Deck 7: Ethics and Products

Question 1

The suits against McDonald's for plaintiffs' obesity have been dismissed.

Answer 1

False

Question 2

Mattel's stock price did not drop because it acted quickly on its recall.

Answer 2

False

Question 3

Failure to disclose the dangers of a diet program is an ethical issue.

Answer 3

True

Question 4

Intentional breach of a contract carries a legal remedy, but it is also unethical.

Question 5

The withholding of material information in a contract relationship is an ethical issue as well as misrepresentation.

Question 6

Lead paint is legal for use in China.

Question 7

Taking advantage of a party in a contract situation due to the party's inexperience, and not due to any lack of disclosure on your part, is ethical.

Question 8

Lead paint lasts longer than unleaded paint.

Question 9

Mattel had design issues with some of its toys.

Question 10

Although you are not part of your company's engineering group, you have discovered a major flaw in the company's new paper-thin solar calculator. The calculator adds when the subtract button is pressed if there are more than three figures to the right of the decimal point. Since it is not your area, you should do and say nothing.

Question 11

Long-term relationships create ethical and legal obligations between the parties through conduct and accommodations.

Question 12

Telling a customer he needs repair work done on a vehicle when the vehicle is in fine condition is unethical and misrepresentation.

Question 13

With respect to #11, it is not necessary for the company to take any action to correct the problem or refund money for those who already own the new calculator.

Question 14

The failure to disclose material information in negotiations is an ethical breach.

Question 15

Taking your current employer's customer list to a prospective employer is a breach of trust.

Question 16

Taking your current employer's supply chain management system to a prospective employer is not a breach of trust.

Question 17

You are in marketing for one of the three U.S. auto manufacturers. You have just received a notice from your seat belt buckle supplier that the buckles shipped to you and used in the cars made between June 94 and September 94 are defective. The defect means that the buckles will come undone if pressure is placed on the belts at any speed over 10 miles per hour. You must encourage your firm to issue a recall.

Question 18

The sale of a product with known, but undisclosed dangers, is unethical.

Question 19

All of the problems that resulted in Mattel's toy recalls were the result of factory issues in China.

Question 20

The failure to correct a known defect in a product is both an ethical lapse and a basis for a negligence claim.

Question 21

Stem-cell research carries ethical questions for biotech firms.

Question 22

The subprime market did not begin until 2007.

Question 23

Craigslist is not required by law to screen ads placed on its online service for illegal conduct.

Question 24

Fast-and-easy mortgage loans were largely undocumented loans.

Question 25

Toyota was clear on the cause of accidents in its vehicles from the first complaint of sudden acceleration.

Question 26

The failure to provide safe packaging is a product liability issue.

Question 27

Reverse mortgages are a form of subprime lending.

Question 28

Pfizer's fine was high because of its previous violations.

Question 29

Tylenol did a rapid recall of its products when consumers reported black flecks were present in the liquid product forms of the company's analgesics.

Question 30

The default rate on subprime mortgage loans is no higher than the default rate for conventional loans.

Question 31

The FDA declined to regulate General Mills and Cheerios ads.

Question 32

Stem-cell research debates center on the question of when life begins.

Question 33

Kellogg's was forced to remove its claims that Rice Krispies increased children's attentiveness from its cereal boxes.

Question 34

Countrywide was acquired by Bank of America.

Question 35

Countrywide went bankrupt.

Question 36

Tylenol's competitors were able to win customers when Tylenol's quality control problem was revealed.

Question 37

Releasing a product with known safety problems for sale to the public is an ethical breach.

Question 38

The whistleblower in the Pfizer sales tactic case was fired.

Question 39

Ford and Firestone have been named as defendants in lawsuits brought by owners of Ford Explorers who have been involved in rollover accidents in their vehicles. For Firestone to be held solely liable for the accidents:

A) Ford must establish that there was no defect in design or manufacture or warning with its Explorer.
B) Firestone cannot be held liable to the Explorer owners because they did not buy their tires directly from Firestone.
C) Ford must show that Firestone was aware of defects in its tires.
D) None of the above

Question 40

The failure to redesign a product with a safety flaw is a product liability issue.

Question 41

What value did Ford put on human life in its analysis of its Pinto issue?

