Business Ethics Test Questions with Answers

Chap 10:

16. Which of the following is true of gatekeepers?
a. They are not bound to ethical duties.
b. Investors and boards are examples of gatekeepers.
c. They serve as intermediaries between market participants.
d. They are not responsible for ensuring conformance to fairness in the marketplace.
Answer: c

17. Which of the following rely on gatekeepers for fair and effective functioning of economic markets?
a. Bankers
b. Auditors
c. Accountants
d. Financial analysts
Answer: a

18. The function of auditors as gatekeepers is to:
a. verify a company’s financial statements so that investors’ decisions are free from fraud and deception.
b. evaluate a company’s financial prospects or creditworthiness, so that banks and investors can make informed decisions.
c. ensure that decisions and transactions conform to the law.
d. function as intermediaries between a company’s stockholders and its executives.
Answer: a

19. Identify the gatekeepers who evaluate a company’s financial prospects or creditworthiness, so that banks and investors can make informed decisions.
a. Investors
b. Attorneys
c. Auditors
d. Analysts
Answer: d

20. Identify the gatekeepers who ensure that decisions and transactions conform to the law.
a. Accountants
b. Attorneys
c. Auditors
d. Analysts
Answer: b

21. Identify the gatekeepers who function as intermediaries between a company’s stockholders and its executives.
a. Accountants
b. Auditors
c. Board of directors
d. Financial analysts
Answer: c

22. Which of the following gatekeepers guarantee that executives act on behalf of the stockholders’ interests?
a. Accountants
b. Board of directors
c. Auditors
d. Analysts
Answer: b

23. A _____exists where a person holds a position of trust that requires that he exercise judgment on behalf of others, but where his personal interests conflict with those of others.
a. duty of care
b. community of interest
c. conflict of interest
d. duty of loyalty
Answer: c

24. A professional is said to have _____ if he has a professional and ethical obligation to clients rooted in trust that overrides his personal interests.
a. statutory duties
b. executive rights
c. creditor claims
d. fiduciary duties
Answer: d

25. Which of the following statements is true of conflicts of interests?
a. Self-interest makes it easy for individuals to fulfill their gatekeeper duties.
b. Legal protection cannot shield professionals from conflicts of interests.
c. Cross-selling of consulting services reduces conflicts of interests.
d. Excessive executive compensation involves conflicts of interests.
Answer: d

26. Which of the following statements is true of the Sarbanes-Oxley Act?
a. It is also known as the Financial Services Modernization Act of 2002.
b. It
is enforced by the Financial Accounting Standards Board.
c. It was passed by Congress because corporate boards failed to police themselves.
d. It fails to provide oversight in terms of direct lines of accountability and responsibility.
Answer: c

27. Which provision of the Sarbanes-Oxley Act prohibits various forms of professional services that are determined to be consulting rather than auditing?
a. Section 201
b. Section 301
c. Section 307
d. Section 404
Answer: a

28. Section 201 of the Sarbanes-Oxley Act addresses the:
a. rules of professional responsibility for attorneys.
b. codes of ethics for senior financial officers.
c. management assessment of internal controls.
d. services outside the scope of auditors.
Answer: d

29. Which of the following provisions of the Sarbanes-Oxley Act mandates majority of independents on any board and total absence of current or prior business relationships?
a. Section 407
b. Section 301
c. Section 406
d. Section 307
Answer: b

30. Section 307 of the Sarbanes-Oxley Act addresses the:
a. rules of professional responsibility for attorneys.
b. codes of ethics for senior financial officers.
c. management assessment of internal controls.
d. services outside the scope of auditors.
Answer: a

31. Which of the following provisions of the Sarbanes-Oxley Act requires lawyers to report concerns of wrongdoing if not addressed?
a. Section 407
b. Section 301
c. Section 406
d. Section 307
Answer: d

32. Section 404 of the Sarbanes-Oxley Act addresses the:
a. rules of professional responsibility for attorneys.
b. codes of ethics for senior financial officers.
c. management assessment of internal controls.
d. services outside the scope of auditors.
Answer: c

33. Section 406 of the Sarbanes-Oxley Act addresses the:
a. rules of professional responsibility for attorneys.
b. codes of ethics for senior financial officers.
c. management assessment of internal controls.
d. services outside the scope of auditors.
Answer: b

34. _____ of the Sarbanes-Oxley Act addresses the disclosure of audit committee financial expert.
a. Section 404
b. Section 301
c. Section 407
d. Section 307
Answer: c

35. Which of the following is a criticism of the Sarbanes-Oxley Act?
a. It excludes requirements for certification of documents by officers.
b. It imposes extraordinary financial costs on the firms.
c. It does not require lawyers to report concerns of wrongdoing if not addressed.
d. It does not require codes of ethics for senior financial officers.
Answer: b

36. Identify the external mechanism that seeks to ensure ethical corporate governance.
a. The Sarbanes-Oxley Act
b. The COSO framework
c. The European Union 7th Directive
d. The European Union 4th Directive
Answer: a

37. Which of the following is an internal mechanism that seeks to ensure ethical corporate governance?
a. European Union 8th Directive
b. The Sarbanes-Oxley Act
c. The COSO framework
d. European Union 7th directive
Answer: c

38. Which of the following statements is true of the Committee of Sponsoring Organizations?
a. It improves financial reporting through a combination of controls and governance standards called the External Control—Integrated Framework.
b. It is an external mechanism that seeks to ensure ethical corporate governance.
c. It describes control as encompassing those elements of an organization that, taken together, support people in the achievement of the organization’s objectives.
d. It replaced the Sarbanes-Oxley Act to ensure ethical corporate governance.
Answer: c

39. Which of the following elements of COSO sets the tone or culture of a firm?
a. Ongoing monitoring
b. Information and communications
c. Risk assessment
d. Control environment
Answer: d

40. Which of the following elements of COSO refers to policies and procedures that support the cultural issues such as integrity, ethical values, competence, philosophy, and operating style? a. Ongoing monitoring
b. Information and communications
c. Control activities
d. Risk assessment
Answer: c

41. Identify the COSO element that is directed at supporting the control environment through fair and truthful transmission of facts.
a. Risk assessment
b. Information and communications
c. Control activities
d. Ongoing monitoring
Answer: b

42. Which of the following COSO elements provides assessment capabilities and
uncovers vulnerabilities?
a. Risk assessment
b. Information and communications
c. Control activities
d. Ongoing monitoring
Answer: d

43. According to the COSO framework, which of the following is true of internal control?
a. It is not geared to the achievement of objectives in overlapping categories.
b. It can provide absolute assurance to an entity’s board.
c. It is an end in itself, not a means to an end.
d. It is affected by people at every level of an organization.
Answer: d

44. Which of the following is true of the COSO controls and the Sarbanes-Oxley requirements?
a. They result in less transparency in ensuring ethical corporate governance.
b. They encourage greater accountability for financial stewardship.
c. They result in a lesser emphasis to prevent any financial misconduct.
d. They do not impact executives, boards, and internal audits.
Answer: b

45. Which of the following legal duties of board members suggests that a director does not need to be an expert or actually run the company?
a. Duty of care
b. Duty of good faith
c. Duty of candor
d. Duty of loyalty
Answer: a

