Kenneth J Arrow | Social Responsibility and Economic Efficiency

question 68

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.
-According to the profit maximization argument, any attempt to regulate corporate social responsibility is likely to be

• A) effectual.
• B) ineffectual.
• C) efficient.
• D) inefficient.