A) $2 million
B) $1 million
C) $200,000
D) $100,000

Question 42

What temperature were most fast-food chains using at the time of the Jack-in-the-Box E-Coli illnesses and deaths?

A) 140 degrees
B) 150 degrees
C) 155 degrees
D) 160 degrees
E) 165 degrees

Question 43

What was the required legal temperature for cooking burgers at the time of the E-Coli illnesses and deaths?

A) 140 degrees
B) 150 degrees
C) 155 degrees
D) 160 degrees
E) 165 degrees

Question 44

What was the cost of partially or completely fixing the Pinto gas tank to better withstand rear-end collision impact?

A) The costs of the changes ranged from $1.80 to $15.30
B) The costs were over 10% of the cost of the car
C) The costs were too great because the car had to be redesigned
D) None of the above

Question 45

What was the original verdict against GM in the LA Malibu case?

A) $1.2 billion
B) $2 billion
C) $4.9 billion
D) $5.0 billion

Question 46

Who is Edward Ivey?

A) The drunk driver in the Malibu accident case
B) CEO of General Motors
C) Engineer who performed a cost-benefit analysis on the Malibu and its gas tank issues
D) None of the above

Question 47

What dictated the placement of the Pinto gas tank?

A) Safety
B) Style
C) Weight
D) Government regulations

Question 48

What did the GM internal memo estimate the cost of the exploding gas tanks would be to GM?

A) $2.40 per car
B) The memo did not do that analysis because it did not put a value on human life
C) GM had learned from the Ford Pinto case and did not have such a memo
D) $200,000 per car

Question 49

What did the memo entitled, "Fatalities Associated with Crash Induced Fuel Leakage and Fires" analyze?

A) Other auto manufacturers' cars and their risks
B) The cost-benefit analysis of producing the Pinto as is or changing its design/components
C) The history of rear-end auto collisions in the U.S.
D) None of the above

Question 50

What memo did GM have that was different from the Ford Pinto situation?

A) There was no GM memo
B) A memo from a lawyer advising against releasing any internal company analysis of the Malibu design
C) A memo that fired engineers who worked on the Malibu
D) None of the above

Question 51

If Firestone establishes that Ford provided incorrect instructions for owners on inflation of tires and that the tires were underinflated at the time of the accidents:

A) Ford is liable if it was aware of the underinflation.
B) Ford is not liable because of Firestone's failure to anticipate the inflation issue.
C) Ford is liable.
D) None of the above

Question 52

What was Lee Iacocca's objective in designing the Pinto?

A) A car less than 2,000 pounds that cost less than $2,000
B) A carefully designed competitor for small imports
C) Safety
D) None of the above

Question 53

What temperature was Jack-in-the-Box cooking its burgers at when the E-Coli illnesses and deaths occurred?

A) 140 degrees
B) 150 degrees
C) 155 degrees
D) 160 degrees
E) 165 degrees

Question 54

What did the state of Indiana do with regard to Ford's Pinto?

A) Banned the sale of the Pinto in the state
B) Indicted Ford for reckless homicide
C) Filed suit to recover damages for burn victims
D) Fined Ford $200,000 per accident

Question 55

Which car that GM manufactured had issues similar to the Pinto?

A) Malibu
B) Corvette
C) Cadillac
D) Both a and b

Question 56

What happened to Mrs. Gray when her Pinto was rear-ended by a Galaxie?

A) She managed to escape from the car
B) Nothing; the gas tank survived the impact
C) She was burned severely and died of congestive heart failure
D) None of the above

Question 57

How did Patricia Anderson's car get rear-ended?

A) The car stalled on the freeway and she was trying to get off the freeway when she was rear-ended
B) She was rear-ended by a car going 70 mph as she sat at a stop sign
C) She was not rear-ended; her car exploded at a stop sign
D) None of the above

Question 58

Who is Richard Grimshaw?

A) Ford engineer who did the cost-benefit analysis on the Pinto
B) A teen who was severely burned when the Pinto he was riding in exploded into flames following a rear-end collision
C) CEO of Ford Motor
D) Secretary of the Department of Transportation

Question 59

For Ford to be held solely liable for the accidents:

A) Firestone can show that the condition of its tires was changed by use and operation on the Explorers.
B) Firestone must show that Ford was aware of a problem with the Explorer.
C) Ford cannot be held solely liable to the Explorer owners.
D) None of the above

Question 60

In addition to the crush space issues, what other problems did the Pinto design have?