46. Identify the duty of obedience according to which board members should strive toward corporate objectives, and are not permitted to act in a way that is inconsistent with the central goals of the organization?
a. Duty of care
b. Duty of good faith
c. Duty of candor
d. Duty of loyalty
Answer: b

47. Which of the following duties of board members suggests that conflicts of interest are always to be resolved in favor of the corporation?
a. Duty of care
b. Duty of good faith
c. Duty of candor
d. Duty of loyalty
Answer: d

48. Which of the following is true of Federal Sentencing Guidelines for boards?
a. The board must be knowledgeable about the objectives and process of the ethics program rather than simply the mere contents of a training session.
b. The board should avoid exercising reasonable oversight with respect to the effectiveness and implementation of the ethics program.
c. The board should leave the evaluation of all board policies, procedures, governance structure, and position descriptions to the executives.
d. The board need not work with executives to analyze the incentives for ethical behavior.
Answer: a

49. Which of the following are additional ethical responsibilities board members should have beyond legal obligations?
a. They should maintain closed conversations within the firm.
b. They should refrain from providing oversight.
c. They should be critical in their inquiries about corporate vulnerabilities.
d. They should pay out a significant amount of the company’s sustainable growth dollars to its chief executives in compensation.
Answer: c

50. Tom, an employee of Electronixx, adjusted credits and debits of the company’s ledger to show high profits. He also created false documents, underreported his income, and evaded paying taxes for a year. Tom can be convicted for _____.
a. unethical insider trading
b. conflicts of interest in corporate governance
c. conflicts of interest in accounting
d. unfair executive excessive compensation
Answer: c

51. According to Kevin Bahr, which of the following is a cause for conflicts in the financial markets?
a. The independence and lack of expertise of audit committees
b. The presence of shareholder activism
c. Long-term executive greed versus short-term shareholder wealth
d. Self-regulation of the accounting profession
Answer: d

52. Which of the following is true of excessive compensation packages?
a. When executive compensation is tied to stock price, executives have a strong incentive to focus on long-term corporate interests rather than short-term stock value.
b. When huge amounts of compensation depend on quarterly earnings reports, there is a strong incentive to manipulate those reports in order to achieve the money.
c. Economic fairness and personal morality always exists in executives receiving lofty compensation packages.
d. Excessive compensation packages serve corporate interests when they provide an incentive that is not based on executive performance or accomplishments.
Answer: b

53. Which of the following scenarios gives rise to conflicts of interests in corporate governance?
a. Senior executives determining the compensation received by board members
b. Board members hand-selecting employees in their company
c. A CEO not chairing the board of directors
d. The absence of cross-fertilization of boards
Answer: a

54. Which of the following exemplifies insider trading?
a. Underreporting income
b. Falsifying account documents
c. Misappropriation of proprietary knowledge
d. Illegally evading income taxes
Answer: c

55. Sara, an employee of PentaComp Inc., passed on confidential information of her company to her friend. Her friend benefitted from selling PentaComp’s stock based on the information shared by Sara. In this scenario, Sara can be convicted of _____.
a. insider trading
b. falsifying documents
c. underreporting income
d. evading taxes
Answer: a

Chap 9
16. The Triple Bottom Line approach involves measuring business success of sustainable businesses and sustainable economic development in terms of:
a. economic, legal, and environmental sustainability.
b. economic, ethical, and environmental sustainability.
c. economic, legal, and competitive sustainability.
d. legal, competitive, and environmental sustainability.
Answer: b

17. Knowing what the future must be, creative businesses then look backwards to the present and determine what must be done to arrive at that future. This process is known as:
a. backward integration.
b. forecasting.
c. forward integration.
d. backcasting.
Answer: d

18. Which of the following is true of the conservation movement?
a. It advocated that the natural world should not be used as a capital resource.
b. It regarded natural resources as being able to provide an inexhaustible
supply of material.
c. It recommended a more restrained and prudent approach to the natural world.
d. It argued against the natural world being used to provide indirect benefits.
Answer: c

19. The conservation movement:
a. regarded natural resources as being able to provide an inexhaustible supply of material.
b. advocated that the natural world should not be used as a capital resource.
c. argued that the natural world was valued as a resource, providing humans with both direct benefits and indirect benefits.
d. believed that business does not good reasons for conserving natural resources.
Answer: c

20. Reminiscent of the _____ tradition, it is suggested that some animals have the cognitive capacity to possess a conscious life of their own and people have a duty not to treat these animals as mere objects and means to their own ends.
a. Kantian
b. virtue ethic
c. neoclassical
d. social web
Answer: a

21. Which of the following is true of a market-based approach to resolving environmental challenges?
a. It is critical of the narrow, philanthropic view of corporate social responsibility (CSR).
b. It asserts that limited resources should not be distributed in the market.
c. It suggests that environmental problems deserve economic solutions.
d. It conveys that resources are infinite and fungible.
Answer: c

Difficulty: Easy

22. Which of the following is involved in environmental problems according to the market-based approach to resolving environmental challenges?
a. Lack of knowledge of producing renewable resources
b. Inability of businesses to produce and sell limited resources
c. Lack of use of appropriate substitutes for limited resources
d. Allocation and distribution of limited resources
Answer: d

23. Which of the following was suggested by William Baxter?
a. An optimal level of pollution can be achieved through competitive markets.
b. Society can strive for pure air and water at a very low cost.
c. From a strict market economic perspective, resources are infinite.
d. All resources can be replaced by substitutes.
Answer: a
Difficulty: Medium

24. In economic terms, all resources:
a. are infinite because they can be replaced by substitutes.
b. are distributed fairly by the government.
c. can be made available everywhere.
d. are distributed efficiently in the market.
Answer: a

25. Which of the following explains the statement “All resources are fungible”?
a. It means that all resources can be regulated by the government.
b. It means that all resources can be replaced by substitutes.
c. It means that all resources cannot be duplicated.
d. It means that all resources cannot be recycled and reused.
Answer: b

26. Which of the following is true about the market-based approach to environmental responsibility?
a. Market failure occurs when no markets exist to create a price for important social goods.
b. Free market exchanges can guarantee optimal results for addressing issues related to externalities.
c. The market-based approach always ensures that what is good and rational for a collection of individuals is also good and rational for a society.
d. Markets can be very successful if important ethical and policy questions and policy decisions are left solely to the outcome of individual decisions.
Answer: a

27. Which of the following ways can lead market failure to serious environmental harm?
a. Creating abundant markets to create a price for important social goods
b. Making no distinction between individual decisions and group consequences
c. Inexistence of externalities in the economic exchange system
d. Assigning property rights to unowned goods
Answer: b

28. Which of the following causes inadequacy in ad hoc attempts—internalizing external costs and assigning property rights to unowned goods such as wild species—to repair market failures?
a. The backcasting problem
b. The fungibility problem
c. The biomimicry problem
d. The first-generation problem
Answer: d

29. Markets can work to prevent harm only through information supplied by the existence of market failures. This is better known as the:
a. biomimicry effect.
b. backcasting problem.
c. first-generation problem.
d. primary market effect.
Answer: c

30. Before environmental legislation was enacted, the primary legal avenue open for addressing environmental concerns was:
a. tort law.
b. international law.
c. public law.
d. criminal law.
Answer: a

