Midterm Take-Home Examination
PHIL215 / ARBUS 202
General Information
1. Due Date: Wednesday Oct. 31, by 11:55p.m. EST
2. Late Policy: Late submissions will not be accepted unless a documented excuse of
sufficient weight (e.g., a medical emergency) is provided.
General Instructions
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Read the Specific Instructions below.
Do not put your name anywhere in this document.
Keep this instruction page in the document you submit. Do not delete.
Keep the Short-Answer Question page in the document you submit. Do not delete.
Keep the Essay Question page in the document you submit. Do not delete.
Do all of your work in this document.
Specific Instructions
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Read Chapters 1 through 6 of the textbook.
Review the online materials for Modules 1 through 6 in LEARN.
Complete Section 1 and Section 2 below.
The expected page length of the exam as a whole is approximately 5 double-spaced
pages in total (1500 words by computer word count).
5. When completed, submit this document to the Midterm Take-Home Examination
dropbox.
6. You must make explicit use of course concepts from the lectures in LEARN and from
the readings in the text.
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Section 1: Short-Answer Questions (50%)
Instructions: Answer each of the following questions. Provide a paragraph or two for each
question, using complete, grammatically correct sentences. The expected page length of
Section 1 (i.e., the total for all five questions) is approximately three (3) double-spaced
pages (about 900 words by computer word count).
1. Consider this claim from Chapter 1, “This basic goal of markets prohibits practices
that detract from proper market functioning.” Explain what the claim means in the
context of the chapter.
2. Why do we need to study traditional ethical theories in addition to the marketfailure approach to business ethics? (Chapter 2 of the text.)
3. In your own words, describe what dirty hands are. Give an example and explain why
your example is an example of dirty hands. (Chapter 3 of the text.)
4. Explain what fiduciary duties are in the context of business. Who has fiduciary
duties? (Chapter 4 of the text.)
5. What is the difference between equality and equity? Provide a unique example that
clearly demonstrates the distinction. (Chapter 5 of the text.)
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Section 2: Essay Question (50%)
Instructions: Answer the following question in the form of a brief analytical essay. Pay
attention to paragraph structure, grammar, spelling, etc. The expected page length of
Section 2 is approximately two (2) double-spaced pages (about 600 words by computer
word count). For the purposes of this essay, it is unnecessary that you provide citations, but
you must employ relevant course concepts in the essay’s content.
1. Using an example, explain how the free-rider problem can emerge in the workplace.
Why is this an ethical problem? Explain how enlightened self-interest (Chapter 6)
can “solve” the free-rider problem.
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Section 1: Short Answer Questions:
Question 1:
To answer this question, the basic goal of markets prohibits practices should be
defined. According to the textbook, it means similarly as being a good sport in business-related
behaviours- the most important one is for a business to respect both the letter and the spirits of
the laws and regulations governing the operation within society. Also, a business should not
intentionally use competitive strategies that exploit loopholes in the rules. And a business should
not be attracted by unscrupulous strategies others are using in order to remain good reputation.
Moreover, it should be operated under competitive strategies that are consistent with the proper
functioning of the market.
In ideal conditions of a perfectly competitive market followed by the First Fundamental
Theorem of Welfare Economics, this market will reach Pareto efficiency eventually. But in real
world, real society with all kinds of markets prohibits practices, desirability like maximizing
profit cannot be reached since Pareto efficiency doesn’t equal to desirability- detracting from
proper market functioning is the loss of following the norms internal to the market.
Question 2:
Firstly, proper ethnical cognitions form up the theoretical basis for the principle of
the market failures approach. As people value the free market economy or respecting its norms,
ethical reasons are expected by doing so- people ought to mitigate risks of facing market failures
caused by multiple factors. Secondly, there are still doubts on whether the market failures
approach can be responsible for business’s moral obligation. As a business student, if there exist
other obligations apart from the ones generated by the norms of the free market, we should be
able to study them in ethical fields and explain the reasons for the necessity which business
should pay attention to those obligations. Thirdly, with the identity of a business student as well
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as a human being living in the society, having a general understanding of traditional ethical
theories is needed for both studying and living purpose- I do care about ethics. Understanding
some of the best ways of explaining basic ethical reasons as well as knowing how others think
through actions are worthwhile to spend time on it.
Question 3:
Dirty hand dilemma arises when a political leader is forced to make a choice to do
something morally wrong to bring about a greater good of some kind.
My example of dirty hands come from history book about Germany. Hitler used “dirty
hands” politics to gain support for his beliefs and change the German’s position around 1930.
