MGT610-BUSINESS

ETHICS
MID TERM SUBJECTIVE
Prepared by: JUNAID
MALIK
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1. What traits are the valuable parts of person’s morally good behavior?
ANSWER:
According to Aristotle, moral virtues enable humans to act in accordance with their
specific purpose (which he held to be reasoning). Other philosophers, such as Aquinas,
have come up with different lists of virtues.

1. In perfect compaction the demand curve is always downward slopping.

Why?
ANSWER:
Under the assumption of perfect competition, supply is determined by marginal cost.
Firms will produce additional output as long as the cost of producing an extra unit of
output is less than the price they will receive.
The demand curve is almost always represented as downward-sloping, meaning that as
price decreases, consumers will buy more of the good.

2. What are the two ideological camps in free trade theories? Explain in detail
ANSWER:
In general, two important ideological camps, the individualistic and communitarian
viewpoints, characterize modern societies. Individualistic societies promote a limited
government whose primary purpose is to protect property, contract rights, and open
markets. Communitarian societies, in contrast, define the needs of the community first
and then define the rights and duties of community membership to ensure that those
needs are met.

3. What is monopolistic and oligopolistic competition? Explain the main

points of difference?
ANSWER:
In a monopoly, two of the seven conditions are absent: there is only one seller, and
other sellers cannot enter the market. As the case of Alcoa exemplifies, such markets
are far from the perfectly competitive model.
Most industries are not entirely monopolistic; in fact, most are dominated by a few
large firms. These markets lie somewhere in between the monopoly and the perfectly
competitive free market; the most important type of these imperfectly competitive
markets is the oligopoly.

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4. Define Law of Nature?
ANSWER:
“A state of perfect freedom to order their actions and dispose of their possessions and
persons as they think fit, within the bounds of the law of nature, without asking leave,
or depending upon the will of any other man. A state also of equality, wherein all the
power and jurisdiction is reciprocal, no one having more than another... without
subordination or subjection [to another].... But... the state of nature has a law of nature
to govern it, which obliges everyone: and reason, which is that law, teaches all
mankind, who will but consult it, that being all equal and independent, no one ought to
harm another in his life, health, liberty, or possessions.”

5. Describe Social Darwinism?

ANSWER:
Social Darwinism is a belief, popular in the late Victorian era in England, America,
and elsewhere, which states that the strongest or fittest should survive and flourish in
society, while the weak and unfit should be allowed to die. The theory was chiefly
expounded by Herbert Spencer, whose ethical philosophies always held an elitist view
and received a boost from the application of Darwinian ideas such as adaptation and
natural selection.

6. Define theory of Absolute Advantage. Compare it with Comparative

advantage? ANSWER:
In 1776 Adam Smith asserted that the wealth of a nation consisted of the goods and
services available to its citizens. His theory of absolute advantage holds that a
country can maximize its own economic well being by specializing in the production
of those goods and services that it can produce more efficiently than any other nation
and enhance global efficiency through its participation in (unrestricted) free trade.
In 1817 David Ricardo reasoned that there would still be gains from trade if a country
specialized in the production of those things it can produce most efficiently, even if
other countries can produce those same things even more efficiently. Put another way,
Ricardo’s theory of comparative advantage holds that a country can maximize its
own economic wellbeing by specializing in the production of those goods and services

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it can produce relatively efficiently and enhance global efficiency through its
participation in (unrestricted) free trade

7. A question related to Limitation of the Locke.

ANSWER:
John Locke: The Limitations of Government Power
An important aspect of all social contract arguments is the placement of limits, both on
the power of the government and on the level of state tolerance. John Locke wrote of
the limitations of government power in the Second Treatise of Government, and of the
limits of toleration in his Letter Concerning Toleration. Locke claims that there is a
moral limitation on the on the state as well as a moral limitation on tolerance.

