problem set 3 ethics tussfdsfs.docx

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ACT 3060
Jennifer Lewin

Minh Hoang Carolyn Ku Andrew Lam Miguel Perez ECON4310.001 08 April 2014 Problem Set #3 Minh Hoang, Carolyn Ku,Andrew Lam, Miguel Perez ECON4310.001 08April 2014 16. a) What’s at stake for the key parties, including those with whom Susan disagrees? For me (as Susan), reputation with the general public and potentially generated revenue is at stake. My job, or rather, a seemingly imminent promotion, would be at stake depending on the outcomes. The company’s image is at stake due to the fact that if they endorse the use of a product that comes with such a negative side effect, they would be under fire. Within the general population, the health of those who use the product is at stake; not only that, the health of those who would be brought into using the product due to increased advertising and directed advertising would be at risk as well. b) What are the main arguments Susan is trying to counter? That is, what are the reasons and rationalizations that you need to address? Capturing the product’s use in the alternative market would generate up to a 50% increase in sales. Making this move also captures the uncaptured consumer surplus. This move also takes advantage of the spare capacity the production line of the product has, thus maximizing producer surplus as well. On the other hand, there is an argument to push for the product seeing as so many people have endorsed and mentioned the product by name as a means to kick start a diet. Another argument is that products such as these tend to have side effects, and in most cases, a disclaimer would be enough to rid the company of liability. c) What levers/arguments can Susan use to influence those with whom she disagrees? It is unethical to ignore unhealthy side effects of a product in order to pursue additional profit when the company is already profitable. In the event that the product is discovered by many to be unsafe for adult use, doubts of its safety for infant use could possibly rise as well. Since the product is in its mature phase, and has been a contender in the market for so long, it would be more advisable to continue to uphold market share rather than attempt to capture an alternate market. Consumers who want to use the product as part of a detoxification diet/flush are free to do so, but endo
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