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:

Conditioned Response

A learned response to a previously neutral stimulus that has become associated with an unconditioned stimulus.

Unconditioned Response

The automatic and natural reaction elicited by an unconditioned stimulus without the need for prior learning or conditioning.

Conditioned Response

A learned response to a previously neutral stimulus that has become associated with an unconditioned stimulus through conditioning.

Unconditioned Response

An automatic, natural reaction to a stimulus, which occurs without prior learning or conditioning.