Man's main purpose for forming commonwealths, according to Locke, is in order to

protect property. All laws and regulations of the commonwealth are based on the main
principle of preserving property. The state is thus limited in that it cannot take a man's
property away from him. If he has consented to the contract necessary to live in the
state, his property is thusly protected by laws. The only way a man's property can be
taken away is if he breaks his end of the contract and is therefore no longer under
contract.

8. Features of market economy?

ANSWER:
Free choice: individuals have purchase options.
Free enterprise: companies can decide what to produce and which markets to compete
in.
Price flexibility: prices rise/fall reflecting supply and demand.
Focus on China
China’s theme is “Socialism with Chinese characteristics,” and the nation has
undergone great economic reform over the past two decades.
 Early Years
 Challenges Ahead

9. Define Principal of diminishing marginal utility with example

ANSWER:
A law of economics stating that as a person increases consumption of a product -
while keeping consumption of other products constant - there is a decline in the

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marginal utility that person derives from consuming each additional unit of that
product.

Let me give you example, if you had no shoes and someone gave you only one shoe,
you would receive some utility. You can now hop through the sticker patch. But a
second shoe that completes the pair might actually give you more utility than the first
shoe, because you are clumsy and you keep falling down with only one shoe. But with
two shoes, you can run and hop and not worry about stickers and stones. So the second
shoe actually has increasing marginal utility.

Now going on, a second pair of shoes doesn't add as much utility as the first pair;
though it is still better to have two pair of shoes than just one. So total utility has
increased with the second pair of shoes, but marginal utility has diminished with the
additional shoes.
10. Describe two neutral rights of free market economy
ANSWER:
John Locke (1632-1704), an English political philosopher, is generally credited with
developing the idea that human beings have a "natural right" to liberty and a "natural
right" to private property. Locke argued that if there were no governments, human
beings would find themselves in a state of nature. In this state of nature, each man
would be the political equal of all others and would be perfectly free of any constraints
other than the law of nature—that is, the moral principles that God gave to humanity
and that each man can discover by the use of his own God-given reason.

11. Critics by Adam Smith of utilitarianism

ANSWER:
Smith's utilitarian argument is most commonly criticized for making what some call
unrealistic arguments.
 First, Smith assumes that no one seller can control the price of a good. Though
this may have been true at one time, today many industries are monopolized to
some extent.
 Second, Smith assumes that the manufacturer will pay for all the resources used
to produce a product, but when a manufacturer uses water and pollutes it without
cleaning it, for example, someone else must pay to do so.

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 Third, Smith assumes that humans are motivated only by a natural, self-
interested desire for profit. This, say his critics, is clearly false. Many humans
are concerned for others and act to help others, constraining their own self-
interest. Market systems, say Smith's critics, make humans selfish and make us
think that the profit motive is natural.

12. Describe main difference between Monopoly, and oligopoly?

ANSWER:
Oligopoly and monopoly have some similarities, both tend to be relatively large and
possess significant market control, but also have a few important differences;
oligopoly market has more than one firm. The dividing line between oligopoly and
monopoly, however, can be blurred due to the closeness of substitutes and the
inclination of oligopoly firms to collude.
Oligopoly is a market structure containing a small number of relatively large firms that
often produce slightly differentiated output and with significant barriers to entry.
Monopoly is a market structure containing a single firm that produces a good with no
close substitutes and with significant barriers to entry. While it might seem as though
the difference between oligopoly and monopoly is clear cut, such is not always the
case.
13. Economic free index
ANSWER:
The Economic Freedom Index approximates the extent to which a government
intervenes in the areas of free choice, free enterprise, and market-driven prices for
reasons that go beyond basic national needs.

