Firms have the right to form and participate in coalitions and associations to conduct
nonmarket activity.
Answer:
The nonmarket environment of a firm is characterized by four I’s: independence,
individuality, ideas and income.
Answer:
As long as the management of the company is cooperative, it does not need to assess
the demands of the activists group or the public.
Answer:
Activists using cooperative private politics organize corporate and market campaigns to
advance issues on their agendas.
Answer:
Milton Friedman argues that the social responsibility of business is to maximize public
welfare.
Answer:
One of the principal predictions of the intrinsic audience interest perspective is that
coverage increases with the societal value on the issue.
Answer:
The Sherman Act allows private parties to bring lawsuits for practices that are illegal
under the Act.
Answer:
When the Obama administration took office, its EPA declared that CO2 and other
greenhouse gases were pollutants and subject to regulation.
Answer:
Liquidated damages are not limited to compensation for harm and are intended as
penalties for particular actions.
Answer:
Supply-side subsidization did not face market risks, whereas subsidization through high
feed-in tariffs was subject to high budget pressures.
Answer:
Utilitarianism is better understood as a particular form of a consequentialist moral
philosophy.
Answer:
The Kyoto Protocol had strong backing in the U.S. Senate, which in 1997 adopted a
resolution in support of the protocol.
Answer:
Mobilizing interest groups members to deliver collective nonmarket action is a
component of the effectiveness of nonmarket action.
Answer:
The Coase theorem implies that when bargaining between two parties to an externality
is possible, social efficiency can be achieved.
Answer:
Reliance on the personal integrity of employees is mostly sufficient to ensure ethical
conduct, and employees should be allowed to operate in an ethics vacuum.
Answer:
It is usually less difficult to develop trust and reciprocity with stakeholders that have
irregular interactions with the firm.
Answer:
Aggregation is required because an action may make some individuals better off and
others worse off.
Answer:
Independent mortgage brokers cannot be the originators of mortgage loans.
Answer:
Reputation risk assessment assesses the potential impacts of a crisis on the stakeholders
of the firm and its reputation with them, the public, and the government.
Answer:
Political leaders and economists all over the world are of the opinion that the Kyoto
Protocol was widely successful.
Answer:
The First Amendment of the Constitution provides strong protection for corporations
against charges of libel.
Answer:
Reassessment of crisis avoidance measures and preparedness is irrelevant to a firm after
a crisis has been resolved.
Answer:
Subsidization was economically disadvantageous because it increased the nation’s
dependence on imported fuels.
Answer:
The majority of members of the Financial Crisis Inquiry Commission concluded that
the financial crisis was unavoidable.
Answer:
Rights consistent with Kant’s system include freedoms of speech and conscience.
Answer:
If a depositor wants to withdraw her funds, the bank is not obliged to replace the funds
with other deposits.
Answer:
Wind power differed from solar power in that blades and tower sections were less
expensive to ship than were solar panels.
Answer:
Nongovernmental institutions include the news media that provides information to
society as well as public sentiment composed of societal expectations and norms of
behavior that arise from ethics and culture.
Answer:
Utilitarianism is criticized for its focus solely on human well-being.
Answer:
The central principle of the WTO agreements is manifested in the most favored nation
(MFN) requirement that each signatory accord all other signatories the most favorable
terms for trade provided to any country.
Answer:
Mobilization of stakeholders of firms is important to an effective grassroots action.
Answer:
The greater the number of members of an interest group, the greater its potential
effectiveness, but the cost of organizing and mobilizing those members can be high.
Answer:
A trade secret is almost anything that is unique and of value or potential value to a
company.
Answer:
The benefit of a patented invention to society increases with the duration of its
monopoly.
Answer:
Behavioral ethics experiments conclude that greater social distance decreases the cost
of acting ethically and increases the likelihood of ethical behavior.
Answer:
Utilitarianism provides a basis for evaluating intrinsic rights.
Answer:
The duty of loyalty supports both Friedman’s position and the strategic use of corporate
social responsibility (CSR).
Answer:
The direct costs of subsidies such as grants and loan guaranties are the corresponding
government budget expenditures and liabilities.
