The railroad emits sparks from its engines which sometimes ignite fires on the farm. There is a 1/10 chance of a fire, and when a fire does occur $50,000 worth of crops are destroyed. It would cost the railroad $6,000 to install a spark arrestor that would prevent fires. The owner of the farm would be willing to pay the railroad no more than $ .

$5,000

Explanation:

$50,000 *1/10 = $5,000 cost per chance of fire occurring

$5,000

Explanation:

The owner of the farm would want to minimize his loss in this situation. The chance of a fire occurring is 1/10 or 10%, and if it does occur, his crops worth $50,000 are damaged. Therefore,

Expected loss = 10% x $50,000 = $5,000

The owner of the farm would want to avoid this expected loss by having a spark arrestor installed to prevent the fire. The cost of a spark arrestor is $6,000.

However, the owner of the farm would only be willing to pay an amount for it which covers his expected loss i.e. $5,000. This is because his loss even in case of a fire does not exceed this amount. Hence, he would be willing to pay the railroad no more than $5,000.

explanation: doctrine of respondeat superior is a legal doctrine that is commonly used in tort. this principle makes an employer or principal legally responsible for the wrongful acts done by an employee or agent, if such acts occur within the scope of the employment or agency.

answer; institution based;