Deck 2: Business Ethicspart Ii: the Legal Environment of Business

Question 1

Although corporations are not persons, but artificial entities created by the state, it is clear that they can and should be held morally accountable.

Answer 1

False

Question 2

To a libertarian, it is unjust for a society to take wealth earned by one citizen and to distribute it to others who did not earn it.

Answer 2

True

Question 3

What is unjust to a social egalitarian will also be unjust to a libertarian.

Answer 3

False

Question 4

Kant's philosophy rejects the idea that the end justifies the means.

Question 5

Legal acts may be immoral.

Question 6

Kant's categorical imperative is a variation of the Golden Rule.

Question 7

The essential characteristic of ethical fundamentalism is a reliance upon a central repository of wisdom.

Question 8

Rule utilitarianism supports rules that, on balance, produce the greatest good.

Question 9

A person who believes in the situational ethics theory would agree that precise guidelines for business behavior must be developed and adhered to by business professionals.

Question 10

Intuitionism holds that rational persons possess inherent powers to assess the correctness of actions.

Question 11

Systems of ethics have a central authority and follow clear-cut, universal standards.

Question 12

Ethics can be defined broadly as the study of what is good or right.

Question 13

A leading proponent of the utilitarian approach to ethics was the eighteenth century philosopher Immanuel Kant.

Question 14

An ethical relativist looks to a central authority, such as the Bible, to guide her in ethical decision making.

Question 15

According to Milton Friedman, the social obligation of a corporation is to return as much money as possible to its shareholders.

Question 16

Deontologists are criticized for rigidity and excessive formalism.

Question 17

Situational ethics, unlike ethical relativism, judges a person's ethics, but first looks at the decision or act from the perspective of the actor.

Question 18

Under the stakeholder model, a derivative of the social contract theory, a corporation has fiduciary responsibilities to more than just its stockholders.

Question 19

Kohlberg believed that all people reach the third stage of moral development by adulthood.

Question 20

To a libertarian, it is not unjust for some people to accumulate fortunes while others live in poverty.

Question 21

Kant's approach, like that of ethical fundamentalists, asserts that universal laws stem from the direct pronouncements of God.

Question 22

True cost-benefit analysis, as a social theory,

A) only measures monetary gains and losses in making business decisions.
B) compares direct and indirect costs and benefits of program alternatives for meeting a specific goal.
C) is another theory that judges persons' actions by what those persons believe is right for themselves.
D) emphasizes justice and a central moral authority.

Question 23

Ethical relativism holds that when any two individuals or cultures differ regarding the morality of a particular issue or action, they are both correct because morality is relative.

Question 24

The ethical decision making approach that views ethical decisions from the actor's perspective and then judges whether the decisions were ethical is:

A) ethical fundamentalism.
B) ethical relativism.
C) situational ethics.
D) act utilitarianism.

Question 25

Under a Kantian approach to ethics, a person should not lie to colleagues unless that person supports the right of all colleagues to lie to one another.

Question 26

Utilitarian notions underlie cost-benefit analysis.

Question 27

Which of the following statements is true of the libertarian social ethics theory?

A) Libertarians stress market outcomes as the basis for distributing society's rewards.
B) Libertarians encourage social control over all people in order to design an equitable society.
C) Libertarians believe it is just for society to take wealth earned by some citizens and distribute it to those who did not directly earn it.
D) The fact that some people end up with fortunes while others are poor proves only that absolute power corrupts absolutely.

Question 28

Which of the following is not true about corporations in the United States?

A) A relatively small number of corporations own the great bulk of U.S. industrial wealth.
B) The great majority of publicly held corporations have audit committees consisting entirely of outside directors.
C) The board of directors of the majority of publicly held U.S. corporations consist mainly or entirely of inside directors.
D) Corporate governance requirements on publicly held corporations have been imposed by federal legislation.

Question 29

An ethical decision-making approach that relies on a central authority or set of rules, such as the Koran or the Bible, is:

A) ethical fundamentalism.
B) ethical relativism.
C) rule utilitarianism.
D) act utilitarianism.

Question 30

If a Middle Eastern culture and the American culture differ as to the morality of a particular action, under ethical relativism:

A) both cultures are correct.
B) the action should be assessed to determine whether the action produces more net pleasure compared with net pain.
C) a cost-benefit analysis should be conducted to determine the relative economic efficiency of the action.
D) the action should be viewed through a "veil of ignorance" to determine whether it is ethical.

