I need help with the business law midterm, 60 mins midterm duration
BADM2001: MARKETS AND POLITICS
MIDTERM EXAM PRACTICE – SPRING 2022
The exam has four parts. Part I (Matching) is 20 points (2 points per question). Part II (Multiple
Choice) is 20 points (2 points per question). Part III (Short Answer) is 15 points (7.5 points per
question). Part IV (Case Analysis) is 45 points. The maximum score is 100 points.
Distribution: Please take the exam in your regular classroom for BADM 2001, either GOV 101
or GOV 102, unless you have made other arrangements with your professor. The exam will be
available on Blackboard Thursday, March 3rd at 11:15am for section 12 and at 2:25pm for section
13. Do not try to access the exam before your computer shows the appropriate time. If you try to
access the exam early, you will not be able to access it, and the browser may not display the exam
once it becomes available.
Taking the exam: The exam is open-readings, open-notes, and open-slides. You may not
collaborate with any other person on the exam. During and after the exam, until 5pm on Friday
March 4th, you may not communicate about the contents of the exam with anyone other than your
professor.
Format of answers: Please type your answers in the text boxes provided to you on Blackboard.
For Parts III and IV, there will be a word count limit for each answer that will be strictly enforced.
Please enter your name on the final question which states “I, [your name], affirm that I have
completed this examination in accordance with the GW Code of Academic Integrity.”
Submission: You will have 1 hour (60 minutes) from starting the exam on Blackboard to complete
the exam. The exam window will close at 12:25pm for section 12 and at 3:35pm for section 13.
Part I: Concept Matching (20 points)
In Blackboard are 15 short phrases or examples that illustrate course concepts. You are to match
the excerpts with the best-fitting concept from the list on the bottom of this page. By “best-
fitting,” I mean not only correct but also most specific. Therefore, if the phrase or example is an
instance of two or more terms, you must select the term that is most restrictively correct. For
example, consider the excerpt:
___ He was a major opponent of socialism.
Suppose the possible answers were:
A. Nathan Robinson
B. an Austrian economist
C. a Nobel Memorial Prize winner
D. Friedrich Hayek
In this example, B, C, and D are all true answers, but D is the most specific of these, and
therefore it is the answer you should select.
Some concepts will remain unused, and no concept is to be used more than once.
Scoring is 2 points for each correct answer.
Concepts
A. Agency problem
B. Arbitrage
C. Command economy
D. Conditions versus problems
E. Compensating wage differential
F. Creative destruction
G. Difference principle
H. Economizing by consumers
I. Friedman’s shareholder theory
J. Hidden and visible political
participants
K. Inalienable right
L. Local knowledge
M. Monopsony
N. Natural monopoly
O. Nozick’s critique of Rawls
P. Nudge theory
Q. Pareto improvement
R. Policy window
S. Price ceiling
T. Price discrimination
U. Price system
V. Principle of equal liberty
W. Principle of fair equality of opportunity
X. Rectification
Y. Regulatory capture
Z. Social voting
AA. Stakeholder theory
BB. Veil of ignorance
Phrases and examples
__1. Everyone wants to be on a certain social media network because their friends and family
are there. N
__2. If you let people exchange their resources freely among themselves, you will end up with
a distribution that seems unfair. However, it is a just outcome if the process was fair. O
__3. A restaurant offers a “senior special” of $7 for elderly customers when their regular lunch
price is $10. T
__4. The president of the United States influences what issues are on the national agenda, but
his proposed solutions were developed by specialists in thinktanks. J
__5. My apartment is rent-controlled, so the government prevents my landlord from charging
above $700 a month. S
__6. A CEO proposes to increase his own salary, even though he knows this will not increase
shareholder profits. A
__7. We voluntarily trade biscuits for coffee. We are both better off, and no one else is
affected. Q
__8. A worker would like to continue his shift in order to earn more overtime wages, but the
law requires him to take a break. K
__9. Before you register for classes, the School of Business automatically schedules a meeting
with your academic advisor, but you can cancel the meeting and still register. P
__10. A central planner decides how to allocate and distribute goods and services. C
Part II: Multiple Choice (20 points)
1. The course readings portray prices as…
a. vital signs that investors monitor in order to track the economy’s health.
b. signals that transmit information among suppliers, manufacturers, consumers,
etc.
c. indicators that the government uses to analyze and predict economic activity.
d. tools that the government uses to increase or decrease demand to desired levels.