31. Which of the following is true about the regulatory approach to environmental challenges?
a. It overestimates the influence that business can have on establishing the law.
b. The government established regulatory standards to offer compensation after the occurrence of pollution or any other environmental harm.
c. It shifted the burden from those threatened with harm to those who would cause the harm.
d. This approach ensures that business does not pursue any financial opportunities that cause harm to the environment.
Answer: c

32. Which of the following is a problem associated with the regulatory approach to environmental challenges?
a. The regulatory model assumes that economic growth is environmentally and ethically benign.
b. If people rely on the law to protect the environment, environmental protection will extend beyond the law.
c. Business passively responds to consumer desires and consumers are unaffected by the messages that business conveys.
d. National regulations are the only means to effectively address international environmental challenges.
Answer: a

33. Which of the following is true about the concept of sustainable development and sustainable business practice?
a. It suggests a radically new vision for integrating financial and environmental goals, compared to the growth model that preceded it.
b. According to this concept, only individuals who can prove that they had been harmed by pollution can raise legal challenges.
c. According to this concept, an economic solution to compensation should be offered for the harm only after the harm has been done.
d. It focuses only on the costs that businesses incur in pursuing environmental goals.
Answer: a

34. The three goals of sustainable development that include economic, environmental, and ethical sustainability are referred to as the:
a. tripartite goals.
b. three pillars of sustainability.
c. three pronged charter.
d. shoulders of sustainability.
Answer: b

35. Which of the following was charged with developing recommendations for paths toward economic and social development that would not achieve short-term economic growth at the expense of long-term environmental and economic sustainability?
a. The Bluewash Commission
b. The Binding Commission
c. The Barentsburg Commission
d. The Brundtland Commission
Answer: d

36. Which of the following is true of the Brundtland Commission?
a. It was named as the Brundtland Commission after the place in Norway, where the summit was conducted for the first time.
b. It was charged with developing recommendations for paths toward economic and social development at the expense of underdeveloped and developing countries.
c. It defined sustainable development as development that meets the needs of the present without compromising the ability of future generations to meet their own needs.
d. It criticized the report from the United Nations’ World Commission on Environment and Development published in 1987.
Answer: c

37. Which of the following models does not differentiate natural resources from the other factors of production and does not explain the origin of resources?
a. The circular flow model
b. The triple bottom line model
c. The bilinear model
d. The sustainability model
Answer: a
.

38. Which of the following is true of the circular flow model?
a. It differentiates natural resources from the other factors of production.
b. It suggests that to keep up with the economy, the population must grow.
c. It treats economic growth as both the solution to all social ills and also as
boundless.
d. It argues that the economy cannot grow indefinitely.
Answer: c

39. The possibility that the economy cannot grow indefinitely is simply not part of the:
a. three pillars of sustainability approach.
b. circular flow model.
c. triple bottom line approach.
d. bilinear model.
Answer: b

40. According to economist Herman Daly, neoclassical economics, with its emphasis on economic growth as the goal of economic policy will inevitably fail to meet these challenges:
a. if it suggests that the population of the world needs to be controlled.
b. unless it recognizes that the economy is but a subsystem within earth’s biosphere.
c. unless it recognizes that resources are infinite.
d. if it focuses on recycling and reusing the by-products of the production process.
Answer: b

41. According to the _____ law of thermodynamics (the conservation of matter/energy), neither matter nor energy can truly be “created,” it can only be transferred from one form to another.
a. first
b. second
c. third
d. fourth
Answer: a

42. The model of economy, in consistency with the second law of thermodynamics, implies that:
a. the amount of re-usable products decreases with an increase in production.
b. the economy exists beyond a finite biosphere.
c. wastes are not produced at each stage of economic activity.
d. the amount of usable energy decreases over time.
Answer: d

43. Over the long term, resources and energy cannot be used, nor waste produced, at rates at which the biosphere cannot replace or absorb them without jeopardizing its ability to sustain life. These are what Herman Daly calls the:
a. “economic limitations.”
b. “backcasting effect.”
c. “biophysical limits to growth.”
d. “un-expandable boundaries.”
Answer: c

44. Which of the following is true of the sustainability model in terms of environmental responsibilities?
a. Sustainability need not be a long-term strategy.
b. The huge unmet market potential among the world’s developing economies can only be met in sustainable ways.
c. Sustainable practices lead to reduced cost savings.
d. Firms that follow sustainable practices lose competitive advantage.
Answer: b

45. Which of the following is true of the sustainability model in terms of environmental responsibilities?
a. Sustainability reduces competitive advantage.
b. Sustainability is not a prudent long-term strategy.
c. Sustainability is a good risk management strategy.
d. Sustainability leads to reduced cost-savings.
Answer: c

46. Estimates suggest that with present technologies, businesses can readily achieve at least a fourfold increase in efficiency, and perhaps as much as a tenfold increase. This can be achieved through the first principle of sustainability known as:
a. biomimicry.
b. eco-efficiency.
c. the cradle-to-cradle responsibility.
d. the take-make-waste model.
Answer: b

47. Which of the following recommends cycling the waste of one activity into the resource of another?
a. The biomimicry principle
b. The cradle-to-grave model
c. The cradle-to-cradle model
d. The eco- efficiency principle
Answer: a

48. “Closed-loop” production seeks to integrate what is presently waste, back into production. In an ideal situation, the waste of one firm becomes the resource of another, and such synergies can create eco-industrial parks. This principle is often referred to as:
a. biomimicry.
b. eco-efficiency.
c. biosynergy.
d. backcast.
Answer: a

49. Which of the following suggests that a business takes resources, makes products out of them, and discards whatever is left over?
a. The cradle-to-grave model
b. The take-make-waste approach
c. The Cradle-to-cradle model
d. The eco-efficiency principle
Answer: b

50. Which of the following holds that a business is responsible for the entire life of its products, including the ultimate disposal even after the sale? a. The cradle-to-grave model
b. The take-make-waste appoach
c. The cradle-to-cradle model
d. The eco-efficiency principle
Answer: a

51. Cradle-to-grave and cradle-to-cradle responsibilities are part of the _____ sustainable business principle.
a. eco-efficiency
b. backcasting
c. biomimicry
d. take-make-waste
Answer: c

52. Which of the following would hold a business liable for groundwater contamination caused by its products even years after they had been buried in a landfill?
a. “Backcast” model
b. “Eco-efficiency” model
c. “Take-make-waste” model
d. “Cradle-to-grave” model
Answer: d

53. Which of the following holds that a business should be responsible for incorporating the end results of its products back into the productive cycle?
a. Backcasting
b. Cradle-to-cradle
c. Take-make-waste
d. Cradle-to-grave
Answer: b

54. Which of the following responsibilities entail an incentive to redesign products so that they can be recycled efficiently and easily?
a. Cradle-to-grave
b. Backcasting
c. Cradle-to-cradle
d. Eco-efficiency
Answer: c

55. Which of the following is true of a service-based economy?
a. A service-based economy tends to the consumers’ demand for clothes cleaning, floor covering, illumination, entertainment, and so forth.
b. A service-based economy interprets consumer demand as a demand for washing machines, carpets, lights, consumer electronics, and so forth.
c. A service-based economy weakens the production efficiencies.
d. A service-based economy increases material and energy costs significantly.
Answer: a

