Deck 3: Business Ethics, Social Forces, and the Law

Question 1

Under United States law, the legal owner (titleholder) of property is free to engage in any use of the property that he or she may desire.

Answer 1

False

Question 2

Unwillingness of businesses to voluntarily improve the ethics of their practices has little practical effect on the regulatory environment.

Answer 2

False

Question 3

Trust is a fundamental basis of the capitalist system that is central to the expectations of investors, customers, and other firm stakeholders.

Answer 3

True

Question 4

Ethics is a philosophical concept that deals with values related to the nature of human conduct.

Question 5

Ethical conduct is desirable but not necessary; business should be conducted through sole reliance on positive law and its enforcement in the courts.

Question 6

An accumulation of complaints from employees, customers, or investors can lead to imposition of restrictive new regulations and laws.

Question 7

Ethical violations can cause lasting detriment to a company's ability to do business through impacts on the company's reputation.

Question 8

In applying the stakeholder model of business ethics, only the interests of important constituencies affected by an action need to be satisfied.

Question 9

Civil disobedience is the remedy natural law proponents use to change positive law.

Question 10

Situational ethics is a moral system whose rigidity makes it unnecessary to examine motivation behind conduct in order to label it right or wrong.

Question 11

There is often a conflict between the goal of making money for shareholders and the goal of solving social problems through business.

Question 12

Evidence suggests that there may be relationships among ethical customer and employee relations and long-term ability to pay dividends.

Question 13

Protection against fraud and exploitation are found both in securities laws and Food and Drug Administration regulations.

Question 14

Both freedom from political domination and freedom from economic domination are personal rights protected under United States law.

Question 15

Moral standards based on positive law may allow businesses to conduct themselves unfairly so long as their actions are not illegal.

Question 16

The field of business ethics recognizes that social values typically must yield to the profitability motive.

Question 17

In addition to issues of social responsibility, business values and ethics play an important role in the success or failure of a business.

Question 18

Economic growth tends to be fastest among developing countries where payments to key administrators can increase transaction efficiency.

Question 19

Unfortunately, there is no evidence that commitment to ethical values is linked with financial performance of business organizations.

Question 20

Individual intentions, as expressed in contracts and wills, will not be given effect in the United States unless expressly authorized by law.

Question 21

Escape clauses are mechanisms created to promote flexibility in the administration of laws that appear unfair in particular circumstances.

Question 22

United States common law requires that case precedents be followed under all circumstances.

Question 23

Legislation and government regulations typically are enacted in response to:

A) isolated but serious ethical transgressions by businesses.
B) ongoing technological changes that make it easier to circumvent old laws.
C) widespread abuses of gaps in existing laws that are fundamentally unfair.
D) changes in the availability of organizational resources.

Question 24

The owner of a factory that releases toxic chemicals into the air and surrounding waterways may be in violation of:

A) environmental regulations.
B) zoning regulations.
C) antitrust regulations.
D) all of the above.

Question 25

Despite the importance of ethical behavior for business success, few Fortune 500 companies have codes of ethics to resolve ethical dilemmas.

Question 26

Laws that prohibit mislabeling of food, speeding, and sale of alcohol to minors exist primarily:

A) for protection of the person.
B) for protection of public health, safety, and morals.
C) for protection of property.
D) for protection of the state.

Question 27

Which of the following has been linked with the long-term growth and profitability of business organizations?

A) high standards for product quality
B) high standards for employee welfare
C) high standards for customer service
D) all of the above

Question 28

The often competing rights of both debtors and creditors are balanced and protected from excesses under United States law.

Question 29

Mortgages, security interests, and surety relationships are legal mechanisms created primarily to promote stability and flexibility in trade.

Question 30

Recognizing that an ethical dilemma exists is usually far more difficult than resolving the dilemma once its existence is recognized.

Question 31

A tenant's interest in fundamental fairness might outweigh the landlord's interest in freedom of trade.

Question 32

Laws that prohibit defamation, invasions of privacy, and discrimination exist primarily:

A) for protection of the person.
B) for protection of public health, safety, and morals.
C) for protection of property.
D) for protection of the state.

Question 33

Differences among businesses preclude the development of any universal categories of ethical behavior.

Question 34

The importance of trust as a fundamental principle underlying business transactions is illustrated by expectations that:

A) investors will be able to earn a return on their investments.
B) employees may be discharged at any time for any reason without notice.
C) litigation is inevitable because parties to agreements usually break promises.
D) insider trading proves that the economic system underlying business is flawed.

Question 35

Regulation of the Federal Reserve system, negotiable instruments, and installment credit transactions are designed largely to facilitate trade.

Question 36

Over half of all Fortune 500 firms train their employees to recognize and deal with particular types of behavior that breach their ethical codes.

