business in ethics ch5, 6, 7
Harvard business professor Theodore Levitt has
drawn an analogy between advertising and art.
The case of MacPherson v. Buick Motor Car in 1916 changed product liability law. As a result of it, the courts
expanded the liability of manufacturers for injuries caused by defective products
Animal manure
is a large source of pollution.
Which statement is true from an ethical perspective?
The argument for strict liability is basically utilitari
The FTC now follows the "modified" ignorant consumer standard and protects only those cases of foolishness that are committed by significant numbers of people.
True
For years Bayer aspirin advertised that it contained "the ingredient doctors recommend most." This is an example of:
concealment of facts.
William F. Baxter addresses environmental ethics by noting
judgments about environmental problems ought to be people-oriented.
One truth about factory farms is
most animals we eat are from them.
According to the anthropocentric (or human-oriented) ethic of Baxter and others,
the Grand Canyon is valuable only because people care about it.
The consumer's main source of product information is
the label and package.
Cost-benefit analysis
A decision-making process that weighs the pros and cons of different alternatives to see if the benefit outweigh the costs.
A psychological appeal is one that aims to persuade by appealing primarily to reason and not to human emotional needs.
False
Congress has now outlawed puffery
False
Economists favor legal paternalism because it prevents individuals from balancing safety against price.
False
Environmental protection is always a static trade-off, with a fixed economic price to be paid for the gains we want
False
Tampering with the ecosystem always has injurious effects.
False
The business-can't-handle-it argument is an argument in favor of a broad view of corporate responsibility
False
Which statement is accurate in its description of consumer protection?
The Consumer Product Safety Commission has the power to order recalls, public warnings, and refunds.
A moral of Garrett Hardin's parable "The Tragedy of the Commons" is that there can be a difference between the private costs and the social costs of a business activity.
True
According to Joel Feinberg, future generations of people have a right to be born
True
According to Keith Davis, in addition to considering potential profitability, a business must weigh the long-range social costs of its activities as well. Only if the overall benefit to society is positive should business act.
True
According to Melvin Anshen, the case for a broad view of corporate responsibility can be defended on the basis of there always being a kind of social contract existing between business and society.
True
Due care is the idea that consumers and sellers do not meet as equals and that the consumer's interests are particularly vulnerable to being harmed by the manufacturer, who has knowledge and expertise the consumer does not have.
True
What society finds to be useful and desirable is always brings profitability to companies.
True
Milton Friedman argues that
a business has no social responsibilities other than to maximize profits.
The case of FTC v. Standard Education was important in the legal transition
away from the reasonable-person standard
"Puffery" is an example of which of the following deceptive or misleading advertising techniques?
exaggeration
People generally speak of two kinds of warranties. What are these two kinds of warranties?
express and implied
To properly protect consumers,
if a product poses a potential, serious threat, a company may need to take extraordinary measures to ensure continued safe use of it.
The term ecology refers to the science of the
interrelationships among organisms and their environments.
Legal paternalism is the doctrine that the law
may justifiably be used to restrict the freedom of individuals for their own good.
.Utilitarians
should include nonhuman animal pleasures and pains in the overall utilitarian calculus.
In Citizens United v. Federal Election Commission, the U.S. Supreme Court ruling included
support for corporations' First Amendment right to participate in the political process
Before the case of MacPherson v. Buick Motor Car in 1916, the law based a manufacturer's liability for injuries due to a defective product on
the contractual relationship between the producer and the consumer.
Corporations differ from partnerships and other forms of business association in two ways. One of these is that
they must be publicly registered or in some way officially acknowledged by the law.
Melvin Anshen suggests that there is an relationship between business and society which he termed as
"social contract".
In 1972 Congress created one of the most important agencies for regulating product safety. This agency is the
Consumer Product Safety Commission.
According to Cambridge University biologist Andrew Balmford, the loss of nature's services is always outweighed by the benefits of development.
False
In the 1960 case Henningsen v. Bloomfield Motors and the 1963 case Greenman v. Yuba PowerProducts, injured consumers were awarded damages based on their proving that the manufacturers of the defective products were negligent.
False
It is not logical for corporations to acknowledge that business should be conducted morally
False
Legal paternalism is the doctrine that the law should not be used to restrict the freedom of individuals for their own good.
False
Manuel Velasquez claims that the corporate internal decision structure of a corporation shows that a corporation can have both intentions and intentionality
False
Recent studies have shown that neither corporate moral codes nor corporate culture affect whether individuals inside the corporation behave morally or immorally.
False
Regulation is always the most effective way to allocate the costs of environmental protection.
False
Strict liability is the same thing as absolute liability.
False
The disparity between private industrial costs and public social costs is what economists call an "internality."
False
When advertisers conceal facts, they suppress information that is favorable to their products.
False
When it comes to protecting animal rights, the United States is far ahead of Europe.
False
William T. Blackstone rejects the idea that each person has a human right to a livable environment on the grounds that it is technically infeasible.
False
Which of the following contributed to the more relaxed incorporation procedures of modern times
The idea that incorporation is a by-product of the people's right to associate, not a gift from the state.