Question 31

Corporations are subject to a higher standard of accountability than are public bodies.

Question 32

The "Television Test" is a test that is generally accepted by adherents of intuitionism.

Question 33

Bennett would like to propose to the board of directors of Benmarc, Inc., that the corporation distribute one percent of its pre-tax yearly income to feed the poor.To Milton Friedman and others, Bennett's proposal might be considered unethical, because it violates the purpose for which the corporation was established.

Question 34

Philosophers have found that the most effective way to develop dependable and universal methods for making ethical judgments is to fashion a priori guidelines.

Question 35

Deontological theories assess good and evil in terms of the motives behind actions.

Question 36

The ethical theory that underlies cost-benefit analysis is:

A) libertarianism.
B) deontology.
C) utilitarianism.
D) ethical relativism.

Question 37

Cost-benefit analysis seeks the greatest economic efficiency according to the underlying notion that, given two potential acts, the act achieving the greatest output at the least cost promotes the greatest marginal happiness over the less-efficient act, other things being equal.

Question 38

Ethical issues in business settings include corporate governance, whistle-blowing, shareholder voting, and management's duties to shareholders.

Question 39

From a Kantian perspective, for an action to be moral, it must be possible for it to be made into a universal law and it must be respectful of the autonomy and rationality of all human beings.

Question 40

Psychologist Lawrence Kohlberg observed that people progress through sequential stages of moral development according to the two major variables of age and reasoning.

Question 41

Nineteen-year-old Kiren was raised in a home where Christianity is practiced and he attended parochial school through eighth grade.Kiren is a good student and citizen who conforms to the expectations of his church, family, and peers.He does so because he loves his family and church, is loyal to them, and trusts them.Under Kohlberg's schematic analysis, Kiren is most likely at what stage of moral development?

A) Pre-conventional.
B) Conventional.
C) Post-conventional.
D) Adult.

Question 42

Critics of business offer all but which of the following arguments to support their contention that business must help resolve societal problems?

A) Social contract.
B) The more responsibly companies act, the less government must regulate them.
C) Involvement in social causes makes good business sense.
D) Expertise.

Question 43

Adam Smith, in The Wealth of Nations , said the capitalistic system was composed of six institutions, which include all but which of the following?

A) Economic motivation.
B) Free enterprise.
C) Labor.
D) Limited government.

Question 44

Social egalitarians believe:

A) the ends justifies the means.
B) society should provide each person with equal amounts of goods and services regardless of the contribution each makes to increase society's wealth.
C) society should divide wealth based on each person's contribution.
D) that if persons wish to act morally, they should emulate those in the society who always seem to do the right thing.

Question 45

A factor demanding the ethical and social responsibility of business is:

A) the "invisible hand" of competition.
B) the sheer size and power of individual corporations.
C) the fact that self-regulation has been effective in achieving social goals.
D) great amounts of wealth and economic power are controlled by a small number of shareholders who own and exercise tight control over a large number of corporations.

Question 46

The definition of business ethics includes which of the following points?

A) It is a branch of applied ethics.
B) It is fully codified in federal statutes.
C) It has a central authority and universal standards.
D) It is based on maximizing profits for a business.

Question 47

The ethical theory of intuitionism proposes that:

A) the power of an individual to assess the rightness or wrongness of decisions is as basic to human beings as the instinct for survival.
B) market outcomes should be the basis for distributing goods.
C) the "veil of ignorance" should be developed to consider the needs and rights of all society's members.
D) society should stress equality of opportunity, not results.

Question 48

Which of the following presents ethical dimensions for a business?

A) Possible pollution of the physical environment.
B) Conflicts among differing cultures and value systems in international transactions.
C) Compensation and working conditions of employees.
D) All of these.

Question 49

Which of the following is a common criticism of deontological ethical theories?

A) They are excessively pragmatic.
B) They are rigid and excessively formal.
C) They only consider actions by their motives.
D) They fail to consider universal principles.

Question 50

A major criticism of utilitarianism as an ethical theory is that:

A) it is rigid.
B) in some important instances it ignores justice.
C) it results in the judgment that a person's actions are always moral for that person and therefore exempt from punishment.
D) it is excessively formal.

Question 51

Under which ethical system would it be ethical to compel a few citizens to undergo painful or fatal medical tests in order to develop cures for the rest of the world?

A) Utilitarianism.
B) Ethical fundamentalism.
C) Distributive justice.
D) Libertarianism.

