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Assessment Questions

1. True or false? Corporations that embrace CSR policies consistently produce a lower rate of return on investment for shareholders.

correct answer

 False. Social responsibility does not mean lower profitability, as the returns on social index funds have shown.

2. True or false? Milton Friedman’s economic philosophy advocates increased government regulation to ensure that corporations are socially responsible.

correct answer

False. Milton Friedman argued that shareholders should be able decide for themselves what social initiatives to donate to or to take part in, rather than having a business executive or government decide for them.

3. Which of the following is not true?
    • A. Shareholder primacy is the clear legal precedent in the United States.
    • B. Maximizing shareholder profits is a legitimate goal of management.
    • C. Dividends are paid out of corporate profits.
    • D. Companies that pursue CSR policies can also be profitable.
correct answer

 A

4. Industries like to be in control of their own destiny and as a result prefer self-regulation to laws imposed by governments. Self-regulation is often ________.
    • A. based on external codes of conduct
    • B. enforced by the courts
    • C. in conflict with common law
    • D. less costly for firms than government regulation
correct answer

 D

5. Identify two benefits for a company following a policy of corporate social responsibility (CSR).
correct answer

One benefit is that consumers may prefer to purchase products from a socially responsible company. A second benefit is that CSR may attract more investors, or shareholders, who are interested in investing in the company.


6. What is earth jurisprudence?
correct answer

Earth jurisprudence is an interpretation of law and governance based on the belief that society will be sustainable only if we recognize the legal rights of Earth as if it were a person.


7. Which of the following best describes the tragedy of the commons?
    • A. People are always willing to sacrifice for the good of society.
    • B. People are likely to use all the natural resources they want without regard to others.
    • C. The common good of the people is a popular corporate goal.
    • D. Tragedies occur when there is too much government regulation.
correct answer

 B

8. ISOs are sustainability standards for businesses ________.
    • A. promulgated by the state government
    • B. promulgated by the federal government
    • C. promulgated by the World Trade Organization
    • D. none of the above
correct answer

 D

9. True or false? If environmental harm is discovered, the business entity causing it is frequently held liable by both the government and the victims of the harm in separate proceedings.
correct answer

 True


10. Which of the following is a potentially effective way to reduce global warming?
    • A. build more coal-burning power plants
    • B. build more diesel-burning cars
    • C. implement a carbon tax
    • D. implement tax-free gasoline
correct answer

 C

11. True or false? The law prohibits all executives from serving in senior government posts and then leaving to go back to work for the same company in the private sector.
correct answer

False. Legal restrictions exist to limit the revolving door effect, but most relate only to direct government contracting and/or lobbying.

12. True or false? Air pollution is regulated by three levels of government: local, state, and federal.

correct answer

 True

13. Which of the following is true?
    • A. Very few business executives have ever left private jobs to go into government service.
    • B. Most government regulatory agencies are funded by donations.
    • C. Numerous executives have left Goldman Sachs to go to work for the government.
    • D. Few people leave government service to go into the private sector.
correct answer

 C

14. Which of the following constitutional provisions gives regulatory power to the federal government?
    • A. First Amendment
    • B. Tenth Amendment
    • C. Commerce Clause
    • D. Supremacy Clause
correct answer

 C

15. The Citizens United case ________.
    • A. upheld existing law limiting spending on behalf of political candidates
    • B. overturned existing law
    • C. sent the case back to the lower court to be re-tried
    • D. created more restrictive limits on political spending
correct answer

 B


16. What Amendment was at the center of the Citizens United case? Explain.
correct answer

The First Amendment and free speech: The case was a challenge to the federal elections law limiting the amount of money a person or business can spend in support of a political candidate.

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