2. According to Schumpeter’s concept of creative destruction, why must even a monopolist
continually innovate?
a. New products or production methods always threaten to displace the monopolist.
b. Customers will grow bored with uncreative products.
c. It is too expensive to buy start-up competitors.
d. All of the above
3. Critics of price-gouging laws argue that such laws…
a. ensure that necessities remain affordable to low-income consumers.
b. cause producers to create more of the goods in question.
c. enhance or amplify the signals sent by prices.
d. prevent producers from responding and thus cause shortages.
4. Wealth inequality often violates people’s moral intuitions.
a. True
b. False
5. Which of the following is a reason that an executive agency might prefer to issue a guidance
document rather than use notice-and-comment rulemaking?
a. Guidance can be issued immediately without a public comment period.
b. Guidance requires public comments that provide the agency with information.
c. Guidance is not legally binding.
d. All of the above.
6. In Louis Brandeis’s view, what is the greatest threat posed by monopoly?
a. High prices make consumers worse off.
b. Private concentrations of power endanger democracy.
c. Monopolists do not produce enough goods.
d. Monopolists do not invest enough in innovation.
7. Milton’s Friedman’s shareholder theory would likely oppose the justifications for diversity
hiring or affirmative action policies given by Rawls’s principle of fair equality of opportunity.
a. True
b. False
8. Which public policy response would be most effective if the major concern was the nonmarket
power wielded by a monopolist corporation?
a. Require the corporation to disclose more information to customers
b. Regulate prices and product quality
c. Break up the corporation through an antitrust action
d. Stop the corporation from acquiring competitors
9. Which of the following is NOT a reason that behavioral economics approaches, like nudge
theory, might be favored by business managers?
a. Nudges do not involve restricting employees’ freedom of choice.
b. Nudges cause all employees to make the same choices, simplifying administration.
c. Nudges do not require compensating employees with additional incentives.
d. Nudges may help employees achieve their true goals.
10. Command economies face a problem, and markets are said to solve this problem. Which of
the following is NOT an example of that solution in action?
a. Companies make more hand sanitizer when the price of hand sanitizer increases.
b. A person buys hand sanitizer for $1 at a local store and sells it for $20 online.
c. People drive less when the price of gasoline goes up.
d. The government conducts a survey that asks people whether they would use a
new program that has been proposed (e.g., government health insurance).
Part III: Short Answer (15 points)
These questions have maximum word limits. Your answers can be shorter.
Question 1 (7.5 points) (Word limit: 50)
Friedrich Hayek and Milton Friedman agree that there are dangers in centralizing decision-
making, either in a centrally-planned economy or in the delegation of shareholder decisions to a
corporate executive. However, the disagree over the primary danger. What are the key
motivations of Hayek’s and Friedman’s arguments?
Hayek worried that central decisionmakers could not collect and use the dispersed local
knowledge in society. Therefore, they lacked the necessary information. Friedman instead
worried that executives would pursue their own interests rather than the interests of those
who appointed them.
Question 2 (7.5 points) (Word limit: 50)
At what stage of Baron’s nonmarket issue life cycle does the management of an affected
business have the least discretion? Why?
The final stage of enforcement: At this stage, the government is imposing a policy on the
business, so the manager must obey that policy. He or she lacks the flexibility of earlier
stages when policy affecting the business might still be influenced or avoided.
Part IV: Case Analysis (45 points)
This part of the exam consists of a mini-case followed by three questions. The questions
have maximum word limits. Your answers can be shorter.
Major hotel chains have implemented environmental incentive programs where guests who
decline cleaning services can receive incentives such as rewards points and restaurant discounts.
Reducing housekeeping services both cuts costs for hotel chains and benefits the environment by
saving water and electricity. The managers of Luxel Hotels (not a real business) are considering
whether to implement such a program.
