Kenneth J Arrow | Social Responsibility and Economic Efficiency

question 33

Multiple Choice

Kenneth J. Arrow | Social Responsibility and Economic Efficiency
Arrow first reveals the shortcomings in arguments against the social responsibility of firms, or in arguments for profit maximization, setting the stage for why firms should be held responsible to society. In particular, corporations should be held responsible for the harms they cause, such as pollution and traffic congestion, for which they do not pay any costs. Lastly, regulations for such social obligations should be embodied in institutional, legal, or ethical manner, so all firms will accept that their competitors will also be held liable for their fulfillment.
-The rule of maximizing profits is ___________ in cases in which the seller has considerably more knowledge of the product than the buyer.

• A) socially inefficient
• B) socially responsible
• C) publicly enforced
• D) ignored

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Definitions:

Trade Publications

Specialized magazines or journals aimed at professionals in specific industries to share relevant news, trends, and insights.

Proactive

Taking initiative by acting in advance of future situations or problems, rather than just reacting.

Globalization

The process by which businesses or organizations develop international influence or start operating on an international scale, leading to a more interconnected and interdependent world.

External Environment

The outside forces and factors that affect an organization's performance and strategies, including economic, technological, sociocultural, and political/legal elements.