Chapter 2

Question 1

The Right of Private Property

Answer 1

• The legal right to own and use economic goods, for example land and buildings.
• Property is not owned by the state, and individuals may own property and use it as they see fit.

Question 2

Ethical Implications of Right of Private Property

Answer 2

• uneven distribution of wealth among members of society. taxation is one method of redistributing wealth.
• Intellectual Property is an umbrella term for patents, copyrights, trademarks, industrial designs, integrated circuit topographies, and plant breeders’ rights.
• Property rights guarantee an individual’s security and freedom.

Question 3

Individualism

Answer 3

The view that the individual, and not the society or a collective, is the paramount decision maker in society and assumes that the individual is inherently decent and rational. Linked to freedom.

Question 4

Economic Freedom

Answer 4

exists when the business system operates with few restrictions on its activities.

Question 5

Ethical Implication of Individualism and Economic Freedom

Answer 5

Many consider the emphasis on individuals inappropriate and believe that communitarianism is more important in society as individuals seek to join and identify with some type of community organization.

Question 6

Equality of Opportunity

Answer 6

the assumption that all individuals or groups have an even chance at responding to some condition in society.

Question 7

Ethical Implications of Equality of Opportunity

Answer 7

• challenging to achieve in capitalist system
• leads to economic or income inequality

Question 8

Competition

Answer 8

The condition in a market system in which many rival sellers seek to provide goods and services to many buyers.

Question 8

Ethical Implications of Competition

Answer 8

• Monopolies, Oligopolies
• Entry barriers

Question 9

Profits

Answer 9

Excess of revenues over expenses and are closely associated with competition.

Question 10

Ethical Implications of Profit

Answer 10

• some view profit with disdain, some even consider them immoral
• maximizing profits through reducing competition seen as inappropriate.

Question 11

The Work Ethic

Answer 11

Work Ethic is a code of values, or a body or moral principles, claiming that work is desirable, it is a natural activity, and it is good in and of itself.

Question 12

Ethical Implications of the Work Ethic

Answer 12

• Argued that individuals’ attitudes toward work have changed as a result of government programs and society’s expectations.

Question 13

Consumer Sovereignty

Answer 13

• The assumption existing in an economy that consumers have and exercise power over producers through the decisions they make in purchasing the goods and services provided by the corporations.
• Consumers, by “voting” for a product when they purchase it, dictate the types, styles, and quality of goods and services by business.

Question 14

Ethical Implications of Consumer Sovereignty

Answer 14

• Sometimes consumers are not aware of all alternatives available to them and sometimes they are not capable of understanding the technical complexities of many goods and services.

Question 15

The Role of Government

Answer 15

• frequently expressed as a laissez-fair approach
• minimum government involvement is advocated
• government is still to provide for such things as national security, internal law and order, and a system of currency and measures.

Question 16

Ethical Implications of the Role of Government

Answer 16

• subsidies, taxation, tariffs, regulations, legislation, loans, grants programs and ownership.

Question 17

Consumer Capitalism

Answer 17

• Practiced in US, Britain, Canada, Australia.
  -Limited gov involvement
• open borders
• profit mentality exists
• Consumer has considerable influence.
• Problems: income inequity, low savings rate, and weak central governments.

Question 18

Producer Capitalism

Answer 18

• emphasizes production, employment, and statist policies.
• Social market economy
• France, Japan, Mexico, Germany
• Problems: social safety nets fray, innovation is slowed, and consumer dissatisfaction often occurs.

Question 19

Family Capitalism

Answer 19

• Crony and Confucian capitalism
• Eastern Asian countries such as Malaysia, Thailand, and Indonesia.
• Clans or families dominate business activities and control capital flows.

Question 20

Frontier Capitalism

Answer 20

• Russia and China
• Capitalism in its beginning stages.
• The role of gov changes with the need to develop commercial law and regulation.
• Rule of law is not clearly established, and criminal activity often fills the void
• No barriers to trade

Question 21

State Capitalism

Answer 21

• greater role of government directly in the business system through the ownership of corporations.
• State capitalism is an economic system in which governments manipulate market outcomes for political and social purposes.

Question 22

Greed

Answer 22

the excessive desire to acquire or possess more, especially more material wealth, than one needs or deserves.

Question 23

Economic Downturns

Answer 23

• Economic cycles
• Swings between prosperous times and recessions pr even depressions.

Question 24

Business failures

Answer 24

• failure that disposes of weak corporations and shifts to new or stronger ones.

Question 25

Income and wealth inequity

Answer 25

• critics argue that a system based on a market system leads to inequities.
• Supporters say that inequities are inevitable and necessary in a dynamic economy to provide incentive and prevent the regimentation of equality.

Question 26

Corporate crime and wrongdoing

Answer 26

exists in all societal institutions, come in many forms and often receive considerable publicity and damages the reputations of businesses.