Question 1

Identity the correct statement regarding corporate culture and corporate ethics.

Accepted Answer

A) Corporate culture and corporate ethics are well understood. 
B) Corporate ethics can be well articulated,but not corporate culture. 
C) Corporate culture can be well articulated,but not corporate ethics. 
D) Corporate culture and corporate ethics are elusive. 
A) Corporate culture and corporate ethics are well understood. 
B) Corporate ethics can be well articulated,but not corporate culture. 
C) Corporate culture can be well articulated,but not corporate ethics. 
D) Corporate culture and corporate ethics are elusive. D

Question 2

Economist Milton Friedman argued that ethical behavior followed and practiced by organizations is the same as:

Accepted Answer

A) cost minimization. 
B) wealth maximization. 
C) sales minimization. 
D) output maximization. 
A) cost minimization. 
B) wealth maximization. 
C) sales minimization. 
D) output maximization. B

Question 3

Which of the following will control incentive problems in a corporation?

Accepted Answer

A) Managers checking on their employees email and other activities closely 
B) Managers forcing employees to adopt higher and stringent ethical standards 
C) Managers and employees adopting predefined ethical standards 
D) Managers and employees adopting higher and stringent ethical standards 
A) Managers checking on their employees email and other activities closely 
B) Managers forcing employees to adopt higher and stringent ethical standards 
C) Managers and employees adopting predefined ethical standards 
D) Managers and employees adopting higher and stringent ethical standards D

Question 4

In the United States,there are numerous organizations,some sponsored by business and others that are independent of business,that monitor the behavior,the product quality,and the service provided by businesses.What role do these organizations have in the process of promoting ethical behavior?

Accepted Answer

These intermediaries help promote ethica

Question 5

Many businesses face the same customers over and over again.Repeat business generally:

Accepted Answer

A) increases ethical behavior toward customers. 
B) reduces ethical behavior toward customers. 
C) is a sign of poor product quality. 
D) is the sign of a poorly run business. 
A) increases ethical behavior toward customers. 
B) reduces ethical behavior toward customers. 
C) is a sign of poor product quality. 
D) is the sign of a poorly run business.

Question 6

Many codes of ethics attempt to alter or reinforce standards of behavior.An economist wouldn't argue with the codes but would probably note that:

Accepted Answer

A) the codes need to be universally accepted in order to be effective. 
B) codes will never help under any circumstance. 
C) designing an organizational architecture with proper incentives is more important. 
D) the laws of supply and demand usually require that codes of ethical behavior are tertiary artifacts. 
A) the codes need to be universally accepted in order to be effective. 
B) codes will never help under any circumstance. 
C) designing an organizational architecture with proper incentives is more important. 
D) the laws of supply and demand usually require that codes of ethical behavior are tertiary artifacts.

Question 7

Martha Stewart seems to have made a bad decision concerning the use of insider information in selling ImClone stock.The resulting negative publicity on the issue caused the value of her corporation,Martha Stewart Living,to fall by almost half.This example is supposed to show that:

Accepted Answer

A) insider trading can pay off in certain circumstances. 
B) ethics and wealth creation are not linked in any way. 
C) stock markets are fickle stewards of wealth. 
D) ethics and wealth creation are closely linked. 
A) insider trading can pay off in certain circumstances. 
B) ethics and wealth creation are not linked in any way. 
C) stock markets are fickle stewards of wealth. 
D) ethics and wealth creation are closely linked.

Question 8

Ralph Nader has long argued that large corporations in oligopolistic markets should use their vast productive powers to redress social ills.Implementing this policy may put companies:

Accepted Answer

A) in conflict with the government. 
B) in conflict with its trade unions. 
C) in conflict with the process of wealth maximization. 
D) in conflict with their international policies. 
A) in conflict with the government. 
B) in conflict with its trade unions. 
C) in conflict with the process of wealth maximization. 
D) in conflict with their international policies.

Question 9

The text notes that many firms that use animals in production or advertising adopt the animal treatment standards of the American Society for Prevention of Cruelty to Animals.Why do companies adopt a professional group's standard of behavior?

Accepted Answer

Professional groups such as ASPCA are we

Question 10

The corporate ethics problem is basically a problem of controlling:

Accepted Answer

A) CEO salaries. 
B) shirking by the managers. 
C) opportunism. 
D) incentives. 
A) CEO salaries. 
B) shirking by the managers. 
C) opportunism. 
D) incentives.

Question 11

In a situation where customers will never be seen again:

Accepted Answer

A) economies of scale are common. 
B) sellers are likely to cheat on price or quality. 
C) supply bottlenecks and shortages are likely to arise. 
D) increased honesty in transactions is common. 
A) economies of scale are common. 
B) sellers are likely to cheat on price or quality. 
C) supply bottlenecks and shortages are likely to arise. 
D) increased honesty in transactions is common.

Question 12

Consumer Reports and other organizations rank companies on the quality of their products and the reliability of their services.These companies provide an:

Accepted Answer

A) incentive for corporate cheating. 
B) internal audit function for corporate honesty. 
C) insight into the organization's mission and vision. 
D) external check for corporate honesty. 
A) incentive for corporate cheating. 
B) internal audit function for corporate honesty. 
C) insight into the organization's mission and vision. 
D) external check for corporate honesty.