Answer:
From a utilitarian perspective, bribery distorts markets and reduces economic
efficiency.
Answer:
The major components of U.S. trade law are embodied in the Trade Act of 1974 and the
Tariff Act of
Answer:
________ is required because an action may make some individuals better off and
others worse off.
a) Aggregation
b) Collateralization
c) Altruism
d) Fundamentalism
Answer:
Congress enacted the ________ to provide for public notice and comment prior to
agency action.
a) National Industrial Recovery Act
b) Sherman Antitrust Act
c) Administrative Procedures Act of 1946
d) Interstate Commerce Act of 1887
Answer:
The Maastricht Treaty ________.
a) formally recognized the Charter for Fundamental Rights
b) established an independent European Central Bank
c) made human and civil rights enforceable by the European Union
d) addressed several impediments to trade and provided measures to facilitate access to
national markets
Answer:
________ are based on the opportunity cost of the next best alternative.
a) Consequential damages
b) Reliance damages
c) Liquidated damages
d) Primary damages
Answer:
Which of the following statements is true of the free-rider problem?
a) higher the cost of organizing, the more serious the free-rider problem
b) bundling together nonmarket action and services for interest group members
increases the free-rider problem
c) free-rider problem does not affect the funds available for nonmarket action
d) higher the costs of collective action, the less prevalent the free-rider problem
Answer:
As a result of its ________, India’s pharmaceuticals industry had some 5,000
pharmaceutical companies producing 20 percent of the world’s generic drugs.
a) patent law
b) foreign relations policy
c) subsidies
d) cutting-edge technology
Answer:
________ keep a check on business nonmarket power.
a) Activist groups
b) Management of firms
c) Human resource departments
d) Employees
Answer:
Which of the following is true with regard to research findings on behavior in dictator
games?
a) The source of the endowment did not affect behavior in the course of experiments.
b) People do not follow social norms in considering how to allocate the endowment.
c) Participants in the role of the proposer are rationally self-interested.
d) Most proposers chose an equal allocation of the endowment rather than a very
unequal allocation favoring the proposer.
Answer:
Which of the following is a requirement for a trademark?
a) distinctiveness
b) strict adherence to generic expressions
c) strict adherence to fanciful expressions
d) similitude
Answer:
The distributive objection to products liability is that ________.
a) it is inequitable to assess damages to firms when there was nothing they could have
done to prevent the injury
b) a reduction in the liability of retailers is likely to have negative consequences for
businesses
c) the awards in many cases are too large and seem to provide a prize, as in a lottery,
rather than providing compensation for actual losses
d) the awards in cases decided on the basis of fault and negligence are mostly
inadequate
Answer:
Protection applies to________,
a) tax exemptions for promoting green technology
b) high domestic wages
c) stringent labor laws
d) predatory trade practices
Answer:
________ was the first federal antitrust statute.
a) Interstate Commerce Act of 1887
b) Sherman Act
c) Clayton Act of 1914
d) Federal Trade Commission Act
Answer:
According to the audience interest/societal significance continuum, under which of the
following types of coverage is “the weather” most likely categorized?
a) extensive coverage with position taking and advocacy
b) moderate coverage with interpretation and advocacy
c) moderate coverage with factual treatment and interpretation
d) low coverage with factual treatment
Answer:
________ systems of ethics define the rightness of an action in terms of the good its
consequences yield.
a) Deontological
b) Existential
c) Teleological
d) Pragmatic
Answer:
Under the Chicago school of thought, the purpose of antitrust policy is ________.
a) maximization of producers’ plus consumers’ surplus.
b) focuses on the opportunities for strategic behavior
c) focuses on the objectives of static and dynamic efficiency
d) is intended to improve economic performance and further the social objective of
limiting economic power.
Answer:
The ________ can be understood as an approach to improving the well-being of poor
farmers in developing countries by circumventing markets and coordinating market
behavior.
a) fair trade movement
b) Clayton Act
c) Freedom House
d) Ethics in Government Act of 1978
Answer:
The politics of international trade policy is driven by ________, which arises from the
interactions between international trade policy and the domestic economy.
a) domestic politics
b) international peak organizations
c) the aggregate well-being of the country
d) the aggregate cost of social externalities
Answer:
Which of the following is characteristic of common law?
a) It is written in codes based on legal principles, and judges decide cases based on
those codes and the principles expressed in them.
b) Its evolution was independent of the precedents set by public courts.
c) It typically does not use an adversarial system of litigation.
d) It can adjust to changing circumstances without having to wait for new statutes to be
enacted by legislation.