A) None, the only problem was the crush space
B) The price of the car was too high
C) Protruding flanges and bolt heads
D) None of the above

Question 61

What error did Intel discover in its Pentium chip in July 1994?

A) That the chip was contaminated
B) That there was a floating point error that caused errors in division calculations
C) That the chip could cause computer viruses
D) None of the above

Question 62

Jack-in-the-Box, Inc. cooked its hamburgers according to the temperature required by law. Other chains cooked their hamburgers at a higher temperature and for longer. Jack-in-the-Box:

A) Made a decision that resulted in liability and the moral responsibility for deaths and injuries of its customers.
B) Was in compliance with the law and ethical in its conduct.
C) Has no liability because it was in compliance with the law.
D) Both b and c
E) None of the above

Question 63

How much money had Intel spent developing the Pentium chip?

A) $150 million
B) $500 million
C) $600 million
D) $1 billion

Question 64

What company changed Intel's reaction to the flawed chips?

A) Dell
B) Microsoft
C) IBM
D) Apple

Question 65

What was Coke's strategy for expanding fountain sales?

A) Sign up new fast-food franchises
B) Move Frozen Coke into fast-food franchises
C) Eliminate Frozen Coke from convenience stores
D) None of the above

Question 66

Who made the Intel error problem public?

A) Intel
B) A mathematician professor
C) IBM
D) None of the above

Question 67

Who is Matthew Whitley?

A) The account manager for Burger King
B) The Coke retail vice president
C) A Coke employee who questioned the invoices from the marketing consultant
D) CEO of Coke

Question 68

What area was picked for the test market?

A) Richmond, Virginia
B) Tallahassee, Florida
C) Atlanta, Georgia
D) Orlando, Florida

Question 69

Intel's biggest obstacle in its Pentium chip flaw was:

A) The cost of replacement.
B) Admitting that there was a problem and acknowledging it to the public.
C) The hit to earnings if the sales were not made.
D) Both a and c
E) None of the above

Question 70

Why did Burger King want a test market?

A) The product was new
B) Its marketing campaigns recently had been disasters
C) It did not trust Coke
D) Both a and b
E) a, b and c

Question 71

What was Intel's original proposal on the flawed chips?

A) To replace them without questions
B) To replace them only for computer users who had to do calculations
C) To replace them only for a fee
D) None of the above

Question 72

What was the impact of the E-Coli poisonings on Jack-in-the-Box sales?

A) Sales remained the same, unaffected
B) Sales dropped 10%
C) Sales dropped 20%
D) Jack-in-the-Box was closed so there were no sales

Question 73

What was the total cost if Intel replaced all chips?

A) $100 million
B) $200 million
C) $260 million
D) $360 million

Question 74

What did Intel discover when it ran tests on the Pentium chip?

A) That it would make an error once every 27,000 years
B) That the chance of an error was one in 9 billion
C) That the floating point error problem was not one that required attention
D) a and b only
E) a, b and c

Question 75

How did Coke managers react when an employee brought the Boys and Girls Club issue to their attention?

A) It went to Burger King and apologized
B) It fired the employee
C) It asked the employee to conduct a complete investigation
D) None of the above

Question 76

The sale of a product with a known defect or with knowledge of its potentially harmful impact on users:

A) Is illegal.
B) Is unethical.
C) Exposes the manufacturer to strict and negligent product liability.
D) Both b and c

Question 77

What changes did Jack-in-the-Box make after the E-Coli poisonings?

A) Changed meat suppliers
B) Increased cooking temperature
C) Added extra meat inspections
D) a and b only
E) a, b, and c

Question 78

How did Coke get better numbers in the test market?

A) It seasonalized the numbers
B) It altered the numbers
C) A marketing consultant used the Boys and Girls Clubs to get customers into Burger King to buy Frozen Coke value meals
D) Its own employees bought Frozen Coke value meals

Question 79

How many Jack-in-the-Box customers were affected by the E-Coli poisonings?

A) 100
B) 150
C) 300
D) 600

Question 80

How much did Jack-in-the-Box have to have set aside for payments in the suits filed against it?

A) $20 million
B) $50 million
C) $100 million
D) $200 million