Business, Government, and Society Exam Review

Sets Marginal Revenue (MR) equal to Marginal Cost (MC).

The extra revenue gained from selling one more unit.

The extra cost of producing one more unit.

The quantity where MR=MC. This is where maximum profit is earned.

The price charged at the profit-maximizing quantity (Q*).

Relationship between production quantity and total cost.

Relationship between price and quantity demanded.

The additional profit generated by a specific product/process.

Actions taken by a company to involve and address the concerns of its stakeholders (e.g., customers, investors, employees, and the community).

A corporate strategy for stakeholder engagement by BP, focusing on rebranding and shifting towards renewable energy, addressing climate change concerns.

A change in a company's core mission statement and how they will achieve that mission.

BP's shift in strategy to include renewable energy. This could include acquisitions of solar/wind companies.

BP's concern that climate change could impact future oil and gas business.

Oil/gas are commodities (people buy them based on price); thus brand loyalty does not drive purchases as much as price and availability.

BP's strategy to engage with policymakers and attract scientists for energy sector innovation.

BP's strategy to innovate in the renewable energy sector and be responsive to global warming.

Companies need a clear purpose to succeed, and it attracts key stakeholders. This purpose is directly linked to profits in the long run.

Companies should outline a strategy for creating long-term value for shareholders, considering environmental, social, and governance (ESG) issues.

Factors like climate change, diversity, and board effectiveness have quantifiable financial impact on businesses.

A system where businesses prioritize the interests of all stakeholders (investors, employees, customers, etc.) for long-term success.

Actions detrimental to a company's image or reputation.

Risks arising from government compliance costs or regulations.

Risks related to consumer behavior, such as brand abandonment.

As an investor, BlackRock assesses risk across social, regulatory, and market aspects to make investment decisions.

The process of addressing a social issue involves four predictable phases starting with activist concern and ending with regulatory implementation.

The initial phase where activists raise concerns about a social issue, but there is no public support or political engagement.

Public awareness of the social issue grows, politicians become involved, and the issue gains traction in the political sphere.

If public support for addressing the social issue is achieved, new laws or regulations are passed to address the concern.

Regulatory authorities enforce the new rules made in the previous phase. Companies must comply with these regulations, though they can challenge them in court.

Companies decide how much to comply with social regulations, balancing the costs of compliance with the potential benefits and risks of non-compliance.

Factors like stronger NGO lobbying, more flexible demands, and a company's profile influence a company's decision to comply with social regulations.

Certain company characteristics, like brand recognition and industry leadership, can make them more vulnerable to social targeting and influence their compliance decisions.

The additional advantage a company gains by choosing to comply with social or environmental regulations voluntarily, rather than being forced to by government.

The additional expenses a company incurs by choosing to comply with social or environmental regulations voluntarily, such as investing in new technologies or changing practices.

The level of voluntary compliance a company chooses, balancing the benefits and costs of complying with the pressure from social regulators.

Choosing a company or industry to pressure for change, considering factors like brand recognition, industry leadership, consumer appeal, and past behavior.

A large facility built by Facebook in Prineville, Oregon, specifically chosen for its energy efficiency and strategic location.

An environmental advocacy group, Greenpeace, pressured Facebook to use renewable energy for its data centers.

Companies with a large market share and influence within their industry are often targeted by social regulators, as their actions can set an example for others.

Companies that sell directly to consumers (B2C) are more likely to face pressure from social regulators, as their actions affect a large number of people.

A process where markets incentivize the replacement of old products and processes with new ones, leading to efficiency and innovation.

When government regulations favor or protect a specific group in a way that hinders market competition and efficiency.

The difference between the actual value and the predicted value in regression analysis.

The average of the squared differences between predicted and actual values, measuring how accurate your regression model is.

Sustainable design prioritizes minimizing environmental impact, while traditional design minimizes production costs.

Companies considering not only shareholders but also other stakeholders (employees, customers, communities) in decision-making.

Companies engage with stakeholders because it can positively impact short-term and long-term profits.