Which of the following is true of factory farms?
They permit the mass production of meat at low prices.
Three approaches have gained the most attention when it comes to achieving our environmental goals: the use of regulations, incentives, and pricing mechanisms.
True
Terms like "can be," "as much as," and "help," are examples of
ambiguity
Which of the following consumer goods is responsible for the greatest number of individual social ills?
cigarettes
The philosopher Tom Regan
claims that no impartial morally sensitive person could approve of the treatment of animals in factory farms if he or she knew what was going on.
The best statement to describe corporations is
corporate culture can be both explicit and implicit.
Corporations are limited-liability companies which means that
corporate shareholders are liable for corporate debts only up to the extent of their investments.
One of the three important "limits to what the law can do" discussed by Christopher Stone is
designing effective regulations is difficult.
Kenneth Arrow argues that
ethical codes can contribute to economic efficiency.
Milton Friedman's perspective is that the only responsibility of a business is to
make money for its owners.
A moral vegetarian
rejects eating meat based on moral grounds.
In consideration for the obligation to others
the U.S. uses more than its proportional share of the world's resources.
Due care is
the idea that consumers and sellers do not meet as equals and that consumer's interests are particularly vulnerable to being harmed by the manufacturer.
Advertising
the persuasion to purchase the product.
According to Joel Feinberg, future generations
the rights of future generations are contingent upon those people coming into existence.
The first corporations
were towns, universities, and ecclesiastic orders.
According to Galbraith's "dependence effect",
consumer demand tends to be shaped by the production process.
Those with a broader view concerning business obligations believe that with power comes
social responsibility.
According to Holmes Rolston III,
some natural objects are morally considerable in their own right, apart from human interests.
The "tragedy of the commons" is
that individual pursuit of self-interest can sometimes make everyone worse off.
In deciding whether an ad is deceptive, today the FTC basically follows
the "modified" gullible-consumer standard.
According to the philosopher Joel Feinberg,
the rights of future generations are contingent upon those people coming into existence.
Kenneth Arrow discussed two important situations in which profit maximization can be socially inefficient. One of these occurs when
there is an imbalance of knowledge between buyer and seller.
An assessment of costs and benefits inevitably involves
value judgments and factual uncertainties
Which of the following do proponents of the broader view of corporate social responsibility believe?
Businesses have other obligations besides making a profit.
Momentum for the corporate organization of business really gained momentum after which war?
Civil War
In his essay "Social Responsibility and Economic Efficiency," Kenneth Arrow has argued that ethical behavior in the business world comes only at the expense of economic efficiency.
False
Thanks to the EPA, the federal government long ago eliminated the problem of potentially harmful pesticides and other chemical residues in food.
False
The FTC now follows the reasonable-person standard in matters of advertising, sales and marketing
False
The Fair Packaging and Labeling Act of 1966 empowers representative agencies to rank and list all ingredients in the order of decreasing percentage of total contents.
False
The doctrine of caveat emptor means that the law may be justifiably used to restrict the freedom of individuals for their own good.
False
The international fishing industry as it exists today gives us good reason to reject the moral of Garrett Hardin's "Parable of the Commons
False
The invisible-hand argument against broadening corporate responsibility says that business's appetite for profit should be controlled by the hand of the government
False
The rising affluence of people in the United States has meant a corresponding decrease in pollution and its attendant environmental problems in the United States.
False
The new discipline of "ecological economics" calculates the value of an ecosystem, not in terms of what people are willing to pay for it, but in terms of what it would cost to provide the benefits and services that the ecosystem now furnishes us.
True
The word "ecology" refers to the science of the interrelationships among organisms and their environment.
True
The word "ecosystem" refers to a total ecological community, both living and non-living.
True
Which of the following is an example of price gouging?
a New York hotel tripling its room prices after 9/11
According to the legal doctrine of strict product liability,
a manufacturer need not be negligent to be held liable for a defective product.
Critics of advertising contend that
advertising rarely gives consumers much useful information.
Adam Smith proposed that in our pursuit of economic interests we are led by
an invisible hand to promote general good.
The moral theorist William T. Blackstone claims that the right to a livable environment
is a fundamental human right.
Some environmental regulations (like forbidding the burning of coal in cities) benefit each and every one of us because the air we all breathe is cleaner. If a company ignores the regulation and burns coal, while others obey the regulation, then the company
is being a free rider.
Which of the following is one of the three arguments in favor of narrow corporate social responsibility discussed in this chapter?
let-government-do-it
A common point of contention about corporations is
philosophers and business theorists disagree whether corporations are moral agents
. "Pollution permits" are an example of which of the following methods of achieving our environmental goals?
pricing mechanisms
The "rules of the game" for corporate work are intended to
promote open and free competition.
The terms "best, finest, and most" are examples of
puffery
Which of the following is a drawback to the regulatory approach?
regulation can take away an industry's incentive to do more than the minimum
In the corporate world, the board of directors will
rubber stamp the policies and recommendations of the management.
Externalities are
side effects passed on to a party other than the buyers and sellers in the market
Which of the following is true of a regulatory approach to environmental problems?