Question 13

Milton Friedman's view on corporate social responsibility:

Accepted Answer

A) acknowledges that shareholders may use some of their wealth for altruistic purposes. 
B) assumes shareholders are not rational. 
C) advocates that corporations engage in philanthropic activities. 
D) applies only to U.S.corporations. 
A) acknowledges that shareholders may use some of their wealth for altruistic purposes. 
B) assumes shareholders are not rational. 
C) advocates that corporations engage in philanthropic activities. 
D) applies only to U.S.corporations.

Question 14

Compensating differentials for employees can be seen as one measure of adjusting for:

Accepted Answer

A) high rates of inflation. 
B) problems of ethical conflict. 
C) surplus labor in the unorganized sector. 
D) corporate tax evasion. 
A) high rates of inflation. 
B) problems of ethical conflict. 
C) surplus labor in the unorganized sector. 
D) corporate tax evasion.

Question 15

Incentive problems in a business can lead to:

Accepted Answer

A) wealth maximization. 
B) full employment of resources. 
C) risk reduction. 
D) ethical problems. 
A) wealth maximization. 
B) full employment of resources. 
C) risk reduction. 
D) ethical problems.

Question 16

Economist Jack Hirshleifer notes that,"Altruism economizes on the costs of policing and enforcing contracts." Since economics assumes that people act in a self-interested manner,what could he possibly mean?

Accepted Answer

Increased trust between contracting part

Question 17

A seller-provided product warranty is often offered to a consumer to:

Accepted Answer

A) assure the latter that cheating will not occur. 
B) get rid of inventory. 
C) to deal with shortages of products. 
D) decrease the cost of doing business. 
A) assure the latter that cheating will not occur. 
B) get rid of inventory. 
C) to deal with shortages of products. 
D) decrease the cost of doing business.

Question 18

The key mission that most economists ascribe to a firm's managers is to:

Accepted Answer

A) maintain ethical behavior. 
B) follow all regulations. 
C) maximize the value of the firm. 
D) hire a large number of employees. 
A) maintain ethical behavior. 
B) follow all regulations. 
C) maximize the value of the firm. 
D) hire a large number of employees.

Question 19

For some products,quality is virtually impossible to determine prior to purchase.If sellers of such commodities are rational,they will cheat or engage in unethical behavior only when:

Accepted Answer

A) laws allow unethical behavior. 
B) the expected gains are greater than the expected costs. 
C) production exhibits positive externalities. 
D) the expected gains are equal to the expected costs. 
A) laws allow unethical behavior. 
B) the expected gains are greater than the expected costs. 
C) production exhibits positive externalities. 
D) the expected gains are equal to the expected costs.

Question 20

Ethics is about making good decisions.Sometimes it is hard to see what economics has to do with ethics until you remember that economics is often defined as the:

Accepted Answer

A) science of choice. 
B) key branch of theology. 
C) study of market failures. 
D) study of production techniques. 
A) science of choice. 
B) key branch of theology. 
C) study of market failures. 
D) study of production techniques.

Exam 22: Ethics and Organizational Architecture

Identity the correct statement regarding corporate culture and corporate ethics.

Economist Milton Friedman argued that ethical behavior followed and practiced by organizations is the same as:

Which of the following will control incentive problems in a corporation?

In the United States,there are numerous organizations,some sponsored by business and others that are independent of business,that monitor the behavior,the product quality,and the service provided by businesses.What role do these organizations have in the process of promoting ethical behavior?

Many businesses face the same customers over and over again.Repeat business generally:

Many codes of ethics attempt to alter or reinforce standards of behavior.An economist wouldn't argue with the codes but would probably note that:

Martha Stewart seems to have made a bad decision concerning the use of insider information in selling ImClone stock.The resulting negative publicity on the issue caused the value of her corporation,Martha Stewart Living,to fall by almost half.This example is supposed to show that:

Ralph Nader has long argued that large corporations in oligopolistic markets should use their vast productive powers to redress social ills.Implementing this policy may put companies:

The text notes that many firms that use animals in production or advertising adopt the animal treatment standards of the American Society for Prevention of Cruelty to Animals.Why do companies adopt a professional group's standard of behavior?

The corporate ethics problem is basically a problem of controlling:

In a situation where customers will never be seen again:

Consumer Reports and other organizations rank companies on the quality of their products and the reliability of their services.These companies provide an:

Milton Friedman's view on corporate social responsibility:

Compensating differentials for employees can be seen as one measure of adjusting for:

Incentive problems in a business can lead to:

Economist Jack Hirshleifer notes that,"Altruism economizes on the costs of policing and enforcing contracts." Since economics assumes that people act in a self-interested manner,what could he possibly mean?

A seller-provided product warranty is often offered to a consumer to:

The key mission that most economists ascribe to a firm's managers is to:

For some products,quality is virtually impossible to determine prior to purchase.If sellers of such commodities are rational,they will cheat or engage in unethical behavior only when:

Ethics is about making good decisions.Sometimes it is hard to see what economics has to do with ethics until you remember that economics is often defined as the:

Introduction

Economists View of Behavior

Exchange and Markets

Demand

Production and Cost

Market Structure

Pricing With Market Power

Economics of Strategy: Creating and Capturing Value

Economics of Strategy: Game Theory

Incentive Conflicts and Contracts

Organizational Architecture

Decision Rights: the Level of Empowerment

Decision Rights: Bundling Tasks Into Jobs and Subunits

Attracting and Retaining Qualified Employees

Incentive Compensation

Individual Performance Evaluation

Divisional Performance Evaluation

Corporate Governance

Vertical Integration and Outsourcing

Leadership: Motivating Change Within Organizations

Understanding the Business Environment: the Economics of Regulation

Organizational Architecture and the Process of Management Innovation

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