Before WWII, Germany was left in shambles, broken down with a non-existent economy and
controlled by sanctions from the previous war. The people were oppressed, jobless as well as
hopeless and most fertile land had been stolen from them. Hitler rose through the ranks,
brainwashed his people and took command. In the process, he picked up the German economy
and made them the powerful state they are today. Apart from the remaining Nazi and neo-Nazi,
Hitler’s strategy of making Germany great again is amoral- he did achieve his promise on
changing the status quo; but the Nazism he established had a further influence globally. To
conclude this case, Nazism used for brainwashing and commanding is morally wrong; the
change of Germany’s future and the state of its people are relatively better.
Question 4： Being a fiduciary means having a duty to take care of someone else’s budget. A
fiduciary duty exists where a person or company is required to put another person's interests
before their own. In the context of businesses, they were given investors’ money with the
understanding that the business would try to generate profits and pay out dividends to their
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investors. If the company does anything other than pursue profits the shareholders might feel that
they have been denied what they deserve.
Many individuals are responsible for fiduciary duties. A typical example can be company
director to their company or to shareholders. Also any sort of agents can be accounted for having
fiduciary duties to their principals.
Question 5:
Starting with the definition of equality and equity, equality the state of all things
being equal, or the equal distribution of rights, responsibilities, privileges, and resources. While
equity means fairness and fair judgement among different situations. Summarizing differences,
we get three points. Firstly, equality denotes that everyone is at the same level, whereas equity in
business parlance denotes the ownership of the shares of a company. Secondly, equity refers to the
qualities of justness, fairness, impartiality and even handedness, while equality is about equal
sharing and exact division. And lastly, equality equals quantity, whereas equity equals quality.
My example is the Canada’s publicly-funded health care system. In the terms of equality,
every Canadian citizen ought to have same access to health care providers and services
regardless of their ability to pay for care. But, individuals vary- differences in gender, age, place
of residence and many other factors determines that some might need additional services and
programs to fulfill their demand. And this embodies equity in this case as everyone need to
achieve and maintain their own well-being which equality in health care system cannot bring
them.
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Section 2: Essay Question
A free rider is a person who benefits from something without expending effort or paying
for it. Free riders exist in real life, especially in the workplace where individual distribution is
hard to distinguish from; and they are so annoying as they reap without sowing!
Consider the scenario when you are taking a marketing course as a student of the University
of Waterloo and according to the syllabus, a 20-min interviewing video about new venture is
assigned to each group of 3 students. Due to high survival pressure, one student can only
undertake 10-min of the interview, but the requirement is 20 minutes. This means if everyone
contributes 10 minutes, there will be an excess of 10 minutes in the total video length. And
according to real life experience, this group work will likely to have poor quality and lack of
communication. In this case, free rider problem can be easily demonstrated- everyone will try to
lower their contribution time as they know they can fulfill the requirements even if they don’t
participate as much as the next person. In a board sense, wherever exists groupwork in the
workplace, there exists free-rider problem as some individuals would rather have extra leisure
time than hard-working while receiving same paybacks. This conclusion can also be reached
through a prisoner dilemma game. Analyzing through aspect of ethics, the free-rider problem has
become an ethical problem as it violates the principle of equity. The expected return or wages in
the workplace should always be determined by the effort and related output equally. And the
existence of free-riders will not only discourage their colleagues but also reduce productivity
which should pay attention to it.
Turning on to the topic of how to minimize the side effects bring by free-rider problem,
enlightened self-interest is the main theory which provides possible solutions to the problem.
From previous paragraph we get to the conclusion that pure self-interest causes free-rider
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problem, while enlightened self-interest is a totally different concept. According to Wikipedia,
“Enlightened self-interest is a philosophy in ethics which states that persons who act to further
the interests of others (or the interests of the group or groups to which they belong), ultimately
serve their own self-interest.” Based on existing observations, cases of people sacrificing their
own interests for the sake of others can be explained by enlightened self-interest theories as
people are proved to be social animals and are socially conditioned to be cooperators. And this
makes enlightened self-interest useful in solving free-rider problem as different individuals will
cooperate wholeheartedly together to achieve a certain goal while remain their selfish motives.
Also, enlightened self-interest can often bring us in the direction of what is ethical. The
recognition of reputation capital is a great example showing how useful enlightened self-interest
is. Effected by social factors, a business or an individual might see that being perceived as ethical
by society is beneficial. And eventually the business as well as the individual will regulate
themselves to follow the rules of being ethical. Furthermore, self-regulations aim at codifying and
enforcing rules in the code of ethics will be achieved as well as regulations from external forces
like the government. It is widely believed that followed by self-regulations and the demand for
good reputation, free-rider problem can be worked out.
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