Answer:
Intrinsic rights are to be respected because ________.
a) they have moral standing independent of the consequences they yield
b) they lead to desirable consequences
c) they lead to the maximization of individual well-being
d) they have legal standing and are codified by the state
Answer:
Ethics principles are intended to be ________.
a) country specific
b) orthodox
c) unconventional
d) universal
Answer:
The members of the board of governors of the Federal Reserve are appointed by the
________.
a) president
b) Senate
c) secretary of state
d) chairman of the Federal Reserve
Answer:
On which of the following premises is the intrinsic audience interest theory of news
coverage based?
a) that the news media organizations are owned by for non-profit firms
b) that the coverage and treatment decisions are governed by the relevance of the issue
c) that the coverage increases with audience interest
d) that the explanatory power of the theory comes primarily from the supply side
Answer:
Which of the following statements is true of moral suasion in behavioral ethics
experiments?
a) Moral suasion serves as a coordination mechanism by increasing the confidence of
participants.
b) Moral suasion cannot change the preferences of participants.
c) Participants receiving the moral messages and the message urging contributions
decreased their contributions on average
d) The deterioration of contributions was steeper with the moral messages.
Answer:
From Friedman’s perspective, a conception of corporate social responsibility (CSR) that
differs from shareholder value maximization must be costly and can have only two
interpretationseither a political process is to be used to make decisions or ________.
a) managers are to act as agents rather than as principals
b) managers are to act as principals rather than as agents
c) shareholders are to act as principals rather than as agents
d) consumers are to act as principals rather than as agents
Answer:
A market strategy is ________
a) a concerted pattern of actions taken in the market environment to create value by
improving the firm’s economic performance
b) a concerted pattern of actions taken in the nonmarket environment to create value by
improving the overall performance of a firm
c) an elaborate and systematic plan of actions to achieve successful market
capitalization
d) usually never used by firms that decide to enter a country that has open markets or
trade barriers
Answer:
Which of the following steps follows the identification of the nonmarket issue in the
nonmarket issue life cycle?
a) enforcement
b) interest group formation
c) administration
d) legislation
Answer:
Regulatory decisions are required to bear a relationship to a proper public purpose
under the Constitution. This is review under the framework of ________.
a) procedural due process
b) substantive due process
c) arbitrary regulatory actions
d) capricious regulatory actions
Answer:
Which of the following is the first stage of the nonmarket issue life cycle?
a) issue identification
b) interest group formation
c) legislation
d) administration
Answer:
A pharmaceutical manufacturing firm wants to contribute to the presidential election
campaign in support of a pro-industry policies candidate. The firm should ________.
a) directly contribute to the campaign to influence legislative voting
b) form multicandidate political action committee for the purpose of soliciting
contributions
c) collect funds for political contributions through dues
d) contribute using hard money because there is no limit on its use
Answer:
The ________ applies the law established by the Court of Justice, and its decisions may
be appealed to the higher court.
a) Committee of Permanent Representatives
b) European Council
c) Council of Ministers
d) General Court
Answer:
________ specifies the length of a patent and defines the limitations on filing lawsuits.
a) Customary law
b) Case law
c) Statutory law
d) Regulatory law
Answer:
Under the new theory of ________, firms could be held liable if their stock prices fell
significantly when the firms’ projections of future earnings had been favorable.
a) fraud on the market
b) fraud on the nonmarket
c) the common factor
d) collective deception
Answer:
When the Party Congress is not in session, authority passes to the ________, which
convenes at least twice annually.
a) Central Committee
b) Politburo
c) state work units
d) Standing Committee of the Politburo
Answer:
In the United States and in other countries, the ________ is the principal institution
which guides producers and consumers in most product safety decisions.
a) licensing system
b) warranty system
c) institution of liability
d) institution of regulation
Answer: