Podcast
Questions and Answers
Which of the following characteristics is not associated with a monopoly?
What is a significant characteristic of an oligopoly?
In perfect competition, firms can enter and exit the market easily. What is one ethical issue that may still arise?
Which market structure is characterized by interdependent decision-making between two firms?
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What is a common example of a market that operates under perfect competition?
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Which of the following best describes a key concern in a monopoly market structure?
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What ethical issue is most likely to arise in firms operating in a perfectly competitive market?
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Which characteristic differentiates perfect competition from oligopoly?
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What is the primary focus of personal ethics at the individual level in business?
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Which component is essential for establishing a strong ethical culture at the organizational level?
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What aspect does the societal level of business ethics primarily consider?
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Which of the following is a characteristic of perfect competition?
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Peer pressure at the industry level can result in which of the following outcomes?
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Which of the following is NOT a factor at the organizational level of business ethics?
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Which term describes the minimum standards businesses must follow due to regulations?
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What is often a consequence of a strong ethical corporate culture?
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What ethical issue arises when monopolistic firms set excessively high prices?
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Which of the following is a potential consequence of a monopoly's lack of competition?
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In an oligopoly, what unethical practice involves firms working together to set prices?
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Which characteristic is NOT a feature of perfect competition?
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What is a significant feature of a duopoly?
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Which of the following issues is commonly associated with oligopolistic firms due to their interdependence?
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What ethical issue can arise from monopolies using their market dominance?
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How do firms in an oligopoly often react to pricing decisions made by their competitors?
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Study Notes
Business Ethics
- Involves principles and standards that guide behavior in business.
- Applies to business decisions, corporate governance, employee relations, customer interactions, and supplier relationships.
Levels of Business Ethics
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Individual Level:
- Focuses on personal ethics like integrity, beliefs, and character.
- Ethical decision-making based on individual morals.
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Organizational Level:
- Corporate culture influences ethical climate.
- Codes of Ethics outline expected behaviors and ethical guidelines for employees.
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Industry Level:
- Different industries have specific ethical standards.
- Peer pressure can influence either ethical or unethical behavior.
- Organizations adhere to industry standards for credibility and trust.
-
Societal Level:
- Businesses operate within a larger societal context.
- Ethical businesses focus on social responsibility.
- Legal framework sets minimum ethical standards.
Market Structures
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Perfect Competition:
- Many sellers and buyers.
- Identical products (e.g. wheat, corn).
- Easy entry and exit for firms.
- Perfect information access for everyone.
- Example: Agricultural markets
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Oligopoly:
- Few large firms dominate the market.
- Homogeneous or differentiated products (e.g. steel, cars).
- Significant barriers to entry.
- Prices are stable due to interdependence of firms.
- Example: Automotive industry
-
Monopoly:
- Single firm controls the entire market.
- Unique product with no substitutes.
- High barriers to entry prevent competition.
- Example: Local utility companies
-
Duopoly:
- Specific type of oligopoly with only two dominant firms.
- Firms make decisions based on each other's actions.
- Example: Boeing and Airbus in commercial aircraft market
Ethical Issues in Market Structures
-
Perfect Competition:
- Potential ethical issues:
- Companies may cut corners on quality to lower costs.
- Pressure on firms to exploit labor for cost reduction.
- Neglecting environmental standards to maintain low prices.
- Potential ethical issues:
-
Monopoly:
- Ethical issues:
- Potential for price gouging.
- Reduced innovation due to lack of competition.
- Abuse of power through predatory practices to eliminate competition.
- Ethical issues:
-
Oligopoly:
- Ethical issues:
- Collusion to fix prices or divide markets.
- Price rigidity artificially keeps prices high.
- Misleading advertising to outcompete rivals.
- Ethical issues:
Key Definitions
- Perfect Competition: A market with many sellers and buyers, identical products, no barriers to entry/exit, and perfect information access.
- Monopoly: A market dominated by a single firm with a unique product and high barriers to entry.
- Oligopoly: A market with a few large firms that control a significant portion of the market.
- Duopoly: A specific type of oligopoly with only two firms in the market.
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Description
This quiz delves into the principles and standards that guide ethical behavior in business. It covers various levels of business ethics including individual, organizational, industry, and societal aspects. Test your understanding of how ethics influence business decisions and corporate governance.
