MGMT 202 1st EditionFinal Exam Study GuideLaws regulate competition to prevent formation of monopolies and inequitable pricing1890 Sherman Antitrust Act – before 1890, big businesses were in the railroad, oil, and coal industries, they were forming “trusts” or “pools” where they helped each other – made agreements with competitors and set the same high prices – Sherman Antitrust Act was made to prevent this1998 Digital Millennium Copyright Act – protect copyrights in movies/musicProtection of consumers – from food to social media 1906 Pure Food and Drug Act – (FDA – food and drug administration) – Coca Cola used cocaine up till 1903; replaced it with caffeine and weren’t saying how much; Coke decided to reveal howmuch they were using for legal interests1998 Children’s Online Privacy Protection Act – before this, anyone could get information online from minors – not just stalkers but also companiesPromotion of Equity and Safety:1963 Equal Pay Act – made it illegal for gender discrimination affecting pay when positions and other factors are the same1970 Occupational Safety and Health Act – protecting people’s safety and health in the workplaceProtection of the Natural Environment1970 Clean Air Act, 1972 Federal Water Pollution Act, 1973 Endangered Species Act All made when there was a Republican president, Democratic Congress (so there was general agreement between both parties)Before these acts, people who became sick or died from polluted air or water had the responsibility of proving the company had harmed them. After these acts, the companies had toprove they hadn’t polluted the water or air.Laws that Encourage Ethical Conduct:1991 Federal Sentencing Guidelines for Organizations – incentives for organizations to promote and build an ethical workplace – ethics training, reporting systems, etc2002 Sarbanes-Oxley Act – accounting oversight boards Limitations of Legal Requirements:-laws are just minimal behavior standards; it would be ideal for people to do better-laws are all about what you SHOULDN’T do, rather than what you should do-laws tend to lag behind society’s moral standards – e.g., having slaves, women voting, color segregated schools – people can do things they know are wrong but aren’t illegal yet-it’s hard for uneducated, poor, illiterate people to influence changes in laws – exclusive groups mainly change the laws-discriminatory outcomes Is economics on par with engineering?Both offer technical advice – one action will have ________ consequencesBoth have precise methods (to understand relationships between actions and results)Both are value-free and objective Analogy fails in several ways:Economics has not achieved the scientific rigor that engineering hasLaws in economics are not as widely confirmed and accepted as scientific/mathematic lawsAssumptions about humans (neo-classic approach trying to explain human behavior):-humans are self-interested – minimum answer is “yes BUT”-humans are rational – not everyone really is; -humans learn from their mistakes and change their behavior if a choice is not beneficial to them – problem is, some mistakes people can’t recover from “first-generation problem” – assumption that you can always recover from mistakes – not always trueFundamental difference between macro and micro economicsThese lectures refer to micro economicsMacro – big picture; entire economyMicro – details of big picture; behaviors of individuals or firms or government agenciesNeoclassic economists:Adam Smith – Wealth of Nations – invisible hand (don’t need government enforcement), law of supply and demand (supply is a function of demand)David Ricardo – The Principles of Political Economy and Taxation – diminishing returns (increased input=decreased output), comparative advantage (country should focus on producing what they can produce most efficiently and trade with other companies)Thomas Malthus – Essay on the Principle of Population – theory on population (influenced Darwin’s theories on evolution etc; noticed plants and animals commonly overproduce – due to natural selection; survival – humans overproduce as well but don’t die off so natural resources are limited; associating overpopulation with poverty; compared to an epidemic; theory rejected at first) Assumptions of neoclassic economics:-government shouldn’t intervene in economics – it’s unnecessary and inappropriate -individuals can freely pursue their self-interest (like Smith’s theories)-markets discipline private economic activity-profit alone determines corporate performance/success-the primary contributions from firms to society are creating wealth, jobs, paying taxes, and delivering goods and servicesMarket economy – should have choice, competition, efficiencyCell phone companies, airlines, and rental car companies are reducing in numberLeast # you should have is 3 – getting dangerously close to monopolyNegative externalities – bribery, administered pricingLimitations with classic economic thought:Practical (Velasquez) – some parts of society are excluded (poor); damaging/hazardous effects to individuals Theoretical (Hosmer) – greatest good for greatest number accepts that there are people who don’t get their rights or benefits; people are treated as means to an end (can be somewhat abused if profits are prioritized over people)Combined (Melendez) – cost effective analysis (the end is already decided and we have to determine if the cost is worth it – example, cotton harvesting is very harmful to the health of the people harvesting it but worker safety is not the most important when weighed with cost); supply/demand and “dependence effect” (what if supply is not a function of demand but vice versa?)Old student union – rain leaked through floors, additions were disorganized and nonsensicalStudents protested ILC being built on mallASUA was honest; students voted no, they wouldn’t pay an extra fee to improve the union but said it was administration’s responsibility, so UA found a way to build the new student union and ILC without increasing feesEthics – inclusive, morals/values, making judgments based on situationsDo ethics always apply to you? No; everyone’s ethics are different (beyond basics – don’t murder, rob a bank, etc).Little decisions form your ethical principles – people around you, work environment, etc all add upEgo influences decisions