Question 1

Which of the following ethical models incorporates conscience into the decision-making process?

Accepted Answer

The Blanchard and Peale model incorporates conscience into the decision-making process by encouraging individuals to listen to their inner voice, or conscience, when making ethical decisions. The other options do not specifically reference conscience as a factor in ethical decision-making.

Question 2

Jane Eyring works for PharmaMeds, Inc. Jane is a physician-scientist who is responsible for running the pilot tests on PharmaMed's new oral spray medication for individuals with adult onset diabetes. Jane has discovered that if those in the test group do not spray the medicine correctly or if they spray for too short of a time, the medicine is not effective, or as effective, and insulin shock has resulted in a few of the patients. Jane talks with one of her colleagues who responds, "Look, there's no need to stop the testing or the drug's release. Just tell them in the test and in the brochures that will be with the spray, 'Spray correctly! If you do not, you may not receive your necessary dose.'" Jane is not sure anyone can be 100% accurate in spraying all the time. What risks does the company run if the spray doesn't work for the patients?

Accepted Answer

If the spray doesn't work for the patients, the company runs the risk of fines and penalties for not ensuring proper efficacy and safety of the product, litigation by patients who become ill due to the product, and damage to its reputation for releasing a faulty product. Therefore, all of the above are valid risks that the company may face.

Question 3

Which of the following is not a requirement of Sarbanes-Oxley?

Accepted Answer

Sarbanes-Oxley does not require the appointment of an ethics officer. It does require the establishment of a code of ethics and an ethics hotline.

Question 4

Michael Chertoff was the head of the Department of Homeland Security. Mr. Chertoff paid 25 cents to the federal government each time a personal fax came to him at his federal office. Mr. Chertoff's actions:

Accepted Answer

Mr. Chertoff's actions are meant to establish an effective tone at the top by showing that even small expenses should be properly accounted for and paid appropriately. This demonstrates a commitment to ethical behavior and sets an example for others in the agency to follow.

Question 5

The Corruptions Perceptions Index compiled by Transparency International:

Accepted Answer

The Corruptions Perceptions Index compiled by Transparency International shows a correlation between corruption and the lack of economic development, suggesting that corruption inhibits economic growth and development. It does not suggest that all countries' governments are corrupt or that corruption is acceptable in most countries.

Question 6

Enron Corporation filed for bankruptcy following a number of revelations about its accounting procedures. Enron used a complex structure of corporations and off-the-books debt to mask its true financial picture from the markets. When asked about the propriety of Enron's reporting methods, many analysts have responded, "They simply did what most corporations do." Their comments:

Accepted Answer

The analysts' response reflects rationalization, in which they justify Enron's actions by suggesting that it was a common practice among corporations.

Question 7

Which of the following statements best describes the ethical position of Enron executives?

Accepted Answer

The Enron executives justified their unethical actions by believing that as long as their actions were legal, they were ethical. They were also under pressure to keep the stock price up, which led them to do whatever it takes to manipulate the stock price. They often believed that everybody in the industry was doing it, so it was acceptable for them to do it too. Therefore, both statements A and B describe their ethical position.

Question 8

Jane Eyring works for PharmaMeds, Inc. Jane is a physician-scientist who is responsible for running the pilot tests on PharmaMed's new oral spray medication for individuals with adult onset diabetes. Jane has discovered that if those in the test group do not spray the medicine correctly or if they spray for too short of a time, the medicine is not effective, or as effective, and insulin shock has resulted in a few of the patients. Jane talks with one of her colleagues who responds, "Look, there's no need to stop the testing or the drug's release. Just tell them in the test and in the brochures that will be with the spray, 'Spray correctly! If you do not, you may not receive your necessary dose.'" Jane is not sure anyone can be 100% accurate in spraying all the time. Whom is affected by Jane's decision, regardless of what decision she makes?

Accepted Answer

Jane's decision impacts shareholders (who have a financial stake in the product's success), customers (who rely on the product for their health), and her own reputation (based on the ethical and safety considerations of her work).

Question 9

Enron's failure to disclose its off-the-book debts was legal. Which of the following ethical categories do you think apply to that type of financial reporting?