It requires the EPA or other body to determine the most effective, feasible pollution-control technology for each different industry.
The media with the greatest advertising influence over children is
TV
Defenders of advertising claim that, despite criticisms, advertising enjoys protection under the first Amendment as a form of speech.
True
Moral vegetarians are people who reject the eating of meat on moral grounds.
True
One of the attitudes prevalent in business that has led to increased environmental problems is the tendency to view the natural world as a free and unlimited good.
True
The Federal Trade Commission (FTC) was established over 75 years ago to protect consumers against deceptive advertising
True
The Federal Trade Commission (FTC) was established over seventy-five years ago to protect consumers against deceptive advertising.
True
The case of First National Bank of Boston v. Bellotti sharpened the legal distinction between corporations and individuals.
True
The controversy over legal paternalism pits the values of individual freedom and autonomy against social welfare.
True
The idea that corporations will impose their values on us supports one of the arguments for the narrow view of corporate social responsibility.
True
Advocates of a "naturalistic ethic" believe that penguins are important only because people like them.
False
Business is right to insist that accidents occur exclusively as a result of product misuse and that it is thereby absolved of all responsibility.
False
Externalities are the intended negative (or in some cases positive) consequences that two parties purposefully impose on an external third party
False
In his books The Affluent Society and The New Industrial State, John Kenneth Galbraith argues that consumer wants determine what gets produced.
False
Most Americans believe a corporation's top obligation is to its
Employees
According to Jeremy Bentham, the question is not whether animals can feel pain, but whether they can talk and reason
False
According to Kenneth Arrow, trust and confidence are highly overrated in business.
False
According to William F. Baxter, we ought to respect the "balance of nature" and "preserve the environment" even if doing so brings no benefit to human beings.
False
According to law professor Christopher D. Stone, the relationship between corporate management and its shareholders is identical with the relationship between you and an investment advisor
False
Which environmental statement is true?
Tropical forests are the earth's richest, oldest, and most complex ecosystems.
"Limited liability" means that members of a corporation are financially liable for corporate debts only up to the extent of their investments.
True
"Weasel words" are words used to evade or retreat from a direct or forthright statement.
True
According to John Kenneth Galbraith, business's social role is purely economic and corporations should not be considered moral agents.
True
According to Milton Friedman, business has no social responsibilities other than to maximize profits.
True
Adherents of the broad view of corporate responsibility claim that modern business is intimately integrated with the rest of society and that, as a result, although society expects business to pursue its economic interests, business has other responsibilities as well.
True
Advocates of a naturalistic ethic contend that some natural objects are morally considerable in their own right, apart from human interests.
True
An ordinary example of an ecosystem is a pond.
True
Any equitable solution to the problem of who should pay the bill for environmental cleanup should take into account responsibility as well as benefit.
True
Before the case of MacPherson v. Buick Motor Car in 1916, injured consumers could only recover damages from the retailer of the defective product
True
Business's responsibility for understanding and providing for consumer needs derives from the fact that citizen-consumers are dependent on business to satisfy their needs.
True
Companies should look at a code of ethics as more than just window dressing with more than just a vagueness that is so general it lacks substance
True
Corporate internal decision (CID) structures amount to established procedures for accomplishing specific goals.
True
Cost-benefit analysis is a device used to determine whether it's worthwhile to incur a particular cost.
True
Business has considered the environment to be
free and nearly limitless
A decade after wolves were reintroduced to Yellowstone Park their presence was discovered to
have changed the behavior of elk
Business must be sensitive to its impacts on the physical environment primarily because of the
interdependence of an ecosystem's elements.
The debate over corporate moral agency hinges on which question?
Corporate punishment
The narrow view of corporate social responsibility argues companies must make money within the "rules of the game" which rules out all of the following except for:
Harm
Anti-paternalism gains plausibility from the view that individuals know their own interests better than anyone else and that they are fully informed and able to advance those interests.
True
Corporations should welcome the outside opinions of society as a whole, local communities, customers, suppliers, employees, managers, and stockholders.
True
Externalities are the unintended negative (or in some cases positive) consequences that an economic transaction between two parties can have on some third party
True
Legally a corporation is a thing that can endure beyond the natural lives of its members and that has incorporators who may sue and be sued as a unit and who are able to consign part of their property to the corporation for ventures of limited liability
True
Most business observers agree with Berle and Means that, because stock ownership in large corporations is so dispersed, actual control of the corporation has passed to management.
True
One decisive case in the legal transition away from the reasonable-person standard in matters of advertising, sales and marketing was FTC v. Standard Education.
True
Statistics indicate that the faith consumers place in manufacturers is often misplaced.
True
Strict product liability is the doctrine that the seller of a product has legal responsibilities to compensate the user of that product for injuries suffered due to a defective aspect of the product, even though the seller has not been negligent in permitting that defect to occur.
True
Subliminal advertising is advertising that supposedly communicates at a level beneath our conscious awareness.
True
The discussion of corporate moral agency also included discussion of corporate punishment and corporate internal decision structures.
True
The courts and the general public find corporate responsibility
useful and intelligible.