Chap 8
16. Which of the following is a set of processes for creating, communicating, and delivering value to customers and for managing customer relationships in ways that benefit the organization and its stakeholders?
a. Procuring
b. Branding
c. Marketing
d. Copywriting
Answer: c

17. Which of the following is one of the “Four Ps” of marketing?
a. Purpose
b. Planning
c. Promotion
d. People
Answer: c

18. The _____ ethical tradition would see a simple situation of an agreement for an exchange between two parties as upholding respect for individuals by treating them as autonomous agents capable of pursuing their own ends.
a. role-based
b. rights-based
c. rules-based
d. strategy-based
Answer: b

19. The _____ ethical tradition would take the two parties’ agreement as evidence that both are better off than they were prior to the exchange and thus conclude that overall happiness has been increased by any exchange freely entered into.
a. utilitarian
b. virtual
c. Kantian
d. deontological
Answer: a

20. The simple situation in which two parties come together and freely agree to an exchange is ethically legitimate only prima facie because:
a. investigation proves that a simple exchange does not involve unethical situations.
b. a simple exchange involves the consent of both parties involved, which leaves no room for unethical acts.
c. certain conditions must be met before it can be concluded that autonomy has been respected and mutual benefit has been achieved.
d. exchange occurs on mutual consent and for mutual benefit, parties get involved in an exchange only if they see their benefit.
Answer: c

21. While approaching an ethical issue in marketing, the rights-based tradition would:
a. ask to what degree the participants are respected as free and autonomous agents rather than treated simply as means to the end of making a sale.
b. calculate the benefits and costs of each exchange.
c. attempt to find out about other values that are affected by the exchange.
d. want to know the degree to which the transaction provided actual as opposed to merely apparent benefits for each participant.
Answer: a

22. While approaching an ethical issue in marketing, the utilitarian tradition would want to know:
a. the degree to which individuals freely participate in an exchange.
b. the degree to which the transaction provided actual as opposed to merely apparent benefits.
c. about other values that are affected by the exchange.
d. about the personal characters of the parties that are involved in the exchange.
Answer: b

23. A consumer’s consent to purchase a product is not informed if that consumer is:
a. unwilling to listen to the product details from the sales person.
b. injured after using the product and filed a product liability suit.
c. asked to buy a product without a warranty.
d. being misled or deceived about the product.
Answer: d

24. Greater consumption is likely to lead to unhappiness, a condition termed _____.
a. affluenza
b. caveat emptor
c. influenza
d. insomnia
Answer: a

25. The legal doctrine of strict liability is ethically controversial because:
a. it assumes informed consent of the buyer and therefore it is assumed to be ethically legitimate.
b. it allows consumers to assume that products are safe for use.
c. it holds that consumer demand depends upon what producers sell.
d. it holds a business accountable for paying damages whether or not it was at fault.
Answer: d

26. Identify the approach that assumes that every purchase involves the informed consent of the buyer and is ethically legitimate.
a. Res ipsa loquitur approach
b. Prima facie approach
c. Caveat emptor approach
d. Caveat venditor approach
Answer: c

27. In selling a product, a business offers tacit assurances that the product is reasonably suitable for its purpose. The law refers to this as the:
a. doctrine of caveat emptor.
b. implied warranty of merchantability.
c. doctrine of caveat lector.
d. implied warranty of productivity.
Answer: b

28. Which of the following statements is correct about the implied warranty of merchantability?
a. It refers to the caveat emptor approach.
b. This standard shifts the burden of proof from producers to consumers.
c. Most courts allow a business to completely disclaim the implied warranty of merchantability.
d. Many businesses issue a disclaimer of liability, or offer an expressed and limited warranty to limit their liability.
Answer: d

29. The implied warranty of merchantability shifts the burden of proof from:
a. producers to consumers.
b. producers to suppliers.
c. consumers to producers.
d. suppliers to consumers.
Answer: c

30. A business will seek to limit its liability by explicitly disowning any promise or warranty by:
a. using the caveat venditor principle.
b. issuing a disclaimer of liability.
c. completely disclaiming the implied warranty of merchantability.
d. denying responsibility for the behavior of its suppliers.
Answer: b

31. How did the use of an implied warranty of merchantability solve a set of problems with the contract law approach to product liability?
a. Consumers do not need complex contracts in order to protect themselves from all possible harms that products might cause.
b. The burden of proof has shifted from producers to consumers as consumers are allowed to assume that products are safe for ordinary use.
c. It has forced businesses to issue a disclaimer of liability and offer limited warranties to limit its liability.
d. Buyers have the responsibility to look out for their own interests and protect their own safety when buying a product.
Answer: a

32. Which of the following is true about tort law?
a. Tort law holds that the only duties that a person owes are those that have been explicitly promised to another party.
b. Tort law holds manufacturers accountable in cases when consumers are injured by products and no one is at fault.
c. Tort law holds a principal responsible for the actions of an agent when that agent is acting in the ordinary course of his or her duties to the principal.
d. Tort law holds that people do not owe other people any general duties, if they have not voluntarily assumed them.
Answer: b

33. Which of the following statements is true about negligence?
a. It is not a central component of tort law.
b. One can be negligent by doing something that one should not.
c. One cannot be held negligent by failing to do something that one should have done.
d. It excludes acts of both commission and omission.
Answer: b

34. Which of the following is true about strict product liability?
a. The United States has adopted clear strict liability standards.
b. It holds that the government must pay consumers where neither the producer nor the consumer is at fault.
c. It insures that society creates a strong incentive for business to produce safer goods and services by holding business strictly liable for any harm their products cause.
d. It is the same as negligence, and it suggests that holding business liable for harms caused due to negligence provides an incentive to better protect products in the future.
Answer: c

35. Society creates a strong incentive for businesses to produce safer goods and services by holding them responsible for any harm their products cause. This claim supports the:
a. strict product liability standard.
b. actual foreseeability standard.
c. reasonable person standard.
d. consent and informed decision standard.
Answer: a

36. Which of the following statements is true about manipulation?
a. It involves total control of direction or management.
b. A person cannot manipulate someone without deception.
c. It implies guiding people’s behavior with their conscious understanding. d. To manipulate something is to guide or direct its behavior.
Answer: d

37. Which of the following ethical traditions would have the strongest objections to manipulation?
a. Economic
b. Virtue-based
c. Principle-based
d. Utilitarian
Answer: c

38. Which of the following statements about manipulation would a strong believer of the principle-based ethical tradition most likely support?
a. Cases of paternalistic manipulation, in which someone is manipulated for their own good, are acceptable.
b. Manipulation executed without deception is acceptable.
c. Even unsuccessful manipulations are guilty of ethical wrong.
d. The ethical consequence of manipulation depends on the personal characteristics of the manipulator.
Answer: c

39. Marketing practices targeted at elderly populations for goods such as supplemental health insurance, funerals etc. are subject to criticism because:
a. that population is vulnerable.
b. interest gained on such investments are not highly profitable.
c. they target the considered and rational desires of the consumers.
d. they do not abide by the principles of welfare economics.
Answer: a

