BUS 309 Week 5 Quiz – Strayer
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Chapter 4—The Nature of Capitalism
1. Which of the following historical stages of capitalism came first?
a. financial b. mercantile c. industrial d. state welfare
2. The profit motive
a. is a fundamental feature of all societies.
b. is no longer a key feature of capitalism.
c. must be checked by competition if society is to benefit.
d. is basically immoral.
3. A basic tenet of capitalism is that
a. property refers only to physical objects.
b. ownership is a simple relationship between a person and the thing owned.
c. capitalism requires private ownership of the major means of production.
d. in the 21st century, capitalism no longer requires capital.
4. The concept of the “invisible hand” means
a. pursuit of private gain will bring the best overall results.
b. although it can’t be seen, the hand of government controls the economy.
c. feudalism inevitably gives rise to capitalism.
d. externalities must be internalized.
5. A basic premise of Adam Smith’s invisible hand argument is
a. human beings try to avoid acquisitive behavior.
b. when people are left to pursue their own economic interests, disaster looms.
c. the division of labor, though good for the firm, reduces overall efficiency.
d. We often get what we want from others by offering something they need from us.
6. One of the key features of capitalism is
a. favoritism. b. cooperation. c. inequality. d. competition.
7. Some critics of capitalism believe that it rests on a flawed view of human beings because
a. capitalism produces equality.
b. capitalism eliminates poverty.
c. capitalism assumes that well-being comes from greater material consumption.
d. capitalism offers a higher sense of purpose.
8. One reason for believing that in practice capitalism fails to live up to its own ideal of competition is
a. we have government subsidies and protective tariffs.
b. monopolies control almost all areas of economic life.
c. so many small companies go bankrupt.
d. the outsourcing of jobs.
9. Karl Marx believed that
a. capitalist workers suffer from alienation.
b. capitalism no longer exploits workers.
c. industrialization does away with alienation.
d. workers are alienated from their products, but not from themselves or other people.
10. An assessment of work in America is
a. American manufacturing is growing faster than ever.
b. American corporations ignore short-term performance.
c. manufacturing still employs more people than government.
d. many manufacturing companies have become “hollow” or “weightless”.
11. An exclusive focus on short-term performance
a. is the best guarantee of a company’s long-term performance.
b. has helped to create a high-pressure environment conducive to fraud.
c. encourages long-term research and development.
d. hurts stock prices.
12. Evidence for the idea that American manufacturing is declining is
a. the fact that government now employs more people than manufacturing.
b. a reluctance to outsource.
c. fewer “hollow” corporations.
d. a shrinking trade deficit.
13. According to one survey of cultural values
a. Americans value work more than Japanese do.
b. for Americans, only good health is more important than work.
c. Americans typically value things like their children’s education and a satisfactory love life more than work.
d. Americans place no value on work, only on money.
14. Which statement best describes capitalism?
a. Capitalism is an economic system in which the means of production and distribution is in state hands.
b. Capitalism is an economic system that operates under the profit motive.
c. Capitalism is an economic system that dispenses with competition.
d. Capitalism is an economic system where the profits generated belong to the state as a whole.
15. Which of the following is an accurate statement?
a. Adam Smith defends capitalism by appealing to the idea of a natural, moral right to property.
b. Adam Smith denies that human beings are, by nature, acquisitive creatures.
c. A common defense of capitalism is the argument that people have a fundamental moral right to property and that our capitalist system is simply the outcome of this natural right.
d. Utilitarians oppose capitalism in principle.
16. Marxism states
a. capitalism leads to a concentration of property and thus a concentration of resources and power in relatively few hands.
b. socialism will eventually be replaced by financial capitalism.
c. the means of production should be placed under the control of the bourgeoisie.
d. only workers who are poorly paid in a capitalist system are alienated.
17. Which of the following accurately reflects the concept of Marxism?
a. It is only within a capitalist economic system that workers are not alienated from the products of their labor.
b. Only workers who are poorly paid for their labor are alienated.
c. Within a capitalist economic system, the activity of labor is an end in itself and, as a result, has intrinsic value.
d. Labor is alienated in a capitalist economic system (in part) because the labor of a worker stands opposed to the worker as an autonomous power.
