Free Market Advocates Tend to Do All of the Following

question 27

Essay

Free market advocates tend to do all of the following except:
a. Argue that "the social responsibility of business is to increase its profits, which leads to efficient capital and product markets."
b. Argue that all stakeholders have an equal right to bargain for a "fair deal."
c. Believe that the first and foremost stakeholder group is shareholders.
d. Argue that if firms attempt to attain social goals, managers will lose their focus on profit maximization.
e. Fear that firms will become like SOEs.

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Definitions:

Deadweight Loss

The loss of economic efficiency when the equilibrium outcome is not achievable or not achieved in a market.

Sales Tax

A tax imposed by a government on sales of goods and services, typically calculated as a percentage of the sale price.

Deadweight Loss

An economic inefficiency that occurs when a market does not reach equilibrium, leading to a loss of total social welfare.

Consumer Surplus

The difference between the total amount consumers are willing to pay for a good or service and the total amount they actually pay.