40. According to economist John Kenneth Galbraith, advertising and marketing were creating the very consumer demand that production then aimed to satisfy. The assertion that consumer demand relies upon what producers have to sell is termed:
a. the Hawthorne effect.
b. the dependence effect.
c. the reverse channel effect.
d. the supplemental effect.
Answer: b

41. Identify one of the implications of the “dependence effect.”
a. Unless a seller explicitly warrants a product as safe, buyers are liable for any harm they suffer.
b. Advertising and marketing create consumer wants that support the entire economy.
c. The court’s ruling on product liability cases is dependent on the extent of manipulation.
d. By creating consumer wants, advertising and other marketing practices violate consumer autonomy.
Answer: d

42. Which of the following do advertising and other marketing practices violate by creating consumer wants?
a. Right to free speech
b. Consumer autonomy
c. Right to privacy
d. Consumer demand
Answer: b

43. How does advertising distort the economy?
a. It manipulates prices for promotion to gain a foothold in a market.
b. It results in supply becoming a function of demand.
c. It is not able to create nonautonomous desires.
d. It creates irrational and trivial consumer wants.
Answer: d

44. Consumer vulnerability occurs when:
a. a person has an impaired ability to make an informed consent to the market exchange.
b. a person is susceptible to injuries from falls and medical emergencies.
c. the consumer is treated as an end in itself.
d. the law of supply and demand is reversed.
Answer: a

45. Which of the following is an example of consumer vulnerability?
a. Elderly people susceptible to expensive health care bills
b. Poor people susceptible to bankruptcy
c. Children susceptible to any bright, attractive items of no practical value
d. Single women walking alone at night susceptible to sexual assault
Answer: c

46. General vulnerability occurs when:
a. a person has an impaired ability to make an informed consent to the market exchange.
b. a person is susceptible to some specific physical, psychological, or financial harm.
c. children are shown commercials in and around schools.
d. people are susceptible to the harm of not satisfying their consumer desires and/or losing their money.
Answer: b

47. Consumers are vulnerable when they are not aware that they are subject to a marketing campaign. This type of campaign is called:
a. imminent marketing.
b. word-of-mouth marketing.
c. network marketing.
d. undercover marketing.
Answer: d

48. Which of the following statements is true about stealth marketing?
a. It occurs when consumers are aware that they are subject to a marketing campaign.
b. It refers to situations where consumers are subject to directed commercial activity without their knowledge.
c. It occurs when consumers pay little or no attention to billboards while speeding past a highway.
d. It is not an intentional effort to hide the true marketing element of the interaction.
Answer: b

49. Marketing experts consider stealth marketing extraordinarily effective because:
a. a consumer does not question the message as she might challenge a traditional advertising campaign.
b. the consumer’s guard is not down while accepting the message.
c. consumers do not see the communication as
too personal and often tend to trust an advertisement or other marketing material much more than they would trust the communicator.
d. consumers seek out the communicator’s vested interest.
Answer: a

50. An employer is held liable for damages caused by an accident involving an employee driving the company car on company business. Identify the law underlying this decision.
a. The doctrine of caveat emptor
b. The doctrine of respondent superior
c. Implied warranty of merchantability
d. The doctrine of caveat lector
Answer: b

51. UniCo—a multinational corporation that specializes in designing, developing, and selling consumer electronics—outsources manufacturing products to a third-world country company. Human rights activists have criticized UniCo for operating inhumane sweatshops at the manufacturing plants to gain profits. Although UniCo. is not directly liable to the labor exploitation, it threatens to pull out its business from the contracted company if the laborers are not provided with dignified wages and good working conditions. Which of the following responsibilities did the company fulfill in this scenario?
a. Caveat emptor
b. Implied merchantability
c. Respondent superior
d. Strict liability
Answer: c

52. Which of the following is an often overlooked aspect of advertising?
a. Pricing function
b. Evaluation function
c. Educational function
d. Watchdog function
Answer: c

53. Identify the practice of promoting a product by misleading consumers about the environmentally beneficial aspects of the product.
a. Greenwashing
b. Redlining
c. Gentrification
d. Greenskinning
Answer: a

54. Labeling products with such terms as “environmentally friendly,” “natural,” “eco,” “energy efficient,” “biodegradable” and the like can help promote products that have little or no environmental benefits. This practice is known as:
a. greenskinning.
b. redlining.
c. gentrification.
d. greenwashing.
Answer: d

55. Which of the following refers to the growing marketing practice of taking back one’s products after their useful life?
a. Reintermediation
b. Reverse channels
c. Disintermediation
d. Forward integration
Answer: b

Chap 7

16. Two general and connected understandings of privacy have been identified: privacy as a right to be ‘left alone’ within a personal zone of solitude, and privacy as the:
a. right to understand one’s emotions.
b. right to understand others’ emotions.
c. right to control information about others.
d. right to control information about oneself.
Answer: d

17. Values that are fundamental across culture and theory are called:
a. authentic norms.
b. hypernorms.
c. ethnocentric norms.
d. executive norms.
Answer: b

18. According to Donaldson and Dunfee, examples of hypernorms include the right to:
a. a safe workplace.
b. public information.
c. personal freedom.
d. vote.
Answer: c

19. According to Donaldson and Dunfee, the right to _____ is an example of a hypernorm.
a. a safe workplace.
b. public information.
c. vote
d. physical movement
Answer: d

20. Which of the following is true about privacy?
a. The right to privacy is not restricted by any social contract.
b. Privacy cannot be legally protected by common law.
c. Privacy can be legally protected by the constitution.
d. The right to privacy is unrelated to the universal right to autonomy.
Answer: c

21. _____ refers to the body of law comprised of the decisions handed down by courts, rather than specified in any particular statutes or regulations.
a. Statutory law
b. Common law
c. Civil law
d. Constitutional law
Answer: b

22. The Constitution’s Fourth Amendment protection against an unreasonable search and seizure governs only the public sector workplace because:
a. unions exist only in public sector organizations.
b. the private sector does not cater to appeals of unreasonable search or seizure.
c. the Constitution applies only to state action.
d. only public sector organizations deal with classified information.
Answer: c

23. Which of the following prohibits the “interception” or unauthorized access of stored communications?
a. The Electronic Communications Privacy Act of 1986
b. The Computer Security Act of 1987
c. The Privacy Act of 1974
d. The Computer Fraud and Abuse Act of 1986
Answer: a

24. The impact of the ECPA is to punish electronic monitoring only by third parties and not by employers because courts have ruled that “interception” applies only:
a. to access of messages by employers.
b. when monitoring is done without consent.
c. when employees file a case.
d. to messages in transit.
Answer: d

25. Which of the following statements about the Electronic Communications Privacy Act of 1986 is true?
a. Courts have ruled that the “interception” of stored communications applies only to messages that have actually reached company computers.
b. A firm that secures employee consent to monitoring at the time of hire is immune from ECPA liability.
c. The impact of the ECPA is to punish electronic monitoring only by employers.
d. The ECPA does not allow interception even when consent has been granted.
Answer: b

26. Name the legal violation that occurs when someone intentionally interferes on the private affairs of another when the interference would be “highly offensive to a reasonable person.”
a. Calumny
b. Vilification
c. Intrusion into seclusion
d. Defamation
Answer: c