18. Which statement accurately describes capitalism?
a. Industrial capitalism is characterized by pools, trusts, holding companies and an interpenetration of banking, insurance and industrial interests.
b. Mercantile capitalism emerged in the United States in the period directly following the civil war.
c. In state welfare capitalism the government plays an active role in regulating economic activities in an effort to smooth out the boom-and-bust pattern of the business cycle.
d. Financial capitalism developed in the period immediately prior to the Renaissance.
19. For employees who are paid handsomely for their efforts, Marx said their work would ultimately prove to be
a. profitable to them. c. meaningless to them.
b. expensive to them. d. tireless.
20. For the first time since the Industrial Revolution, less than _____ percent of the American workforce was employed by manufacturing.
a. 10 b. 25 c. 50 d. 62
21. Though many jobs are outsourced, most economists believe
a. Mexico is the place to work.
b. the United States is in trouble.
c. the economy will create new jobs in the USA.
d. manufacturing will make a comeback.
22. Many economists are concerned that the growing trade deficit makes the U.S. vulnerable to
a. terrorist attacks. c. ease.
b. depression. d. economic extortion.
23. Rather than strong work ethic, a common attitude is:
a. Me-first c. I like it easy
b. Happy days are here to stay d. Let the boss sweat it
24. How many Americans believe that “if you work hard enough, you’ll make it?”
a. One out of two. b. One out of three. c. One out of four. d. One out of five.
25. The Fugger dynasty was an example of
a. industrial capitalism. c. financial capitalism.
b. mercantile capitalism. d. globalized capitalism.
1. Worker control socialism is a hybrid economic system with no marketplace and no profits.
2. Utilitarians reject the very idea of a natural right to property.
3. If it’s true that individuals have a natural right to own property, then there can be no limits on this right.
4. Some critics believe that “competition is not a good” because trying to do well and trying to beat others are two different things.
5. Adam Smith claims that the people seeking self-interest in a free market through competition can benefit society as a whole.
6. Capitalism is possible without private property.
7. According to Marx, when workers are alienated they are not truly free.
8. None of the specific measures proposed by Marx and Engels in the Communist Manifesto have been implemented in capitalist countries.
9. Companies that in years past were identified with making goods of all sorts now are likely to produce only the package and the label.
10. Capital is that money that is invested for the purpose of making more money.
11. Socialism is an economic system characterized by public ownership of property and a planned economy.
12. According to Alfie Kohn, competition promotes individual and group achievement better than cooperation.
13. Outsourcing is a practice where companies buy parts or whole products from other producers, both at home and abroad.
14. The capitalism that we know today in the United States is a “pure” form of laissez-faire capitalism.
15. According to a socialist, the best economic system would be one where the means of production and distribution are in the hands of the bourgeoisie.
16. Government programs often subsidize American businesses and protect them from competition.
17. Implicit in capitalism is the view that human beings aim to maximize their economic self-interest.
18. According to Adam Smith, the division of labor decreases economic activity.
19. As a classical moral justification of capitalism, the natural right to property is a utilitarian justification.
20. The sense of private property that is central to capitalism is the ownership of the means of production and distribution.
21. What we call capitalism did not fully emerge until the Renaissance in Europe during the 15th and 16th centuries.
22. Socialism is an economic system characterized by public ownership of the means of production and distribution, and a planned economy.
23. The U. S. trade deficit has shrunk significantly in recent decades.
24. Property ownership involves a generally complex bundle of rights and rules governing how, under what circumstances, and in what ways both the owner and others can use, possess, dispose of, and have access to the thing in question.
25. According to John Stuart Mill, what makes capitalism a desirable economic system is the type of worker-capitalist relationship inherent in capitalism.
1. What is the difference between capitalism and socialism? What is “worker control socialism”?
2. What are the five different historical forms of capitalism?
3. What are the four features of capitalism?
4. Sometimes capitalism is defended based on the idea that we have a natural right to property. How might this defense be criticized?
5. What is the “invisible hand” of Adam Smith?
6. How do defenders of capitalism respond to critics who point to the profound economic inequalities that characterize capitalist society?
