Question

Suppose that courts begin imposing higher fines on car manufacturers that build cars that occasionally malfunction and harm consumers. Car manufacturers can make expenditures that decrease the likelihood of malfunctioning. Does the change in the court’s behavior change the expected marginal benefit of avoiding an accident or the marginal cost of avoiding an accident? What happens to the rate of product malfunctions? Research and provide one example of a car manufacturer that recalled vehicles. What was the impact on profit, reputation? Where they fined by the courts? Was there litigation involved? Did they settle?

Answer 1

yes, the decision of court is correctly towards the sake of all citizens and the environment too.

with this decision of penalaty or incurring cost by manufactures to lower the likelihood of malfunction or the harm caused to the consumers and the environment have force the manufacturers to design vehicle with the required standards of safety and the the rules and regulations in regard to the protection against malfunctioning or harm to consumers.

with this decision , there are maximum chances of avoiding of the accidents and also with the one time cost incurred whie manufaacturing couyld reduce the overall cost paid in terms of protection, safety, treatment after accident or claiming of vehicles.

with alll this there is decline in the rate of product malfunction, as the maximum malfunction can result in higher penalities , therefore, manufactures reduces the rate of product malfunction.

one of the example is of ford 2018 who called off his vehicle 2016ford explorer because there was a potential of a fracturer rear suspension of toe link and with the breakage of toe link there is effect on suspension of steering which could effect worsely. thats why they were called off.

once there was effect on profit but as they were replaced with the correction of that problem there reputation is back on the track.

no they were not fined as manufacturer had given the option , that consumer could replace the same with the new updated one without any charge that save the ford owner from penalty.

yes, in short they settle before any loss.