27. If the basis for finding an invasion of privacy is often the employee’s legitimate and reasonable expectation of privacy, then a situation where there is no real expectation of privacy occurs when the:
a. employee has actual notice.
b. employer is covered under the ECPA.
c. work requires transference of sensitive data.
d. employee belongs to a minority group.
Answer: a

28. Which of the following states in the U.S. requires employers to notify workers when they are being monitored?
a. Ohio
b. Illinois
c. Michigan
d. Connecticut
Answer: d

29. Which of the following is true about the European Union’s Directive on Personal Data Protection?
a. It prohibits EU firms from transferring personal information to a non-EU country unless that country maintains “adequate protections” of its own.
b. It is also known as the European Union Safe Harbor Act.
c. It encourages member countries to maintain myriad standards for information gathering and protection.
d. It states that United States in the only non-member country that maintains “adequate protection” of personal
data.
Answer: a

30. The U.S. Department of Commerce negotiated a Safe Harbor exception:
a. because the U.S. would not qualify as having adequate protection.
b. so that the European Union could get access to personal information.
c. so that each European country could maintain its own standard of information gathering and protection while trading with the U.S.
d. because the law required that all imports to the European Union meet the Safe Harbor standards.
Answer: a

31. According to economist Antonio Argandona, which of the following elements would include issues relating to company secrets, espionage, and intelligence gathering?
a. Truthfulness and accuracy
b. Respect for property and safety rights
c. Respect for privacy
d. Accountability
Answer: c

32. Which of the following is true about technology and its usage?
a. It prohibits access to any information that was once easily accessible.
b. It ensures that the lines between people’s personal lives and professional lives are not blurred.
c. It tends to cause facelessness that is a challenge that has to be met.
d. It allows users to be much more careful with their communications.
Answer: c

33. When we do not get to know someone because we do not have to see that person in order to do our business, we often do not take into account the impact of our decisions on him or her. This is the challenge posed by the:
a. facelessness that results from the use of new technology accessible in the workplace.
b. knowledge gap that exists between people who understand the technology and others who do not understand it.
c. lack of clear boundaries between people’s personal and professional lives.
d. assumption by users of technology that the Internet is safe.
Answer: a

34. Which of the following is an advantage of monitoring?
a. Monitoring tends to promote effective performance since it reduces employees’ stress and pressure.
b. Monitoring tends to create a friendly workplace without any suspicions.
c. Monitoring increases the level of worker autonomy and respect, as well as workers’ right to control their environment.
d. Monitoring allows to ensure effective performance by preventing the loss of productivity to inappropriate technology use.
Answer: d

35. The desire to place workers in appropriate positions, to ensure compliance with affirmative action requirements, or to administer workplace benefits is sufficient reason for employers to undertake employee _____.
a. training
b. orientation
c. monitoring
d. drug testing
Answer: c

36. Which of the following is an advantage of drug testing?
a. Drug testing does not present any ethical challenges for employers.
b. Drug testing tends to provide a productivity benefit for companies.
c. There are no possibilities of incorrect presumptions in connection with drug testing.
d. There are no legal issues relating to monitoring employees through drug testing.
Answer: b

37. From a utilitarian perspective, individual rights to privacy or right to control information about oneself may be outweighed in cases where:
a. public safety is at risk.
b. the employee compensation package is very high.
c. the proposed benefit to the employer is high.
d. employee productivity depends directly on the number of hours they put in.
Answer: a

38. Which of the following acts stipulates that employers cannot use “protected health information” in making employment decisions without prior consent?
a. The Personal Information Protection and Electronic Documents Act
b. The Federal Information Security Management Act
c. The Personal Information and Health Documents Act
d. The Health Insurance Portability and Accountability Act
Answer: d

39. Identify the situation prohibited by The Genetic Information Non-Discrimination Act of 2008 (GINA).
a. An employer releases genetic information about an employee in response to a court order.
b. An employer releases genetic information about an employee in connection with the employee’s compliance to the certification provisions of the Family and Medical Leave Act.
c. An employer releases genetic information about an employee to a health researcher.
d. An employer releases genetic information about an employee to the human resource department differentiate among employees.
Answer: d

40. Which of the following statements about the Genetic Information Non-Discrimination Act of 2009 (GINA) is true?
a. Under GINA, an employer can collect genetic information in order to monitor the biological effects of toxic substances in the workplace.
b. Under GINA, an employer is subject to the same conditions as under the Health Insurance Portability and Accountability Act (HIPAA).
c. Under GINA, an employer cannot collect genetic information in order to comply with the Family Medical Leave Act.
d. Under GINA, an employer cannot release genetic information about an employee to a public health agency.
Answer: a

41. Which of the following is a disadvantage of monitoring?
a. Monitoring tends to constrain effective performance since it can cause increased stress and pressure.
b. Monitoring prevents employers from managing their workplaces to place workers in appropriate positions.
c. Monitoring does not allow managers to ensure compliance with affirmative action requirements.
d. Monitoring cannot be utilized to prevent the loss of productivity due to inappropriate technology use.
Answer: a

42. Which of the following statements is true about monitoring?
a. It reduces workers’ right to control their environment without reducing the level of worker autonomy and respect.
b. It has the potential to cause physical disorders such as carpal tunnel syndrome.
c. It does not have a negative impact on performance.
d. It can lead to mental pressures, but health problems have not been reported.
Answer: b

43. Which of the following is true about the “Hawthorne Effect”?
a. According to the Hawthorne effect, workers’ productivity improves when they are singled out.
b. According to the Hawthorne effect, workers show poor performance when they know that they are being monitored.
c. The Hawthorne effect allows managers to monitor their employees effectively.
d. The Hawthorne effect only occurs when the mechanisms used to monitor employees are unethical.
Answer: a

44. Employees will be on their best behavior during phone calls if they know that those calls are being monitored. Identify this effect of employee monitoring.
a. The placebo effect
b. The observer-expectancy effect
c. The Hawthorne effect
d. The halo effect
Answer: c

45. An employer can resolve the concerns related to the “Hawthorne Effect” through:
a. notified, random monitoring.
b. consented, selective monitoring.
c. selective, notified monitoring.
d. random, anonymous monitoring.
Answer: d

46. If an employee’s weight is evidence of or results from a disability, the employer must explore whether the worker is otherwise qualified for the position. Under the Americans with Disabilities Act (ADA), the individual is considered “otherwise qualified” if she or he:
a. has prior work experience relevant to the position, even if she or he is not able to perform the functions of the position due to the disability.
b. can perform normal daily activities like taking a bath and eating.
c. can perform the functions of the position with or without reasonable accommodations.
d. has a good academic record and good conduct.
Answer: c

47. Some companies have a(n) _____ policy under which an employer refuses to hire or terminates a worker on the basis of the spouse’s working at the same firm.
a. anti-nepotism
b. conflict-of-interest
c. anti-fraternization
d. antitrust
Answer: a

48. Which of the following about the regulation of off-work acts in the U.S. is true?
a. Many states ban discrimination on the basis of weight.
b. Laws that protect employees against discrimination based on marital status exist in just under half of the states.
c. Only a small minority of states protect employees against discrimination on the basis of political involvement.
d. Lifestyle discrimination tends to be lawful if the imposition of the rule treats one protected group differently than another.
Answer: b