7. Why do some critics of competition believe that it isn’t all that it’s cracked up to be?
8. What reason is there for thinking that American manufacturing is declining?
9. What does it mean to say that American companies are too focused on the short term?
10. What is capitalism’s view of human nature?
1. Can we justly criticize capitalism for leading to exploitation? Compare and contrast how this question can be answered using two different theories of ethics.
2. Is manufacturing vital to the success and well being of America? Justify your answer
3. Is Walmart a positive or negative influence on the American economy? Justify your position with information from the “One Nation Under Walmart” article.
4. What objection to laissez-faire do you find the most persuasive? How might one defend laissez-faire from such an objection?
5. How can you justify the role of “sweatshops” after reading the article, “In Defense of International Sweatshops”? Defend your position with facts.
1. The statement that accurately describes corporations is
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.
2. Corporations differ from partnerships and other forms of business association in two ways. One of these is that
a. they are regulated by the Federal Trade Commission.
b. they are formed simply by an agreement entered into among their members.
c. they must be publicly registered or in some way officially acknowledged by the law.
d. their shareholders are entitled to their share of the company’s profits as soon as they are ascertained or determined.
3. The first corporations
a. were towns, universities, and ecclesiastic orders.
b. emerged in the 19th century.
c. were government owned.
d. were profit-making associations.
4. Which of the following contributed to the more relaxed incorporation procedures of modern times?
a. The idea that incorporation is a by-product of the people’s right to associate, not a gift from the state.
b. The move from mercantilist thinking to a belief in Benjamin Franklin’s invisible hand.
c. The idea that incorporation is a gift from the state.
d. The thought that laissez-faire is a losing proposition..
5. In Citizens United v. Federal Elections Commission, the U.S. Supreme Court
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.
6. A common point of contention about corporations is
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.
7. Milton Friedman argues that
a. corporations today should adopt a broader view of their social responsibilities than they have in the past.
b. corporate officials have a social responsibility that goes beyond serving the interests of their stockholders.
c. strict governmental controls are necessary if society is to maximize its overall economic well-being.
d. a business’s only social responsibility is to maximize profits within the rules of the game.
8. Which of the following do advocates of the broader view of corporate social responsibility believe?
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.
9. 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
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.
10. Which of the following is one of the three arguments in favor of narrow corporate social responsibility discussed in Chapter 5?
a. business-can-handle-it c. society-lacks-the-expertise
b. let-government-do-it d. visible-hand
11. One of the three important “limits to what the law can do” discussed by Christopher Stone is
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.
12. Kenneth Arrow discussed two important situations in which profit maximization can be socially inefficient. One of these occurs when
a. there is an imbalance of knowledge between buyer and seller.
b. business would be an “inept custodian” of public values.
c. firms are unwilling or simply refuse to maximize profits.
d. corporate culture promotes dysfunctional social relations.
13. Externalities are
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.
14. Milton Snoeyenbos argues that
a. settled economic life requires purely selfish behavior.
b. with ethical codes, there’s no need for taxes, laws, or regulations as a way of controlling corporate behavior.
c. Corporate moral codes can make it more reasonable to expect employees to behave ethically.
d. to be viable, ethical codes need not be widely accepted or part of corporate culture.
15. The best statement concerning corporations is
a. corporations don’t need moral codes.
b. corporate culture refers to the cultural activities sponsored by the company for its employees.
c. pollution caused by corporations isn’t an externality.
d. corporate culture can be both explicit and implicit.
16. Momentum for the corporate organization of business really gained momentum after which war?
a. Revolutionary War c. Civil War
b. French and Indian War d. World War I
17. The debate over corporate moral agency hinges on which issue?
a. Corporate decision c. Individual responsibility
b. Corporate punishment d. Corporate fit
18. The idea that corporations are moral agents
a. is accepted by many people and companies without hesitation.
b. has not been accepted by the courts.
c. has not been accepted by any major corporation.
d. is supported by the fiduciary relationship between management and shareholders.
19. The “rules of the game” for corporate work are intended to
a. let the games begin. c. destroy the competition.
b. promote open and free competition. d. make business fun.
