Question

Using supply and demand graphs, show how products liability, a branch of comparative negligence law, affects the supply of goods and the demand for goods consumers know are governed by products liability.

Answer 1

Product liability is the protects your business in case of any uncertain economic conditions. If any bad thing happens you done have to pay any legal or any other fees.

As producers future cost have fallen or they have less management tension in case of uncertainty, they are likely to raise supply in short run which raises the output from Y to Y1 and prices falls from P to P1 and equilibrium falls from point A to point B..

In long run, consumers demand more goods at less price which shift the demand curve from D to D1 and raises prices up to the same level and raise output to level Y2 and making a new equilibrium at point C.