One Million Automobiles Have a Defect That Could Cause the Car

question 53

Essay

One million automobiles have a defect that could cause the car to explode; however,only one of those cars will actually explode.Nobody knows which one car it is.When the car does explode,the victim's family will sue the automaker for $1 million and win.The defect costs $2 per car to repair.What does economics predict about the automaker's decision to repair the defect?

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Definitions:

Social Skills

Abilities necessary for effective interpersonal behaviors and communication, such as empathy, cooperation, and conflict resolution.

Social Behaviors

Actions or reactions of an individual in response to the social environment or interactions with other individuals.

Need to Justify

The psychological compulsion to rationalize one's behavior, decisions, or beliefs, even in the face of contrary evidence.

Psychotherapy Effectiveness

The measure of how well psychotherapy achieves its intended outcomes, improving the mental health and functioning of clients.