Which of the Following Actions Is Consistent with Social Responsibility

question 1

Multiple Choice

Which of the following actions is consistent with social responsibility but is necessarily inconsistent with stockholder wealth maximization?

• A)Investing in a smokestack "scrubber" to reduce the firm's air pollution as mandated by law.
• B)Voluntarily installing expensive machinery to treat effluent discharge which currently is being dumped into a river where it is ruining the drinking water of the community where the plant is located.
• C)Investing in a smokestack filter to reduce sulphur-dioxide emissions in order to reduce the current tax being levied on the firm by the state for its pollution.
• D)Making a large corporate donation to the local community in order to fund a recreation complex that will be used by the community and the firm's employees.
• E)Each of the above actions is consistent with social responsibility and none are necessarily inconsistent with stockholder wealth maximization.

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Definitions:

Validity

The degree to which a tool, test, or method accurately measures what it is intended to measure.

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Smaller, distinct groups formed within a larger group based on shared characteristics or interests.

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A criterion or measure that is accurate or applicable to a particular group of people or category but may not be relevant or accurate for others.

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