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:

Government Purchases

Expenditures made by the government for goods and services that are necessary for the public sector and to support economic activity.

National Output

The total value of goods and services produced by a country's economy over a specific period of time. It's synonymous with gross domestic product (GDP).

Crowding-Out Debate

A discussion on how government borrowing or spending may lead to reduced investment in the private sector due to increased interest rates or other mechanisms.

Keynesians

Economists and theories following the principles of John Maynard Keynes, emphasizing the role of government intervention to moderate economic cycles.