However, some have raised concerns that these programs have harmed housekeepers, many of
whom are low-income immigrants. When demand for cleaning decreases, their hours are reduced
and schedules become more erratic. Further, because guests often let dirt build up for several
days, the job itself has become harder. Despite accumulated trash and dirt, hotels still require that
workers clean the room in the same allotted time; housekeepers have reported working twice as
hard. Indeed, there have been discussions about a lawsuit by employees against the hotel chains.
Hotel worker unions have criticized environmental incentive programs as cost-cutting measures
in disguise. Hours for housekeepers have declined even as occupancy rates have increased. Some
guests have defended the incentive programs. One anonymous traveler said: “The environment is
an important thing to protect. Unnecessary energy use worsens climate change, which affects the
world’s most impoverished populations.” Another traveler disagreed: “Cleaning is a hard job that
most people won’t do, and it’s unfair for the hotel to make it even harder.”
Question 1 (15 points) (Word limit: 100)
What would shareholder theory (as advocated by Milton Friedman) advise Luxel’s managers to
do? Why?
Shareholder theory advises maximizing returns to shareholders, or profits. Therefore, it
would advise adopting the incentive program to cut costs. However, the risk of lawsuit or a
union conflict could raise costs, and negative guest sentiment (e.g., the last traveler) could
decrease occupancy. Both of those could reduce profits, so those risks would weigh against
that recommendation.
Question 2 (20 points) (Word limit: 200)
a. Who are the stakeholders in Luxel Hotels mentioned in this case? (Please just list)
Shareholders, managers, housekeeping/cleaning employees, other hotel
employees, customers, communities affected by climate change
b. What would stakeholder theory advise Luxel’s managers to do? Why?
Several possibilities on specifics here: Adopt the program, don’t, adopt the
program but provide additional wage and schedule security to employees,
etc. The important aspect is that you identify how the stakeholders are
affected, and that the managers must take input from stakeholders and
balance these interests.
Question 3 (10 points) (Word limit: 50)
Would these environmental incentive programs be viewed as just from the perspective of
Rawls’s difference principle? Why?
Full credit: Yes. The difference principle applies at the societal level, not within the firm.
Therefore, the firm should consider the welfare of the least well-off who are affected by its
emissions: impoverished communities affected by climate change. The program is just.
Half credit: No. The difference principle requires maximizing the welfare of the least well-
off, and housekeepers are less well-off than the guests and the hotel shareholders. The
program that makes housekeepers worse off is not just. [This answer applies the difference
principle within the business, which I cautioned against in the class discussion, as it can
inadvertently harm worse-off people outside of the organization.]
Final Step:
Please type your name after the following statement:
“I, [your name], affirm that I have completed this assignment/examination in accordance with
the GW Code of Academic Integrity.” [text box for name]
Before hitting the “Submit” button, be sure to confirm that you answered all questions.
BADM2001: MARKETS AND POLITICS
MIDTERM EXAM PRACTICE – SPRING 2022
The exam has four parts. Part I (Matching) is 20 points (2 points per question). Part II (Multiple
Choice) is 20 points (2 points per question). Part III (Short Answer) is 15 points (7.5 points per
question). Part IV (Case Analysis) is 45 points. The maximum score is 100 points.
Distribution: Please take the exam in your regular classroom for BADM 2001, either GOV 101
or GOV 102, unless you have made other arrangements with your professor. The exam will be
available on Blackboard Thursday, March 3rd at 11:15am for section 12 and at 2:25pm for section
13. Do not try to access the exam before your computer shows the appropriate time. If you try to
access the exam early, you will not be able to access it, and the browser may not display the exam
once it becomes available.
Taking the exam: The exam is open-readings, open-notes, and open-slides. You may not
collaborate with any other person on the exam. During and after the exam, until 5pm on Friday
March 4th, you may not communicate about the contents of the exam with anyone other than your
professor.
Format of answers: Please type your answers in the text boxes provided to you on Blackboard.
For Parts III and IV, there will be a word count limit for each answer that will be strictly enforced.
