You accidentally jump the curb and run over your neighbor's extensive garden gnome collection. Your neighbor sues you and you are required to pay $3,000 to replace the gnomes. This is an example of
A) the Coase theorem.
B) a liability rule.
C) an injunction.
D) the free-rider problem.

Question

Quizplus · Accepted Answer

This is an example of a liability rule, where the party responsible for the damage (in this case, running over the garden gnomes) is required to compensate the affected party financially.

You Accidentally Jump the Curb and Run Over Your Neighbor's