Question 37

Laws that prohibit theft, operation of a factory in areas zoned residential, and copyright infringement exist primarily:

A) for protection of the person.
B) for protection of public health, safety, and morals.
C) for protection of property.
D) for protection of the state.

Question 38

Voluntary improvements in the fairness and ethics of business behavior are:

A) less effective than those brought about by government regulation.
B) less costly and intrusive than those brought about by government regulation.
C) virtually nonexistent in corporate America.
D) more common in third-world countries than in the United States.

Question 39

Among the guidelines for balancing the interests of various stakeholders to resolve ethical dilemmas in business are:

A) identify potential parties who could be injured by the proposed action.
B) define the problem from both the decision maker's and opposing viewpoints.
C) ask whether you would be willing to describe a proposed action to your family, the board of directors, a congressional hearing, or other public forum.
D) all of the above.

Question 40

Laws such as those authorizing tax collection and draft registration exist primarily:

A) because they are morally justified.
B) to protect individual health and welfare.
C) to protect individual property rights.
D) to enable the government to continue to function.

Question 41

The Blanchard and Peale three-part test for resolving ethical dilemmas consists of the following questions:

A) Is it legal? Is it ethical? Is it moral?
B) Is it legal? Is it balanced? How does it make me feel?
C) Is it ethical? Is it right? Does it pass the "front page of the newspaper" test?
D) Is it right? Is it balanced? Is it fair?

Question 42

"Primum non nocere" is Latin for:

A) Above all, do no harm.
B) Let the buyer beware.
C) Hear no evil, see no evil, and speak no evil.
D) No news is good news.

Question 43

Which of the following is not a question business ethicist Laura Nash has developed to help businesspeople reach the right decision in ethical dilemmas?

A) Have you defined the problem accurately?
B) How would you define the problem if you stood on the other side of the fence?
C) How did the situation occur in the first place?
D) Does your proposed solution to the problem effectively balance the competing objectives of ethical decision-making and corporate profitability?

Question 44

The passage of federal securities disclosure laws occurred largely as the result of:

A) voluntary self-regulation by ethics experts in the securities industry.
B) the stock market crash of 1929.
C) changes in the international market for securities and negotiable instruments.
D) all of the above.

Question 45

In applying the "front-page-of-the-newspaper" test to a contemplated course of conduct one should ask:

A) Would I be found criminally liable if this winds up on the front page of the newspaper?
B) Would I be liable for monetary damages if this winds up on the front page of the newspaper?
C) Would I be willing to have my spouse, friends, and children read about this if it winds up on the front page of the newspaper?
D) Would I be able to explain this to the authorities if it winds up on the front page of the newspaper?

Question 46

Which of the following situations reflects a possible conflict of interest?

A) You offer a company contract to a friend without checking competing bids.
B) You hire a relative for a company position although another candidate is more qualified.
C) You buy a piece of realty that would be suitable for a planned company project.
D) All of the above.

Question 47

John Harrington operates a business that almost always hires skilled workers who are college graduates; currently, however, his business does have a part-time opening for an unskilled worker. Harrington is considering hiring an uneducated welfare recipient instead of a student from the local university. Apply the "Guidelines for Analyzing a Contemplated Action" to this problem.

Question 48

In attempting to fulfill the ethical category of promise-keeping, it is important to avoid multiple conflicting commitments because:

A) it will not always be possible to pay dividends.
B) promises to pay taxes can only be subordinated to secured debt.
C) repeatedly breaking promises will cost a business its reputation in the long run.
D) stakeholders will relax their expectations if they know you are overextended.

Question 49

Thomas works for an internationally-renowned computer company. As a condition of his employment, Thomas signed a confidentiality agreement, in which he agreed not to disclose any trade secrets of the firm. The company has been researching a new computer advancement, and is on the brink of introducing this product to the buying public. Before the official product release, Thomas is considering offering information related to this new advancement to one of his company's competitors for a price. What categories of ethical behavior might be impacted by Thomas' decision to disclose this information to his employer's competitor?

Question 50

An ethical duty of confidentiality could be breached where:

A) information obtained through research of the employer is disclosed.
B) customer lists or leads are disclosed to a competitor.
C) proprietary information or technology of a business is disclosed.
D) all of the above.

Question 51

The ethical category of fairness is best expressed as:

A) Do unto others as you would have them do unto you.
B) Let the buyer beware.
C) He who laughs last laughs best.
D) No harm, no foul.

Question 52

The ethical category of integrity and truthfulness is best expressed as maintaining one's values and principles:

A) so long as profits can be maintained.
B) so long as the costs are not great.
C) unless deviating will go unnoticed.
D) despite the consequences or costs.