14. Locke four major weakness criticize

ANSWER:
Locke's critics focus on four weaknesses in his argument:
The assumption that individuals have natural rights: This assumption is unproven and
assumes that the rights to liberty and property should take precedence over all other
rights. If humans do not have the overriding rights to liberty and property, then the fact
that free markets would preserve the rights does not mean a great deal.
The conflict between natural (negative) rights and positive rights: Why should
negative rights such as liberty take precedence over positive rights? Critics argue, in

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fact, that we have no reason to believe that the rights to liberty and property are
overriding.
The conflict between natural rights and justice: Free markets create unjust
inequalities, and people who have no property or who are unable to work will not be
able to live. As a result, without government intervention, the gap between the richest
and poorest will widen until large disparities of wealth emerge. Unless government
intervenes to adjust the distribution of property that results from free markets, large
groups of citizens will remain at a subsistence level while others grow ever wealthier.
Individualistic assumptions and their conflicts with the ethics of caring: Locke
assumes that people are individuals first, independent of their communities. But
humans are born dependent on others, and without caring relationships, no human
could survive. The degree of liberty a person has depends on what the person can do.
The less a person can do, the less he is free to do. But a person's abilities depend on
what he learns from those who care for him as well as on what others care to help him
to do or allow him to do.

15. Presently Countries are classified as Free, Mostly Free, Mostly Unfree
and repressed. Which are the determining factors of this classification?
ANSWER:
Determining factors include: trade policy, the fiscal burden of the government, the
extent and nature of government intervention in the economy, monetary policy, capital
flows and investment, banking and financial activities, wage and price levels, property
rights, other government regulation, and informal market activities. Over time, more
and more countries have moved toward greater economic freedom. Countries ranking
highest on this index tend to enjoy both the highest standards of living as well as the
greatest degree of political freedom.

16. Sometimes Care and Justice has conflict, give an example and suggest
the guidelines to avoid this conflicts.
ANSWER:
In many personal and family a relationship, caring play a large role, and rights quite a
small one (do you feed your children because they have a right to be fed?). In the
wider society, it is likely that some people will always fall outside anyone's circle of
caring (as I asked in a previous article, what about the other porcupines that might be
wandering homeless out there?).

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So we need the remendously important notions of justice and of human rights, even if
these can sound abstract and impersonal. And we need to recognize that rights to your
own property are not the only rights: there are rights to food, to shelter, to be treated
with dignity. Large institutions, including governments, can't really care for people in
the same way that you might care for people close to you, but they can try to see that
everyone's rights are respected.
So perhaps caring is for personal life and justice for public life? Then, if we take what
I called in Issue 51 the Ofsted view of the relationship between PSHE and citizenship,
we might say that PSHE lessons should look at caring, and citizenship lessons at
justice and rights. But life doesn't divide into such neat compartments.
Even when we care for people we can be unfair to them and not respect their rights as
individuals. And it sometimes makes sense to criticize large institutions for policies
that look right in principle but are uncaring in their effects.
Since most people's values don't come in separate sets labeled 'personal' and 'public', it
would be a pity if the organization of the curriculum encouraged an either/or view
about justice and caring when what we would be teaching is that both are always
relevant.

18. Is Free Competitive markets has bad impact on ethics of care? Discuss
briefly.
ANSWER:
Free competitive markets may have a pernicious effect on people's moral character.
The competitive pressures that are present in perfectly competitive markets can lead
people to attend constantly to economic efficiency. Producers are constantly pressured
to reduce their costs and increase their profit margins. Finally, and most important, we
should note that the three values of capitalist justice, utility, and negative rights are
produced by free markets only if they embody the seven conditions that define perfect
competition. If one or more of these conditions are not present in a given real market,
then the claim can no longer be made that these three values are present.

17. Demand curve download slopping in perfect competition.

ANSWER:
A perfectly competitive firm produces a minuscule proportion of the total industry
output. Thus, although the market demand curve is downward sloping, the demand
curve from the perspective of the individual firm is perfectly elastic (horizontal). A

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perfectly competitive firm can sell as much as it wants at an unchanged price. A
perfectly competitive firm has no market power, and is said to be a price taker.

18. Arguments supporting ethics of care?

ANSWER:
The ethics of care is seen to have a distinctive import because it is well equipped to
understand cultural and social ties; thus, it gives priority to "positive involvement with
others and fosters social bonds and cooperation" (157). But this remark hardly
amounts to an argument for care ethics.