Question 52

How does Immanuel Kant's approach to ethical decision-making differ from that of an ethical fundamentalist?

A) Kant's approach is premised on the rationality of human beings and not on principles handed down from above.
B) Kant's approach stresses liberty and not justice.
C) Kant's approach judges society in moral terms by how it distributes goods and services.
D) Kant's approach assesses each separate act according to whether it maximizes pleasure over pain.

Question 53

The type of moral equality espoused by John Rawls is:

A) freedom to do what one wishes.
B) social and material equality.
C) freedom from government regulation.
D) equality of opportunity.

Question 54

Which arguments oppose business involvement in socially responsible activities?

A) Lack of corporate focus on profitability.
B) Unfairness to company employees and shareholders.
C) Lack of accountability.
D) All of these.

Question 55

An auto designer chooses to devote his efforts to design an automobile that is the safest vehicle possible.He does so because he wishes to save lives and prevent disabling injuries.He believes he and his employer have a duty to provide the public with the safest possible vehicle.The designer's approach to ethical decision-making is best characterized as:

A) utilitarian.
B) deontological.
C) ethically relative.
D) ethically fundamental.

Question 56

Analyze whether telling a lie is unethical in terms of each of the following ethical theories:
a.The deontological approach.
b.Utilitarianism.
c.Intuitionism and the "Television Test."
d.Ethical relativism.
e.Ethical fundamentalism.

Question 57

Milo is the young, likable, optimistic, and generous son of a prominent public official.He has a master's degree in business and is the business partner of Kent and Lily in an oil drilling and exploration business.Milo also serves as a director on the board of the Corley Savings and Loan Association.While serving on the Corley Board, Milo votes to approve major loans to Kent and Lily without disclosing to the other directors that he is a business partner of Kent and Lily .Milo also personally arranges for a $900,000 line of credit from Corley for an oil drilling venture in which he is a partner with Kent .The drilling venture is unsuccessful and Kent and Lily both default on their loans to Corley , which then causes the S & L to become insolvent.Federal banking officials seize Corley and liquidate its assets to pay creditors and depositors.Because Corley is federally insured, tax money is also used to pay off depositors whose deposits are insured under federal programs.Corley shareholders lose their investment money.Was Milo's conduct as a director of Corley ethical? Analyze his conduct in light of the following
a.Intuitionism and the "Television Test."
b.Milton Friedman's ideas on corporate governance.
c.Deontological theories.
d.Rule utilitarianism.
e.Ethical relativism.

Question 58

In what way or ways are ethical relativism  and  situational ethics similar?

A) They both look to a central authority or set of rules to guide ethical decision-making.
B) They both assess each separate act according to whether it maximizes pleasure over pain.
C) They both judge actions from the perspective of the actor.
D) They both begin with an evaluation of the economic benefit of a decision.

Question 59

Which of the following is a common criticism of ethical relativism?

A) It promotes open-mindedness and tolerance.
B) It assumes that a person's actions are always correct for that person, but if that is true, then all behavior is, by definition, moral.
C) It is rigid and excessively formal.
D) It is too judgmental.

Question 60

To a __________ , whether telling a lie in a given instance would produce greater pleasure than telling the truth is less important than deciding if a general practice of lying would maximize society's pleasure.

A) deontologist
B) rule utilitarian
C) ethical fundamentalist
D) ethical relativist

Question 61

Through his observation of human behavior, psychologist Lawrence Kohlberg developed a model of moral development.Describe the stages of moral development that were studied and developed by Kohlberg and the relevance of this model for ethical business behavior.

Question 62

Discuss which of the social ethics theories listed below you most agree with and why.Discuss your reasons for disagreeing with the others.
a.Distributive justice
b.Social egalitarian
c.Libertarianism

Question 63

Compare the social ethics theories of distributive justice, libertarianism, and social egalitarianism.How are they alike? How are they different? Explain your answer.

Question 64

Discuss each of the following ethical theories with regard to whether you accept or reject them for your own actions and decisions.
a.Intuitionism and the "Television Test."
b.Rule utilitarianism.
c.Ethical relativism.
d.Ethical fundamentalism.
e.The deontological approach.
f.Milton Friedman's ideas on corporate governance.

Question 65

Discuss the arguments for and against businesses' involvement in socially responsible activities.

Question 66

Define business ethics and give some examples of the types of situations in which ethical issues might arise in a business setting.