Please enter your name on the final question which states “I, [your name], affirm that I have
completed this examination in accordance with the GW Code of Academic Integrity.”
Submission: You will have 1 hour (60 minutes) from starting the exam on Blackboard to complete
the exam. The exam window will close at 12:25pm for section 12 and at 3:35pm for section 13.
Part I: Concept Matching (20 points)
In Blackboard are 15 short phrases or examples that illustrate course concepts. You are to match
the excerpts with the best-fitting concept from the list on the bottom of this page. By “best-
fitting,” I mean not only correct but also most specific. Therefore, if the phrase or example is an
instance of two or more terms, you must select the term that is most restrictively correct. For
example, consider the excerpt:
___ He was a major opponent of socialism.
Suppose the possible answers were:
A. Nathan Robinson
B. an Austrian economist
C. a Nobel Memorial Prize winner
D. Friedrich Hayek
In this example, B, C, and D are all true answers, but D is the most specific of these, and
therefore it is the answer you should select.
Some concepts will remain unused, and no concept is to be used more than once.
Scoring is 2 points for each correct answer.
Concepts
A. Agency problem
B. Arbitrage
C. Command economy
D. Conditions versus problems
E. Compensating wage differential
F. Creative destruction
G. Difference principle
H. Economizing by consumers
I. Friedman’s shareholder theory
J. Hidden and visible political participants
K. Inalienable right
L. Local knowledge
M. Monopsony
N. Natural monopoly
O. Nozick’s critique of Rawls
P. Nudge theory
Q. Pareto improvement
R. Policy window
S. Price ceiling
T. Price discrimination
U. Price system
V. Principle of equal liberty
W. Principle of fair equality of opportunity
X. Rectification
Y. Regulatory capture
Z. Social voting
AA. Stakeholder theory
BB. Veil of ignorance
Phrases and examples
__1. Everyone wants to be on a certain social media network because their friends and family
are there.
__2. If you let people exchange their resources freely among themselves, you will end up with
a distribution that seems unfair. However, it is a just outcome if the process was fair.
__3. A restaurant offers a “senior special” of $7 for elderly customers when their regular lunch
price is $10.
__4. The president of the United States influences what issues are on the national agenda, but
his proposed solutions were developed by specialists in thinktanks.
__5. My apartment is rent-controlled, so the government prevents my landlord from charging
above $700 a month.
__6. A CEO proposes to increase his own salary, even though he knows this will not increase
shareholder profits.
__7. We voluntarily trade biscuits for coffee. We are both better off, and no one else is
affected.
__8. A worker would like to continue his shift in order to earn more overtime wages, but the
law requires him to take a break.
__9. Before you register for classes, the School of Business automatically schedules a meeting
with your academic advisor, but you can cancel the meeting and still register.
__10. A central planner decides how to allocate and distribute goods and services.
Part II: Multiple Choice (20 points)
1. The course readings portray prices as…
a. vital signs that investors monitor in order to track the economy’s health.
b. signals that transmit information among suppliers, manufacturers, consumers,
etc.
c. indicators that the government uses to analyze and predict economic activity.
d. tools that the government uses to increase or decrease demand to desired levels.
2. According to Schumpeter’s concept of creative destruction, why must even a monopolist
continually innovate?
a. New products or production methods always threaten to displace the monopolist.
b. Customers will grow bored with uncreative products.
c. It is too expensive to buy start-up competitors.
d. All of the above
3. Critics of price-gouging laws argue that such laws…
a. ensure that necessities remain affordable to low-income consumers.
b. cause producers to create more of the goods in question.
c. enhance or amplify the signals sent by prices.
d. prevent producers from responding and thus cause shortages.
4. Wealth inequality often violates people’s moral intuitions.
a. True
b. False
5. Which of the following is a reason that an executive agency might prefer to issue a guidance
document rather than use notice-and-comment rulemaking?
a. Guidance can be issued immediately without a public comment period.
b. Guidance requires public comments that provide the agency with information.
c. Guidance is not legally binding.
d. All of the above.