Accepted Answer

Enron's failure to disclose its off-the-book debts is an example of giving a false impression as well as taking unfair advantage. The company intentionally hid its debts to make its financial statements look better, which gave investors a false impression of the company's financial health. By not disclosing its true financial picture, Enron also took unfair advantage of its investors, who were not able to make informed decisions about the company's value. Therefore, both options B and C apply.

Question 10

Why does the late Dr. Milton Friedman feel that managers should not involve their companies in social issues?

Accepted Answer

Dr. Milton Friedman believed that managers should not involve their companies in social issues because they are agents of the shareholders and should act in their best interests. He believed that the primary responsibility of a business is to maximize profits for its shareholders, and any diversion from that goal would be a disservice to them. He did not believe that companies would necessarily lose money by being socially responsible, but rather that it was not their role to do so.

Question 11

Sarbanes-Oxley is:

Accepted Answer

Sarbanes-Oxley is a federal legislation that imposed ethics requirements on corporations after accounting scandals in the early 2000s, such as Enron and WorldCom. This law aimed to increase transparency and accountability in financial reporting and required public companies to establish and maintain an adequate internal control structure and procedures for financial reporting.

Question 12

In the Parable of the Sadhu:

Accepted Answer

The Parable of the Sadhu is a story about personal values and how they can clash with a group or organizational values. The climbers in the story were all focused on their goal of reaching the summit and were willing to abandon the Sadhu despite his obvious need for help. The lesson to be learned is that personal values should never be completely overridden by an organization's or group's values, and that kindness and empathy should always be practiced.

Question 13

Milton Friedman's view of the social responsibility of business is best described as:

Accepted Answer

Milton Friedman argued that the only social responsibility of business is to increase its profits within the rules of the game set by society. He believed that managers should focus solely on maximizing shareholder value and not be distracted by other societal concerns unless those concerns directly impact the profitability of the firm. Therefore, choice A is the most accurate description of his view on the social responsibility of business.

Question 14

In international business:

Accepted Answer

Trust and honesty are essential in international business for investment and economic growth. Many countries have ethics and legal frameworks that promote transparency, accountability, and trust, and businesses operating in these markets must adhere to these standards. Companies must ensure they comply with local laws and regulations, build strong relationships with local partners and stakeholders, and demonstrate a commitment to ethical and responsible business practices.

Question 15

Which of the two following groupings of ethical thought would you describe as opposites?

Accepted Answer

Natural law is a theory that claims morality is inherent in nature and can be understood through human reason. On the other hand, moral relativism denies that there are absolute moral values and claims that moral truth is subjective and dependent on cultural or individual perspectives. These two theories are opposite in their approaches to understanding morality.

Question 16

An example of unethical behavior in the New York City and Boston marathon races was committed by:

Accepted Answer

Rosie Ruiz pretended to have won both the New York City and Boston marathon races, but it was later revealed that she had cut large parts of the course and had not actually completed the races. This is considered unethical behavior in the sport of marathon running. The other choices do not have any known instances of unethical behavior in these races.

Question 17

Which country is perceived as the most corrupt country in the 2012 Corruption Perceptions Index?

Accepted Answer

According to the 2012 Corruption Perceptions Index by Transparency International, Somalia was perceived as the most corrupt country with a score of 8 out of 100. Iraq and Iran were tied at 116th place with a score of 18, while Singapore was perceived as the least corrupt country with a score of 87.

Question 18

Which of the following is not important for capitalism to function?

Accepted Answer

Grease payments, also known as bribery or kickbacks, are unethical and illegal actions that undermine the integrity of free market competition. While consumer confidence, absence of corruption, and trust in government officials are important for capitalism to function properly, grease payments go against the principles of fairness and equal opportunity for all participants in the marketplace.

Question 19

Which of the following is not an element of the Nash test?

Accepted Answer

The element of legality is not included in the Nash test, which instead focuses on factors such as long-term satisfaction, personal values, and consideration of others' perspectives.

Question 20

Tim Donaghy was a referee for the NBA. Mr. Donaghy began betting in 2003 on NBA games. He also provided tips to other gamblers on who would win games in which he was serving as a referee. Mr. Donaghy's actions:

Accepted Answer

The answer of Tim Donaghy was a referee for the...

Quiz 2: Business Ethics and Social Responsibility