19. Morality is a principle to follow or cultivation to certain dispositions

and traits. Support your answer with logical arguments.
ANSWER:
However, there is another understanding of morality which should not be forgotten.
This is the sense of morality in which morality is linked with certain virtues,
excellences, or flourishing ways of living. In this sense, morality is not primarily
concerned with rules and principles, but with the cultivation of certain dispositions or
traits of character. This view has been expressed in this way: ‘the moral law ... has to
be expressed in the form, “be this”, not in the form, “do this” ... the true moral law
says “hate not”, instead of “kill not”...... the only mode of stating the moral law must
be a rule of character.’ This, I believe, is quite close to Marx’s views.

20. Elaborate Formulation of kant's categorical Imperative

ANSWER:
Kant’s first formulation of the categorical imperative is as follows: “I ought never to
act except in such a way that I can also will that my maxim should become a universal
law.” A maxim for Kant is the reason a person in a certain situation has for doing what
he or she plans to do. A maxim whoud “become a universal law” if every person in a
similar situation chose to do the same thing for the same reason. Kant’s first version of
the categorical imperative, then come down to the following principle:
“An action is morally right for a person in a certain situation if, and only if, the
person's reason for carrying out the action is a reason that he or she would be willing
to have every person act on, in any similar situation.”
21. Define egalitarian view

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ANSWER:
Egalitarians hold that there are no relevant differences among people that can justify
unequal treatment. According to the egalitarian, all benefits and burdens should be
distributed according to the following formula:
“Every person should be given exactly equal shares of a society's or a group's benefits
and burdens.”

22. Communitarian system and individual system

ANSWER:
Communitarian systems use a command system, in which a single authority decides
what to produce, who will produce it, and who will get it. Free market systems are
characteristic of individualistic societies.
Free market systems are characteristic of individualistic societies. Incorporating ideas
from thinkers like John Locke and Adam Smith, they allow individual firms to make
their own decisions about what to produce and how to do so.

23. Differentiate the concept of justice and Virtue

ANSWER:
When we speak of justice as a virtue, we are usually referring to a trait of individuals,
even if we conceive the justice of individuals as having some (grounding) reference to
social justice. But Rawls and others regard justice as “the first virtue of social
institutions” (1971, p. 3), so “justice as a virtue” is actually ambiguous as between
individual and social applications. This essay will reflect and explore that ambiguity,
though the principal focus will understandably be on the justice of individuals.
‘
24. How you will perform moral ethics in specific circumstances
ANSWER:
Circumstances that leave a person uncertain (but not unsure) about what he or she is
doing;
Circumstances that make it difficult (but not impossible) for the person to avoid doing
it;
Circumstances that minimize (but do not remove) a person's involvement in an act

25. Major problems with utilitarian

ANSWER:

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Though utilitarianism offers a superficially clear-cut method of calculating the
morality of actions, it relies upon accurate measurement, and this can be problematic.
There are five major problems with the utilitarian reliance on measurement:
1. Comparative measures of the values things have for different people cannot be
made-we cannot get into each others' skins to measure the pleasure or pain
caused.
2. Some benefits and costs are impossible to measure. How much is a human life
worth, for example?
3. The potential benefits and costs of an action cannot always be reliably predicted,
so they are also not adequately measurable.
4. It is unclear exactly what counts as a benefit or a cost. People see these things in
different ways.
5. Utilitarian measurement implies that all goods can be traded for equivalents of
each other. However, not everything has a monetary equivalent.

26. Explain social science?

ANSWER:
The social sciences—such as anthropology, sociology, and psychology—also study
morality, but do so in a way that is quite different from the approach to morality that is
characteristic of ethics.
27. Define mixed economy and its elements
ANSWER:
Economic system in which land, factories, and other economic resources are more
equally split between private and government ownership. Government controls
economic sectors important to national security and long-term stability. Generous
welfare system supports unemployed and provides health care. There are three
elements which are
1. Origins of the Mixed Economy
2. Decline of Mixed Economies
3. Market Economy
28. Rawl's theory of justice ideas
ANSWER:
John Rawls' theory of justice as fairness is an attempt to bring many of these disparate

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ideas together in a comprehensive way. According to his theory, the distribution of
benefits and burdens in a society is just if:
1. Each person has an equal right to the most extensive basic liberties compatible
with equal liberties for all (the principle of equal liberty); and
2. Social and economic inequalities are arranged so that they are both:
a. To the greatest benefit of the least advantaged (the difference principle), and
b. Attached to offices and positions open fairly and equally to all (the principle
of equal opportunity).

