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NEW QUESTION: 1
One of your colleagues is running an event to raise money for a local charity. One evening, you see her taking boxes of pens, notepads and post-it notes. When you challenge her, she says that she is taking them for her fundraising and, although she has not asked permission to take them, she is sure the company will not mind. Is this an ethical issue and why?
A. Yes - she should not be undertaking charitable initiatives
B. No - it is just stationery and nothing valuable
C. No - the company would undoubtedly not mind her using the stationery for charitable purposes, so there is nothing wrong with her taking it
D. Yes - she is using company property for other purposes without permission
Answer: D
NEW QUESTION: 2
Mary Andrews and Drew McClure are economists for Gasden Econometrics. Gasden provides economic consulting and forecasting services for governments, corporations and small businesses. Andrews and McClure are currently consulting for the developing country of Wakulla, which is considering imposing new regulations on its businesses.
Due to increases in industrial production in the country, the demand for electricity has increased.
Unfortunately the cost of electricity has increased as well, and the Wakullian government is considering regulating the electrical utility industry by limiting the amount producers can charge. The price limits would be established so that the utilities can set their own prices as long as they do not earn a return on invested capital that is higher than the average Wakullian business.
The Wakullian government has also proposed stiffer environmental regulations on its firms because the level of air quality has declined in its largest cities. Andrews advises that this regulation is likely to increase production costs that will burden smaller businesses more than larger businesses, and thus can adversely affect competition within an industry. The higher production cost from the environmental regulation will ultimately be borne by consumers, she asserts.
One of the concerns of the Wakullian government is that previous regulation of the economy has been ineffective. For example, when the automobile industry was required to increase the fuel efficiency of passenger vehicles, they increased the weight of some vehicles so more could be classified as trucks, instead of passenger vehicles. The trucks were not subject to the regulation and as a result, fuel efficiency actually declined in the country due to the heavier weight of trucks. McClure comments that the regulation should have been written so that the regulation would be more effective.
McClure gives another example of an ineffective regulation from the automobile industry. When airbags were required in automobiles, consumers started wearing their seat belt less often and driving at higher speeds because the airbags gave them a feeling of greater safety. Consequently, driving fatalities and injuries did not decline as much as expected.
Some regulation, Andrews states, is limited in effectiveness when the regulators are chosen from the industry that is regulated. For example, Andrews states that, due to the level of scientific knowledge needed, many regulatory bodies for the pharmaceutical industry are dominated by former drug company executives and scientists. She states that, according to the share-the-gains, share-the-pains theory, regulatory decisions tend to favor the drug industry because of the close relationship between the industry and the regulator.
McClure adds that another example of regulatory ineffectiveness is when telephone companies go before their regulatory bodies to ask for rate increases. He states ihat according to the capture hypothesis, telephone companies will have greater economic resources and more at stake than individual consumers.
As a result, the regulatory decisions tend to favor the telephone industry.
The Wakullian government is considering some of the country's industries. To illustrate the potential costs and benefits of deregulation to the Wakullian government, Andrews and McClure compose a matrix of the potential consequences of deregulation. In the matrix, three scenarios of possible economic consequences are presented in Exhibit 1.
Which of the following scenarios proposed by Andrews and McClure is the most likely result from deregulation?
A. Scenario C.
B. Scenario A.
C. Scenario B.
Answer: A
Explanation:
Explanation/Reference:
Explanation:
Scenario C is the most likely scenario resulting from deregulation. As a result of deregulation, in the short run:
* High cost producers may exit the industry due to lower profits. The quality of goods and services may decline.
* Prices may rise.
* Unions become less powerful and employees may be laid off. As a result of deregulation, in the long run:
* Industries will become more competitive as barriers to entry fall.
* Prices should fall.
(Study Session 4, LOS 15.c)
NEW QUESTION: 3
A. Option C
B. Option D
C. Option A
D. Option B
Answer: A
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