Law and Ethics in the Business Environment International Edition 7th Edition by Terry Halbert – Test Bank

CHAPTER 8
Allocating Risk and Responsibilities: Products Liability

Questions
1. The term caveat emptor means:
a. “seller take care”
b. “empty the cave of deceit”
c. “buyer beware”
d. “truth shall prevail”
ANSWER: C PAGE: 282

2. In Wyeth v. Levine, the majority rejected the idea that primary responsibility for drug safety lies with the government and instead lies with the drug manufacturer.
I. True
II. False

ANSWER: TRUE PAGE: 283-4

3. The Food and Drug Administration, the Consumer Product Safety Commission and the National Highway Transportation Safety Association are
I. Cabinet Departments within the Executive Branch
II. Subcommittees of the Senate and House of Representatives within the Legislative Branch
III. Judicially created organizations to implement Supreme Court mandates related to product safety.
IV. Independent Agencies that report to no branch of government.
ANSWER: D PAGE: 287
4. The organization that works with companies on recalls of unsafe products (such as lead-paint laden Thomas the Train toys) is
I. The Consumer Protection Group (CPG)
II. The Consumer Product Safety Commission (CPSC)
III. The Product Protection People (P3)
IV. The Buy American Coalition (BAC)
ANSWER: B PAGE: 289-90

5. According to the plaintiff’s attorney, to minimize liability, corporations often
I. Hire the best defense firms to make the plaintiffs look like liars
II. Pursue illegal means to get plaintiffs to drop their cases
III. Use the system to make the case too expensive for plaintiffs to pursue their cases
IV. Push plaintiffs in to class action suits to force the case to be heard only one time.
a. I and II
b. II and III
c. III and IV
d. IV and I

ANSWER: C PAGE 295-6

6. The most notable exception to caveat superior was for
a. Food
b. Automobiles
c. Clothing
d. Shoes
ANSWER: A PAGE: 299

7. To win a case in negligence, a plaintiff must prove all but
a. A duty of care owed by the defendant to the plaintiff
b. A lack of fault by the defendant for the harm caused
c. Behavior by the defendant that fails to meet a standard imposed by the law

d. Harm caused to the plaintiff by the defendant’s behavior

ANSWER: B PAGE: 300

8. The Ford Pinto exploded when rear-ended by another vehicle. Of the types of defects a product may have, the Pinto suffered from
a. Design Defect
b. Manufacturing Defect
c. Warning Defect
d. End-user Defect

ANSWER: A PAGE: 302-3

9. According to Stephen Sugarman, performance-based regulation is:
a. Where the government sets targets for how much harm is allowed for each product produced and the company is fined or penalized for any harm beyond the acceptable level.
b. Where the government creates a reporting structure for consumers to report corporation performance related to safety or environmental issues and then the government imposes fines by a specific formula for companies who exceed a certain number of negative reports.
c. Where consumer advocacy groups work with the independent agencies to determine which corporations are implementing best practices for consumer safety and then create regulations to impose those practices on other companies.
d. Where the government analyzes which companies make the most profit, indicating consumer approval of their performance on safety standards and then implement those companies’ practices as legal standards.
ANSWER: A PAGE: 310

Essay Questions

10. Discuss litigation against major corporations – tactics used to aid plaintiffs and to aid defendants.

PAGE: 294-299