a result, the price drops so that the vendors can sell all the onions they have.

• Price increases if the supply decreases and demand remains the same

Now, if the supply of the onions remains the same, but all of a sudden the demand for the onions increases, it means the price of the onions will increase. The reason is that now people are competing for a fixed quantity of onions.

• Price decreases if the supply remains the same, and the demand decreases

Now, on the other hand, if the supply of the onions remains the same, but only a few people wants to buy the onions, then there would be a decrease in the price. It’s because of the oversupply of the onions.

How do you calculate supply and demand?

Now let us look at how to calculate supply and demand.

To do this, you need to follow some simple steps.

1. Calculate the supply function.
2. Calculate the demand function.

iii.    Solve for equilibrium price.

1. Plug equilibrium price into the supply function.
2. Validate the result by plugging price into the demand function.

Let’s look at an example to illustrate this.

A linear supply function and a linear demand function looks like Q_S = mP + b and Q_D = mP + b respectively. Here,

m = slope of the function

b = represents the y intersect.

P = price

Now, let us suppose we have two equations for demand and supply.

• Equation 1:Q_D = 40 – 2P
• Equation 2: Q_S= -10 + 2P

To find the value of P, put the two equations together.

40 - 2P = -10 + 2P

⇒ - 4P = - 50

⇒ P = 50/4

⇒ P = 12.5

Now, to find the value of Q, just put this value of P into one of the equations. Here I am putting it in the first equation.

Q_D= 40 – 2P

⇒Q_D= 40 – 2(12.5)

⇒Q_D= 40 – 25

⇒Q_D= 15

Now to check if it attains the equilibrium, put the value of P in the other equation.

Q_S= -10 + 2P

⇒Q_S= -10 + 2(12.5)

⇒Q_S= -10 + 25

⇒Q_S= 15

Therefore, Q_S= Q_Dwhen P = 12.5

After going through this blog, you will get a better understanding of what is Economic analysis of law, its concepts, its types, its examples and the procedure to calculate it.

Are you looking for Law and Economics assignment help? Hold the hands of the experts of MyAssignmenthelp.com

Are you anxious about meeting the submission deadline or having difficulties in solving difficult economic scenarios? If your answer is a yes, then congratulations to you. You are in the right place. At MyAssignmenthelp.com, we have a team of experts who provide premium quality Law and Economics assignment help to every individual.

Our experts follow the university guidelines and write every assignment from scratch. We have more than 5000 experts who have delivered around 930663 orders over a decade. We have satisfied thousands of students with a client rating of 4.9 out of 5.

Are you still not convinced? Take a look at the benefits of hiring our Law and economics assignment experts:

1. We assist students across the world from different universities
2. We cover a wide range of Law and Economics topics
3. We deliver the assignments on time
4. We charge reasonably for our services
5. We provide unlimited free revisions

So, do not fret around and waste your time. Hire the Law and Economics assignment experts of MyAssignmenthelp.com and secure top grades.