49. Identify the policy under which an employer refuses to hire or terminates a worker whose spouse works at a competing firm.
a. Anti-nepotism policy
b. Antitrust policy
c. Affirmative action policy
d. Conflict-of-interest policy
Answer: d

50. Most statutes or common law decisions provide for employer defenses for all of the following EXCEPT:
a. those rules that are reasonable and rationally related to the employment activities of a particular employee.
b. those rules that treat one group differently from another considering lifestyle practices.
c. those rules that are necessary to avoid a conflict of interest or the appearance of conflict of interest.
d. those rules that constitute a “bona fide occupational requirement.”
Answer: b

51. Identify the act that expanded states’ rights with regard to Internet surveillance technology, including workplace surveillance, and amended the Electronic Communications Privacy Act.
a. The USA PATRIOT Act
b. The Sarbanes-Oxley Act
c. The Federal Information Security Management Act
d. The Personal Information Protection and Electronic Documents Act
Answer: a

52. Which of the following acts grants access to sensitive data with only a court order rather than a judicial warrant and imposes or enhances civil and criminal penalties for knowingly or intentionally aiding terrorists?
a. The Federal Information Security Management Act
b. The Sarbanes-Oxley Act
c. The USA PATRIOT Act
d. The Personal Information Protection and Electronic Documents Act
Answer: c

53. Title II of the USA PATRIOT Act provides roving surveillance authority under the:
a. Federal Information Security Management Act to track website access of individuals.
b. Foreign Intelligence Surveillance Act to track individuals.
c. Electronic Communications Surveillance Act to track business transactions.
d. International Surveillance of Terrorists Act to track individuals in countries with diplomatic relations.
Answer: b

54. Which of the following is true about the USA PATRIOT Act?
a. The act does not grant access to sensitive data with only a court order.
b. The act expands states’ rights with regard to Internet surveillance technology.
c. The act excludes provisions designed to combat money laundering activity.
d. The act does not enhance civil and criminal penalties for intentionally aiding terrorists.
Answer: b

Chap 6
16. Some employers might decide to treat employees well as a means to produce greater workplace harmony and productivity. This approach is reminiscent of _____ ethics.
a. deontological
b. utilitarian
c. normative
d. Kantian
Answer: b
Difficulty: Easy

17. Some employers emphasize the rights and duties of all employees, and treat employees well simply because “it is the right thing to do.” Identify the ethical approach for this perspective.
a. Prescriptive ethics
b. Utilitarianism
c. Deontological ethics
d. Classicism
Answer: c

18. Philosophically, the right of _____ is the right to be protected against the arbitrary use of authority.
a. continuance
b. freedom of association
c. due process
d. self-determination
Answer: c

19. Which of the following statements is true about the right of due process?
a. In legal contexts, due process refers to the procedures that police and courts must follow in exercising their authority over citizens.
b. Few dispute that the state, through its police and courts, has the authority to punish citizens. This authority of the state is the right of due process.
c. Due process in the workplace acknowledges employees’ authority over an
employer.
d. In legal contexts, due process refers to the unlimited authority that police and courts have over citizens, to create a safe and orderly society.
Answer: a

20. Identify the correct statement about “bullying.”
a. The mistreatment of an employee needs to be physically threatening to be termed as bullying.
b. Bullying does not involve a boss who is constantly yelling dictates at workers because that is his job.
c. When a coworker spreads rumors about another in order to sabotage his position, he is not regarded as bullying as he is not higher than the other employee in the hierarchy of authority.
d. Bullying can lead to a complete loss of personal dignity, intimidation, and fear.
Answer: d

21. The issue of workplace bullying is more predominant in the service sector because:
a. it lacks the right of due process.
b. that work relies significantly on interpersonal relationships and interaction.
c. of its strong hierarchy of authority.
d. most of the organizations in this sector are decentralized.
Answer: b

22. Identify the doctrine which holds that employers are free to fire an employee at any time and for any reason, unless an agreement specifies otherwise.
a. The doctrine of estoppel
b. The doctrine of constructive notice
c. The doctrine of constructive dismissal
d. The doctrine of employment at will
Answer: d

23. Which of the following statements about the doctrine of employment at will (EAW) is true?
a. Employment at will holds that employers can fire an employee at any time, but have to provide them with a valid reason.
b. The freedom to terminate the employer-employee relationship is mutual, both theoretically and practically.
c. The ethical rationale for EAW has both utilitarian and deontological elements.
d. Civil rights laws are not an exception to the EAW because it prohibits firing someone on the basis of membership in certain prohibited classes.
Answer: c

24. During the process of downsizing, allowing a worker to remain in a position for a period of time once she or he has been notified of impending termination might not be the best option. Identify the correct justification for this statement.
a. Workers will interpret early notice as an effort to allow them time to come to grips with the loss of their jobs.
b. Terminated workers will not be inclined to put their best effort, which might result in lost revenues.
c. Workers who are not terminated will have a bad impression about the organization for terminating their coworkers.
d. Terminated workers may interpret early notice as an effort to get the most out of them before departure.
Answer: d

25. In some regions, employees lack even the most basic health and safety protections in their workplaces. Such work environments are termed as _____.
a. op shops
b. holes-in-the-walls
c. haberdasheries
d. sweatshops
Answer: d

26. The life of one who dies in a workplace accident has _____ value that can be measured, in part, by the lost wages that would have been earned had that person lived.
a. absolute
b. instrumental
c. intrinsic
d. extrinsic
Answer: b

27. The _____ value of the life is something that financial compensation cannot replace.
a. absolute
b. instrumental
c. intrinsic
d. extrinsic
Answer: c

28. Which of the following is true of health and safety at the workplace?
a. Health and safety have instrumental value and intrinsic value.
b. Employers are responsible to provide a completely safe and healthy workplace.
c. Financial compensation can replace the value of life lost due to lack of health and safety measures.
d. Employers do not have the right to fire employees on grounds of health and safety.
Answer: a

29. With regard to health and safety at workplace, _____ can be defined as the probability of harm.
a. obstacles
b. impediments
c. risks
d. barriers
Answer: c

30. With regard to health and safety at workplace, _____ can be determined by comparing the probabilities of harm involved in various activities.
a. variable obstacles
b. absolute impediments
c. relative risks
d. comparative barriers
Answer: c

31. Discussions in ethics about employee health and safety tend to focus on the relative risks workers face and the level of acceptable workplace risk because:
a. workers’ compensation is easier to calculate.
b. employers cannot be responsible for providing an ideally safe and healthy workplace.
c. insurance laws mandate the focus on relative risks and acceptability of workplace risk.
d. it results in a completely safe and healthy workplace.
Answer: b

32. Comparison of the probabilities of harm involved in various activities would determine the _____.
a. acceptable level of risks
b. absolute risks
c. speculative risks
d. relative risks
Answer: d

33. When can we conclude that an activity has an “acceptable level of risk?”
a. If it can be determined that the probability of harm involved in a specific work activity is manageable.
b. If the probability of harm involved in a specific work activity is acceptable by insurance and workers’ compensation laws.
c. If it can be determined that the probability of harm involved in a specific work activity is equal to or less than the probability of harm of some more common activity.
d. If the employers are willing to compensate the harm caused to workers for a specific activity.
Answer: c