29. What consideration you will need about goods and its benefits, which
are presented in traditions occasions?
ANSWER:
To determine what the moral thing to do on any particular occasion might be, there are
three considerations to follow:
1. You must determine what alternative actions are available.
2. You must estimate the direct and indirect costs and benefits the action
would produce for all involved in the foreseeable future.
3. You must choose the alternative that produces the greatest sum total of
utility.

30. Aquinas critics on Aristotle

ANSWER:
According to Aristotle, moral virtues enable humans to act in accordance with their
specific purpose (which he held to be reasoning). Other philosophers, such as Aquinas,
have come up with different lists of virtues.

31. Is it true that competitive markets are ethical? I forgot the exact
question
ANSWER:
Yes….! In a perfectly competitive market ethical considerations are widely accepted
as part of a broader cultural sensitivity that requires organizations to work towards
perfection and morality. Unfortunately, this is not always the case. In most of the

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cases, unethical business conduct is closely associated to corporate or individual goals
of the organizational members.

32. Critics on Kant

ANSWER:
Despite the attractiveness of Kant's theory, critics have argued that, like utilitarianism,
it has its limitations and inadequacies.
1. A first problem that critics have traditionally pointed out is that Kant's
theory is not precise enough to always be useful.
2. Second, some critics claim that although we might be able to agree on the
kinds of interests that have the status of moral rights, there is substantial
disagreement concerning what the limits of each of these rights are and
concerning how each of these rights should be balanced against other
conflicting rights.
3. A third group of criticisms that have been made of Kant's theory is that
there are counterexamples that show the theory sometimes goes wrong. Most
counterexamples to Kant's theory focus on the criteria of universalizability and
reversibility.
33. Non-Moral Standards Five Characteristics

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34. Write a Note on Ethical relativism
ANSWER:

Ethical relativism is the theory that, because different societies have different ethical
beliefs, there is no rational way of determining whether an action is morally right or
wrong other than by asking whether the people of this or that society believe it to be
right or wrong by asking whether people of a particular society believe that it is. In
fact, the multiplicity of moral codes demonstrates that there is no one "right" answer to
ethical questions. The best a company can do is follow the old adage, "When in Rome,
do as the Romans do."

35. Moral Reasoning & Kohlbergs’ Resaech

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36. Write the three categories of issues involving justice

 Distributive justice is concerned with the fair distribution of society's
benefits and burdens.
 Retributive justice refers to the just imposition of penalties and punishments
 Compensatory justice is concerned with compensating people for what they
lose when harmed by others.
37. Write the Four main kinds of basic moral considerations
ANSWER:
1. Utilitarian standards - must be used when we do not have the resources to
attain everyone's objectives, so we are forced to consider the net social benefits
and social costs consequent on the actions (or policies or institutions) by which
we can attain these objectives.
2. Standards that specify how individuals must be treated - must be
employed when our actions and policies will substantially affect the welfare and
freedom of specifiable individuals. Moral reasoning of this type forces

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consideration of whether the behavior respects the basic rights of the individuals
involved and whether the behavior is consistent with one's agreements and
special duties.
3. Standards of justice - indicate how benefits and burdens should be
distributed among the members of a group. These sorts of standards must be
employed when evaluating actions whose distributive effects differ in important
ways.
4. Standards of caring - indicate the kind of care that is owed to those with
whom we have special concrete relationships. Standards of caring are essential
when moral questions arise that involve persons embedded in a web of
relationships, particularly persons with whom one has close relationships,
especially those of dependency.

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