Question 1

A corporate moral code should set reasonable goals and subgoals, with an eye on blunting unethical pressures on subordinates.

Accepted Answer

A) True 
 B)False

Question 2

Milton Friedman's perspective is that the only social responsibility of a business is to

Accepted Answer

A)  provide social benefit for the messes. 
B)  give jobs to the hard workers. 
C)  pay taxes to keep the government operating. 
D)  make money for its owners.

Question 3

The invisible-hand argument against broadening corporate responsibility says that business's appetite for profit should be controlled by the hand of the government.

Accepted Answer

A) True 
 B)False

Question 4

Externalities are

Accepted Answer

A)  always positive, never negative. 
B)  a blessing in disguise in inflationary times. 
C)  an inevitable by-product of social responsibility. 
D)  unintended side-effects.

Question 5

Which of the following do advocates of the broader view of corporate social responsibility believe?

Accepted Answer

A)  Corporations should not internalize their externalities. 
B)  Moral responsibility arises from social power. 
C)  Corporations have moral obligations to consumers, to employees, to suppliers and contractors, to the surrounding community, and to society at large. 
D)  The moral contract between business and society has changed since the 19th century.

Question 6

According to Kenneth Arrow, trust and confidence are highly overrated in business.

Accepted Answer

A) True 
 B)False

Question 7

"Limited liability" means that members of a corporation are financially liable for corporate debts only up to the extent of their investments.

Accepted Answer

A) True 
 B)False

Question 8

Legally a corporation is a thing that can endure beyond the natural lives of its members and that has incorporators who may sue and be sued as a unit and who are able to consign part of their property to the corporation for ventures of limited liability.

Accepted Answer

A) True 
 B)False

Question 9

Most business observers agree with Berle and Means that, because stock ownership in large corporations is so dispersed, actual control of the corporation has passed to management.

Accepted Answer

A) True 
 B)False

Question 10

According to proponents of broadening corporate responsibility, corporations should welcome the outside opinions of society as a whole, local communities, customers, suppliers, employees, managers, and stockholders.

Accepted Answer

A) True 
 B)False

Question 11

One of the three important "limits to what the law can do" discussed by Christopher Stone is

Accepted Answer

A)  laws are passed before there is any real problem to worry about. 
B)  consumers don't want further legal regulation. 
C)  designing effective regulations is difficult. 
D)  regulators are often "bought off" by corporations.

Question 12

Some argue for the narrow view of corporate social responsibility on the ground that managers have a fiduciary responsibility to maximize the profits of their shareholders. As discussed in Chapter 5, one problem with this argument is that

Accepted Answer

A)  companies do not usually have a clear chain of command. 
B)  promises don't override all our other obligations. 
C)  managers don't always know how to maximize profits. 
D)  stockholders don't expect company managers to make money for them.

Question 13

Momentum for the corporate organization of business really gained momentum after which war?

Accepted Answer

A)  Revolutionary War 
B)  French and Indian War 
C)  Civil War 
D)  World War I

Question 14

A common point of contention about corporations is

Accepted Answer

A)  corporate punishment is no different from individual punishment. 
B)  modern corporations no longer utilize a CID structure. 
C)  philosophers and business theorists disagree whether corporations are moral agents. 
D)  if corporations are moral agents, then this relieves individual human beings of any moral responsibility.

Question 15

According to Keith Davis, in addition to considering potential profitability, a business must weigh the long-range social costs of its activities as well. A business should act only if the overall benefit to society is positive.

Accepted Answer

A) True 
 B)False

Question 16

According to law professor Christopher D. Stone, the relationship between corporate management and its shareholders is identical with the relationship between you and an investment adviser.

Accepted Answer

A) True 
 B)False

Question 17

The statement that accurately describes corporations is

Accepted Answer

A)  corporate shareholders have limited liability for their debts. 
B)  corporations must be "publicly held" and thus traded on the stock market. 
C)  corporations are always for-profit. 
D)  corporate shareholders are immediately entitled to any profits.

Question 18

In Citizens United v. Federal Elections Commission, the U.S. Supreme Court

Accepted Answer

A)  defined the free-speech rights of corporations for the first time. 
B)  defended the first Amendment right of corporations to spend money to support political candidates they favor. 
C)  said that banking procedures are to be regulated by the Securities and Exchange Commission. 
D)  said that states should be permitted to distinguish between the rights of individuals and the rights of corporations.

Question 19

Adherents of the broader view of corporate responsibility claim that modern business is intimately integrated with the rest of society and that, as a result, although society expects business to pursue its economic interests, business has other responsibilities as well.

Accepted Answer

A) True 
 B)False

Question 20

The first corporations

Accepted Answer

A)  were towns, universities, and ecclesiastic orders. 
B)  emerged in the 19th century. 
C)  were government owned. 
D)  were profit-making associations.

Exam 5: Corporations

A corporate moral code should set reasonable goals and subgoals, with an eye on blunting unethical pressures on subordinates.

Milton Friedman's perspective is that the only social responsibility of a business is to

The invisible-hand argument against broadening corporate responsibility says that business's appetite for profit should be controlled by the hand of the government.

Externalities are

Which of the following do advocates of the broader view of corporate social responsibility believe?

According to Kenneth Arrow, trust and confidence are highly overrated in business.

"Limited liability" means that members of a corporation are financially liable for corporate debts only up to the extent of their investments.

Legally a corporation is a thing that can endure beyond the natural lives of its members and that has incorporators who may sue and be sued as a unit and who are able to consign part of their property to the corporation for ventures of limited liability.

Most business observers agree with Berle and Means that, because stock ownership in large corporations is so dispersed, actual control of the corporation has passed to management.

According to proponents of broadening corporate responsibility, corporations should welcome the outside opinions of society as a whole, local communities, customers, suppliers, employees, managers, and stockholders.

One of the three important "limits to what the law can do" discussed by Christopher Stone is

Some argue for the narrow view of corporate social responsibility on the ground that managers have a fiduciary responsibility to maximize the profits of their shareholders. As discussed in Chapter 5, one problem with this argument is that

Momentum for the corporate organization of business really gained momentum after which war?

A common point of contention about corporations is

According to Keith Davis, in addition to considering potential profitability, a business must weigh the long-range social costs of its activities as well. A business should act only if the overall benefit to society is positive.

According to law professor Christopher D. Stone, the relationship between corporate management and its shareholders is identical with the relationship between you and an investment adviser.

The statement that accurately describes corporations is

In Citizens United v. Federal Elections Commission, the U.S. Supreme Court

Adherents of the broader view of corporate responsibility claim that modern business is intimately integrated with the rest of society and that, as a result, although society expects business to pursue its economic interests, business has other responsibilities as well.

The first corporations