6. In Louis Brandeis’s view, what is the greatest threat posed by monopoly?
a. High prices make consumers worse off.
b. Private concentrations of power endanger democracy.
c. Monopolists do not produce enough goods.
d. Monopolists do not invest enough in innovation.
7. Milton’s Friedman’s shareholder theory would likely oppose the justifications for diversity
hiring or affirmative action policies given by Rawls’s principle of fair equality of opportunity.
a. True
b. False
8. Which public policy response would be most effective if the major concern was the nonmarket
power wielded by a monopolist corporation?
a. Require the corporation to disclose more information to customers
b. Regulate prices and product quality
c. Break up the corporation through an antitrust action
d. Stop the corporation from acquiring competitors
9. Which of the following is NOT a reason that behavioral economics approaches, like nudge
theory, might be favored by business managers?
a. Nudges do not involve restricting employees’ freedom of choice.
b. Nudges cause all employees to make the same choices, simplifying administration.
c. Nudges do not require compensating employees with additional incentives.
d. Nudges may help employees achieve their true goals.
10. Command economies face a problem, and markets are said to solve this problem. Which of
the following is NOT an example of that solution in action?
a. Companies make more hand sanitizer when the price of hand sanitizer increases.
b. A person buys hand sanitizer for $1 at a local store and sells it for $20 online.
c. People drive less when the price of gasoline goes up.
d. The government conducts a survey that asks people whether they would use a new
program that has been proposed (e.g., government health insurance).
Part III: Short Answer (15 points)
These questions have maximum word limits. Your answers can be shorter.
Question 1 (7.5 points) (Word limit: 50)
Friedrich Hayek and Milton Friedman agree that there are dangers in centralizing decision-
making, either in a centrally-planned economy or in the delegation of shareholder decisions to a
corporate executive. However, the disagree over the primary danger. What are the key
motivations of Hayek’s and Friedman’s arguments?
Question 2 (7.5 points) (Word limit: 50)
At what stage of Baron’s nonmarket issue life cycle does the management of an affected
business have the least discretion? Why?
Part IV: Case Analysis (45 points)
This part of the exam consists of a mini-case followed by three questions. The questions
have maximum word limits. Your answers can be shorter.
Major hotel chains have implemented environmental incentive programs where guests who
decline cleaning services can receive incentives such as rewards points and restaurant discounts.
Reducing housekeeping services both cuts costs for hotel chains and benefits the environment by
saving water and electricity. The managers of Luxel Hotels (not a real business) are considering
whether to implement such a program.
However, some have raised concerns that these programs have harmed housekeepers, many of
whom are low-income immigrants. When demand for cleaning decreases, their hours are reduced
and schedules become more erratic. Further, because guests often let dirt build up for several
days, the job itself has become harder. Despite accumulated trash and dirt, hotels still require that
workers clean the room in the same allotted time; housekeepers have reported working twice as
hard. Indeed, there have been discussions about a lawsuit by employees against the hotel chains.
Hotel worker unions have criticized environmental incentive programs as cost-cutting measures
in disguise. Hours for housekeepers have declined even as occupancy rates have increased. Some
guests have defended the incentive programs. One anonymous traveler said: “The environment is
an important thing to protect. Unnecessary energy use worsens climate change, which affects the
world’s most impoverished populations.” Another traveler disagreed: “Cleaning is a hard job that
most people won’t do, and it’s unfair for the hotel to make it even harder.”
Question 1 (15 points) (Word limit: 100)
What would shareholder theory (as advocated by Milton Friedman) advise Luxel’s managers to
do? Why?
Question 2 (20 points) (Word limit: 200)
a. Who are the stakeholders in Luxel Hotels mentioned in this case? (Please just list)
b. What would stakeholder theory advise Luxel’s managers to do? Why?
Question 3 (10 points) (Word limit: 50)
Would these environmental incentive programs be viewed as just from the perspective of
Rawls’s difference principle? Why?
Final Step:
Please type your name after the following statement:
“I, [your name], affirm that I have completed this assignment/examination in accordance with
the GW Code of Academic Integrity.” [text box for name]
Before hitting the “Submit” button, be sure to confirm that you answered all questions.