20. Milton Friedman’s perspective is that the only social responsibility of a business is to
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.
21. Those with a broader view concerning business obligations believe that with power comes
a. more power. c. too many limits .
b. more money. d. social responsibility.
22. Melvin Anshen suggests that there is a relationship between business and society which he termed as
a. “share the wealth.”
b. “the rich get richer and the poor get poorer.”
c. “social contract.”
d. “one for all and all for one.”
23. Most Americans believe a corporation’s top obligation is to its
a. nation. b. stockholders. c. community. d. employees.
24. In the corporate world, the board of directors will typically
a. rubber stamp the policies and recommendations of the management.
b. write the policies and procedures.
c. be there just for show.
d. hire and fire people for key management positions.
25. Adam Smith proposed that in our pursuit of economic interests we are led by
a. our gut instincts. c. the trends of the economy.
b. an invisible hand to promote general good. d. the moral compass within each of us.
1. 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.
2. Internal or external corporate responsibility audits can help improve a corporation’s “corporate culture.”
3. Corporate internal decision (CID) structures amount to established procedures for accomplishing specific goals.
4. “Limited liability” means that members of a corporation are financially liable for corporate debts only up to the extent of their investments.
5. The invisible-hand argument against broadening corporate responsibility says that business’s appetite for profit should be controlled by the hand of the government.
6. Milton Friedman argues that business has a responsibility to provide employment, refrain from polluting, and eliminate discrimination, even when it’s not profitable to do so.
7. Externalities are the unintended negative (or in some cases positive) consequences that an economic transaction between two parties can have on some third party.
8. The business-can’t-handle-it argument is an argument in favor of a broad view of corporate responsibility.
9. 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.
10. The case of Citizens United v. Federal Election Commission ruled that corporations could spend money to support political candidates.
11. Manuel Velasquez claims that the corporate internal decision structure of a corporation shows that a corporation can have both intentions and intentionality.
12. According to Milton Friedman, business has no social responsibilities other than to maximize profits so long as it follows the rules of the game.
13. 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.
14. According to Melvin Anshen, the case for a broad view of corporate responsibility can be defended on the basis of there always being a kind of social contract existing between business and society.
15. Externalities give us a reason to support the narrow view of corporate responsibility.
16. 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.
17. 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.
18. John Kenneth Galbraith rejects the assumption that Smith’s invisible hand will solve all social and economic problems.
19. The idea that corporations will impose their values on us supports one of the arguments for the narrow view of corporate social responsibility.
20. In his essay “Social Responsibility and Economic Efficiency,” Kenneth Arrow has argued that corporations only have a responsibility to maximize shareholder profits.
21. An effective professional or business moral code—as well as the public’s awareness of this code—is never good for business.
22. It is never profitable for corporations to acknowledge that business should be conducted to make a positive contribution to society rather than just make a profit.
23. 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.
24. According to Kenneth Arrow, trust and confidence are highly overrated in business.
25. A corporate moral code should set reasonable goals and subgoals, with an eye on blunting unethical pressures on subordinates.
1. What is a corporation (or limited-liability company) and how does it differ from partnerships and other forms of business association? What are the different kinds of corporations?
2. Briefly sketch the evolution of corporations.
3. What is the problem of “vanishing individual responsibility?”
4. Briefly explain Milton Friedman’s view of social responsibility.
5. Explain the relevance of the concept of a fiduciary relationship to the debate over corporate social responsibility.
1. Describe the ethical challenges that Yahoo faces in the China market.
2. What is a moral issue raised by how drug companies are testing drugs? Apply a normative theory of ethics to this moral issue to explain why some people would think the drug companies are doing something immoral.
3. What has Yahoo done that could help countries violate human rights? Apply a normative theory of ethics to this moral issue to explain why Yahoo did something immoral.
4. Is Levi Strauss really hurting the people of Costa Rica by opening the operation there? List the pros and cons.
5. Does a company like Levi Strauss have an obligation to keep a plant open in the United States if it can be more profitable going to a foreign country? Share your reasoning.
If you were the owner of a company, would your perspective be any different?