Chapter 4 Quiz

Corporate shareholders, directors, and the company's officers may all benefit from limited liability.

true

In the case of Dodge v. Ford Motor Company, Henry Ford said he believed his company was sufficiently profitable to allow it to consider its social responsibility to engage in activities to benefit the public, including its workers and customers.

true

Social responsibility does not have to mean being unprofitable.

true

The "revolving door" effect occurs when the relationship between business and government becomes too close, as when executives from the private sector leave their jobs to work for government agencies, becoming the regulators rather than the regulated, and then return to industry.

true

The Shlensky v. Wrigley case represented a shift from the idea that corporations should pursue only the maximization of shareholder value.

true

The concept of limited liability means the owners of corporations are protected by laws stating that, in most circumstances, their losses in case of business failure cannot exceed the amount they paid for their shares of ownership.

true

In Citizens United v. Federal Election Commission, the Supreme Court ruled 5 to 4 in favor of public corporations using public funds for political advertising.

false

Sustainability is a short-term approach to the interaction between business activity, environmental responsibility, and societal impact on the environment and other stakeholders.

false

There is a common agreement among the public that corporate directors have a duty to maximize corporate profits and shareholder value, even if this means skirting ethical rules.

false