When Ford Discovered the Fault with Its Pinto Model That

question 106

Multiple Choice

When Ford discovered the fault with its Pinto model that caused the car to explode easily when hit from the rear, what action should it have taken to preserve basic consumer rights?

• A) Ford should have performed a cost benefit analysis to determine whether it would save more money by doing nothing or by rectifying the problem.
• B) Ford should have launched a campaign warning consumers of the defect so they would avoid getting in accidents.
• C) Ford should have warned consumers of the explosions, recalled all of the defective automobiles, and corrected the problem.
• D) Ford should have quietly ignored the problem and phased the Pinto out of its automobile lineup.
• E) Ford should have redesigned the automobile to make it safer for consumers in the future.

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Definitions:

Perfectly Inelastic

A situation in demand where the quantity demanded does not change regardless of the change in price.

Perfectly Elastic

This describes a situation where a small change in price leads to an infinite change in the quantity demanded or supplied.

Demand Curve

A graph showing the relationship between the price of a good and the quantity of the good that consumers are willing and able to purchase at various prices.

Elastic Demand

A situation where the quantity demanded of a good or service changes significantly in response to a change in price.