Deck 4: Ethics in the Market Place

Question 1

Which of the following are characteristics of a perfectly free economy?

A) There are numerous buyers and sellers, none of whom has a substantial share of the market.
B) All buyers and sellers can freely and immediately enter or leave the market.
C) Every buyer and seller has full and perfect knowledge of what every other buyer and seller is doing, including knowledge of the prices, quantities, and quality of all goods being bought and sold.
D) All the above
E) B & C

Answer 1

D

Question 2

When companies get together to fix prices, the result is a .

A) A consortium of suppliers.
B) An oligopoly.
C) A monopoly.
D) None of the above.

Answer 2

C

Question 3

Efficiency comes about in perfectly competitive free markets when:

A) Firms are motivated to invest resources in industries with a high consumer demand and move away from industries where demand is low.
B) Firms are encouraged firms to minimize the resources they consume to produce a commodity and to use the most efficient technologies.
C) Commodities are distributed among buyers such that buyers receive the most satisfying commodities they can purchase, given what is available to them and the amount they have to spend.
D) All the above
E) A & B

Answer 3

D

Question 4

The common definition of price fixing is:

A) When companies agree to set prices artificially high.
B) When companies agree to limit production.
C) When a company sells a buyer certain goods only on condition that the buyer also purchases other goods from the firm.
D) When companies agree to limit production.

Question 5

In a perfectly free economy, all buyers and sellers are utility maximizers: Each tries to get as much as possible for as little as possible.

Question 6

A survey of major corporate executives indicated that 60 percent of those sampled believed that many businesses engage in price fixing.

Question 7

In a perfectly free competitive market, no buyer or seller has the power to significantly affect the price of a good.

Question 8

Because Microsoft Corporation's, market share is only 92 percent of the market in operating systems (Windows) and 94 percent of the market in integrated office suite software (MS Office), Microsoft is not considered a monopoly.

Question 9

The most obvious failure of monopoly markets lies in the high prices they allow the monopoly companies to charge, violating capitalist justice.

Question 10

Proponents of the Antitrust view argue that prices and profits in highly concentrated industries are higher than they should be. By breaking up large corporations into smaller units, they claim, higher levels of competition will emerge in those industries.

Question 11

When a company sells a buyer certain goods only on condition that the buyer also purchases other goods from the firm, this is known as:

A) Manipulation of supply.
B) Exclusive dealing arrangements
C) Price discrimination
D) Tying arrangement

Question 12

In a monopoly, there is only one seller, but other sellers can enter the market.

Question 13

When a buyer purchases a good, each additional item of a certain type is less satisfying than the earlier ones. This is known as:

A) The principle of increasing marginal utility
B) The principle of gross marginal utility
C) The principle of diminishing marginal utility
D) The principle of consumer awareness

Question 14

Monopolistic markets and their high prices and profits violate capitalist justice because the seller charges more than the goods are worth. Thus, the prices the buyer must pay are unjust.

Question 15

As in the ADM case, all that companies have to do to fix price is to agree on the price for which the companies will sell the product.