#19 - Global Reference, Must Be True, Subject Perspective

[Administrator]

Complete Question Explanation

The correct answer choice is (B).

Answer choice (A):

Answer choice (B): This is the correct answer choice.

Answer choice (C):

Answer choice (D):

Answer choice (E):

This explanation is still in progress. Please post any questions below!

[sherrilynm]

I don't understand why B is the best answer - where does it say that the economists believe the PRIMARY goal should be maximizing profits? Thanks!

[Francis O'Rourke]

Answer choice (B) states that economists would agree that CEO's of the specified corporations "should make decisions based primarily on maximizing profits." Evidence for economists agreement with this statement can be found in the first and the third paragraph.

In lines 6-12, economists are described as being in agreement with the "basic corporate practice of making decisions based on what will maximize profits." This does not single out CEO's of non-charitable corporations however, so we will need more evidence.

The third paragraph gives us two types of CEO's. lines 23- 27 tell us that economists believe that CEO's who work for the owners of a company have a "primary interest" in the protection of profits, and that they are bound to seek profits as a condition of their employment.

In cases where CEOs are also the owner of a company, which is what we are interested in to prove answer choice (B), economists also believe that these individuals must make decisions based on profit maximization. Lines 30-34 state that the economist's view is that these CEO's "should still work to maximize profits" regardless of whether these CEO's have other goals which seem to conflict with profit maximization.

[miriamson07]

Hello,
I have the same question as the question above. I agree that the economists think CEOs of owner-operated noncharitable corporations should make decisions based on maximizing profits. But I think to say “primarily” on maximizing profits would require a bit of an assumption.

After reading the response above, it seems to me we’d have to assume that what’s in lines 23 to 25 applies to what economists think about CEOs of owner-operated noncharitable corporations. But I think that even if economists think CEOs should maximize profits for owners, the same wouldn’t necessarily apply when the CEO owns the company. Lines 39-34 do say “the economists' view is that even if such a CEO's purpose is to look to the public good and nothing else, the CEO should still work to maximize profits, because that will turn out best for the public anyway. But this doesn’t necessarily mean the CEO’s focus on maximizing profits needs to be their primary one, does it?

I think we could maybe take the last paragraph as evidence for how much the author cares about acting morally. Then, perhaps we can say since maximizing profits is what’s best for the public, this should be the CEO’s primary focus.

I would love to hear your thoughts, thank you

[Adam Tyson]

The last paragraph expresses the view of the author, not the view of the economists, but the question is asking for something with which the economists would probably agree. Given this statement at the beginning of the beginning of the 3rd paragraph:

The economists argue that a CEO’s sole responsibility is to the owners, whose primary interest, except in charitable institutions, is the protection of their profits. CEOs are bound, as a condition of their employment, to seek a profit for the owners.

it seems pretty clear that those economists would agree with answer B. This statement doesn't carve out any exception for owner-operated noncharitable corporations; it applies to every noncharitable corporation, full stop, no assumptions required. It's explicit in those lines. And they didn't say anything about CEOs owning the company. They told us in the 2nd paragraph that some companies are owner-operated, while others have CEOs, so those are two distinct categories that don't appear to overlap.

There is also zero evidence that the economists would agree with any of the other answer choices, so even if we cannot prove that they would agree with answer B, it's still the one answer which with they would most likely agree.