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Business Law Chapter 43 Homework Average Any Rate Appropriate Building The

Page Count
3 pages
Word Count
561 words
Book Title
Applied Business Ethics: A Skills-Based Approach 1st Edition
Authors
Dean Bredeson
MODULE 43: Microinsurance
Core Module Issues:
It is wrongful to offer “microinsurance” at prices that are not even close
to the costs of providing the service?
Should companies be required to give consumers more information
about microinsurance?
Module Teaching Notes
Although the term “microinsurance” is one that I made up, students will be familiar with this practice. Almost
anytime one makes a purchase of any size, stores offer extended warranties, service plans, and the like.
In many cases, these policies are enormous cash cows for retailers they pay out FAR less than they take
in from customers and this explains why there are often pushed by sales staff aggressively.
You might give a specific example from your own experience, or ask the students to give a few of their own.
The scenario lays out a specific “numbers-based” example, and we made it into a video clip (in which, I
think, the actors did a particularly nice job).
If you like, after rolling the clip, work through the example on the board to show how profitable it is for the
store.
Afterwards, ask the five questions.
Discussion Points for Scenario Questions
1. In this scenario, the store sells a service plan for about $100 on a $900 HDTV. On average, it
pays out $20 for actual service and replacements and keeps an average of $80. Is the $100 price
appropriate?
A. YES SHOULD THEY AT LEAST GIVE CUSTOMERS INFORMATION
ABOUT THE ODDS OF ACTUALLY HAVING A CLAIM, OR THE AMOUNTS
THE PLANS ACTUALLY PAY OUT ON AVERAGE?
2. Building on the example in the first question, what is the highest charge that would be
appropriate? (Circle your answer.)
$21 -- $40 -- $60 -- $80 -- $100 -- $125 -- $150 -- $200 -- $250 -- As Much as
People will Pay
3. Is Alan's statement to Customer 1 ethical?
A. YES IS IT LECAUSE IT WAS TRUTHFUL? IS HE ALWAYS BEHAVING
ACCEPTABLE IF HE MAKES TRUTHFUL STATEMENTS?
4. Is Alan's statement to Customer 2 ethical?
A. YES EVEN THOUGH THE PROBLEM IS A REAL LONG SHOT?
5. Is Alan's statement to Customer 3 ethical?
A. YES IS ANYTHING HE SAYS OK / IS IT ALWAYS UP TO THE
CUSTOMER TO BE ON HIS GUARD?

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