Business Ethics Test 3

Responsibilities of business

1) Business should give safety the priority warranted by the product 2) Business should abandon the misconception that accidents occur exclusively as a result of product misuse and that it is thereby absolved of all responsibilities. 3) Business must monitor the manufacturing process itself 4) When a product is ready to be marketed, companies should have their product safety staff review their market strategy and advertising for potential safety problems 5) When a product reaches the market place, firms should make available to consumers written info about the products performance 6) Companies should investigate consumer complaints quickly

MacPherson Vs Buick

About Product and due care. Before this case injured consumers could only recover from the retailers.

Consumer Dependence

Advertisements shape consumer demand

Gullible Person Standard

Anyone that was misled is protected

Utilitarian for Strict Product Liability

Better for society and manufacturers have more money to shoulder injuries

Problems with Self-Regulation

Businessmen prefer self regulation. It can be an instrument for subordinating consumer interests to profit making when the two goals clash.

Price Gouging

Charging what the market will bear regardless of production costs. Exploiting a short term situation in which buyers have limited options for needed goods.

In 1972 Congress created one of the most important agencies for regulating product safety. This agency is the

Consumer Product Safety Commission.

What About Consumer Choice

Economists worry that preventing individuals from balancing safety against price. For Philosophers the worry is about interfering with people's freedom of choice.

Product Quality

Ensure that the quality of a product measures up to the claims made about it and to reasonable consumer expectations.

Manipulative Pricing

Ex. 39$ per month plus Shipping & Handling, Rebates, Hidden Charges

Deceptive Advertising

Exaggeration to the point it misleads people is wrong.

Price Fixing

Horizontal- occurs when competitors agree to adhere to a set price schedule, not to cut prices below a certain minimum, or to restrict price advertising or the terms of sales, discounts, or rebates. Vertical- Takes place when manufacturers and retailers agree to set prices.

Sovereign Consumer

Idea that consumers should, and do, control the market through their purchases

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

Caveat Emptor

Let the buyer beware. Consumers are to discover things by themselves.

Strict Product liability

Liability without fault.

Which of the following is an example of price gouging?

New York hotels that doubled or tripled their prices in the aftermath of the September 11, 2001, attacks.

Reasonable person standard

Prohibit only advertising claims that would deceive reasonable people

Federal Trade Commission (FTC)

Protects consumers against unfair and deceptive trade practices.

Consumer Product Safety Commission

Purpose is to protect the public against unreasonable risks of injury associated with consumer products

Food and Drug Administration (FDA)

Regulate food products and drug products. Drugs can be passed on market with only two successful clinical trials compared to the placebo despite the numerous unsuccessful trials

Three types of methods for achieving Environmental goals

Regulatory (Stick)- Environmental standards set for all industries. Should be enforceable and fair. Disadvantages: One size fits none, no incentive to go beyond minimum Incentives (Carrot)- Tax breaks and recognition. Advantages: minimizes govt interference. Disadvantages: often slow paced, prone to abuse. Pollution permit (Cap&Trade)- The govt sells pollution permits which allows people to let off certain amounts of pollution and allows credits for these amounts. Companies can sell unused credits.

Greenman vs Yuba

The court held that an injured consumer may be awarded damages without having to prove the manufacturer of the defected product was negligent. Led to strict product liability way of thinking.

What is Due Care

The idea that consumers and sellers do not meet as equals and that the consumer's interest are particularly vulnerable to being harmed by the manufacturer who has knowledge and expertise the consumer does not have.

Legal Paternalism

The law may justifiably be used to restrict the freedom of individuals for their own good.

Which of the following is true of factory farms?

They permit the mass production of meat at low prices.

Free riders

They view that their pollution does not make much of a difference (Diffusion of Responsibility). Therefore they ride for free on the shoulders of Eco friendly businesses.

Who should pay for pollution?

Those responsible or those who would benefit.

Business Attitudes to Environment Old Vs. New

Traditionally business has considered the environment to be a free limitless good. Exploit without regard for the future. New business attitude utilizes the tragedy of the commons. When resources are overused by the common people then they will be no good for anyone.

Which environmental statement is true?

Tropical forests are the earth's richest, oldest, and most complex ecosystems.

FTC Standards

Used to be reasonable person standard, then it was the gullible person standard and now it is modified gullible

Modified Gullible Standard

Will protect gullible people if there is enough of them

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 generally agree that

advertising rarely gives consumers much useful information.

An ecosystem

can be upset by human behavior

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 moral theorist William T. Blackstone claims that the right to a livable environment

is a fundamental human right

Caveat emptor means

let the buyer beware

Legal paternalism is the doctrine that the law

may justifiably restrict the freedom of the individual for his or her own good.

Statistically, there is strong evidence that exposure to television advertising is strongly associated with

obesity in children under twelve.

The case of MacPherson v. Buick Motor Car in 1916 changed product liability law. As a result of it, the courts

permitted consumers to sue manufacturers with whom they had no contractual relationships.

"Pollution permits" are an example of which of the following methods of achieving our environmental goals?

pricing mechanisms

According to Galbraith's "dependence effect,"

producers use advertising to shape consumer wants.

The "tragedy of the commons" is

that individual pursuit of self-interest can sometimes make everyone worse off.

According to the anthropocentric (or human-oriented) ethic of Baxter and others

the Grand Canyon is valuable only because people care about it.

Concerning future generations

the social and environmental policies we adopt can affect who is born in the future

The case of FTC v. Standard Education was important in the legal transition

toward something like the ignorant consumer standard.