34. Which of the following approaches to health and safety at the workplace can be considered paternalistic decision making which treats employees like children and makes crucial decisions for them?
a. Government-regulated ethics approach
b. Diversifiable risk approach
c. Acceptable level of risk approach
d. Market controlled approach
Answer: c

35. Which of the following is true of the acceptable risk approach to health and safety?
a. It is a liberal approach to health and safety that allows employees to recognize the risk they are likely to face.
b. It involves the determination of “relative risks,” the calculation of which is a complicated process and not always reliable.
c. It treats employees disrespectfully by ignoring their input as stakeholders.
d. It assumes differences between workplace risks and other types of risks when there are significant similarities between them.
Answer: c

36. Identify the challenge faced by the acceptable risk approach to health and safety.
a. It is a liberal approach to health and safety that allows employees to recognize the risk they are likely to face.
b. It involves the determination of “relative risks,” the calculation of which is a complicated process and not always reliable.
c. It assumes differences between workplace risks and other types of risks when there are significant similarities between them.
d. It ignores the fundamental deontological right an employee might have to a safe and healthy working environment.
Answer: d

37. Which of the following statements is true about the market controlled approach to health and safety?
a. It treats employees disrespectfully by ignoring their input as stakeholders.
b. In this approach, employees are free to choose the risks they are willing to face by bargaining with employers.
c. It assumes an equivalency between workplace risks and other types of risks when there are significant differences between them.
d. It calls for the determination of comparison of probabilities of harm involved in various activities.
Answer: b

38. Enlightened self-interest would be a valuable theory to introduce and apply in the _____ approach to health and safety.
a. market controlled
b. integrative
c. acceptable risk
d. government-regulated
Answer: a

39. Which of the following problems are associated with the market controlled approach to health and safety?
a. Employees do not know the risks involved in a job and therefore are not in a position to freely bargain for appropriate wages.
b. It ignores the fundamental deontological right an employee might have to a safe and healthy working environment.
c. It assumes an equivalency between workplace risks and other types of risks when there are significant differences between them.
d. It treats employees disrespectfully by ignoring their input as stakeholders.
Answer: a

40. Identify the correct statement about government standards in the government-regulated ethics approach to health and safety.
a. Due to its focus on prevention rather than compensation, standards cannot address the “first generation” problem of the market controlled approach to health and safety.
b. Standards would favor individual bargaining between employers and employees as the approach to workplace health and safety.
c. Standards can overcome market failures that result from insufficient information.
d. Standards call for the determination of comparison of probabilities of harm involved in various activities.
Answer: c

41. Identify the approach that allows the Occupational Safety and Health Administration (OSHA) to make tradeoffs between health and economics.
a. Sustainability approach
b. Integrative approach
c. Market controlled approach
d. Feasibility approach
Answer: d

42. Critics in both industry and government argue that OSHA should aim to achieve the optimal, rather than highest feasible, level of safety. Which of the following can be used to achieve this goal?
a. Cost-utility analysis
b. Cost-minimization analysis
c. Cost-benefit analysis
d. Cost-effectiveness analysis
Answer: c

43. Identify the distinguishing feature between cost-benefit analysis and cost-effectiveness.
a. Cost-effectiveness is ethically problematic.
b. Cost-benefit analysis adopts the most efficient means available to achieving a particular standard.
c. Cost-benefit analysis is ethically problematic.
d. Cost-effectiveness uses economic criteria before setting the standards.
Answer: c

44. Which of the following statements is true about cost-benefit analysis?
a. It treats health and safety merely as an intrinsic value and denies its instrumental value.
b. It requires that an economic value be placed on one’s life and bodily integrity.
c. It adopts the least expensive and most efficient means available to achieve existing standards.
d. It uses ethical criteria in setting standards.
Answer: b

45. According to the universal principle of Kantian philosophy, the ethical obligation of _____ should guide employment interactions.
a. family responsibilities
b. respect for people
c. religion
d. core customs
Answer: b

46. The ‘Tripartite’ part of the Tripartite Declaration of Principles Concerning Multinational Enterprises and Social Policy refers to critical cooperation necessary from all of the following except:
a. governments.
b. employers’ and workers’ organizations.
c. multinational enterprises involved.
d. the suppliers and agents associated with the firm.
Answer: d

47. The Title VII of the _____, passed in 1964, created the prohibited classes of discrimination.
a. International Labour Act
b. United States Civil Rights Act
c. Equal Employment Opportunity Commission Act
d. Uniform Employment Termination Act
Answer: b

48. Which of the following is discrimination against those traditionally considered to be in power or the majority?
a. Reverse discrimination
b. Affirmative action
c. Inverse discrimination
d. Backward discrimination
Answer: a

49. Which of the following is an example of reverse discrimination in America?
a. An African-American interviewer rejects another African-American based on ethnicity.
b. A female interviewer rejects a male interviewee because of gender.
c. A white interviewer rejects an African-American based on ethnicity.
d. A female interviewer rejects another female interviewee because of gender.
Answer: b

50. An organization, in an attempt to avoid discrimination suits filed against it, intentionally hires a lot of African-American women, and a few disabled people. Which of the following is most likely to occur?
a. The performance of the organization will increase.
b. The organization will win an award for equity.
c. There will be an increase in the number of diversity training sessions.
d. A white man or a woman will file a reverse discrimination suit.
Answer: d

51. Which of the following refers to a policy or a program that tries to respond to instances of past discrimination by implementing proactive measures to ensure equal opportunity today?
a. Gentrification
b. Bully Broads
c. Just cause
d. Affirmative action
Answer: d

52. All of the following are ways through which affirmative action can arise at the workplace except:
a. through legal requirements.
b. through judicial affirmative action.
c. consultant based affirmative action.
d. voluntary affirmative action plans.
Answer: c

53. The law relating to affirmative action applies only to about 20 percent of the workforce who are subject to Executive Order 11246, which requires affirmative action efforts to ensure equal opportunity. Which of the following is required by courts in order to remedy a finding of past discrimination, when Executive Order 11246 is not applicable?
a. Voluntary affirmative action
b. Judicial affirmative action
c. Quasi-affirmative action
d. Executive affirmation action
Answer: b

54. Which of the following affirmative action plans would include training plans and programs, focused recruiting activity, or the elimination of discrimination?
a. Quasi-affirmative action
b. Executive affirmation action
c. Judicial affirmative action
d. Voluntary affirmative action
Answer: d

55. A claim which states that people who ‘pay’ for wrongs are unfairly burdened and should not bear the responsibility for the acts of others, is opposing _____.
a. reverse discrimination
b. judicial activity within organizations
c. affirmative action
d. authoritative leadership
Answer: c

Chap 5
16. The form of business that limits the liability of individuals for the risks involved in business activities is known as _____.
a. corporation
b. partnership
c. joint proprietorship
d. sole proprietorship
Answer: a

17. Legislators created a form of business called corporations because they thought that businesses could be more efficient in raising the capital necessary for producing goods, services, jobs, and wealth if:
a. multiple owners were involved in the strategic decision making process of the firm.
b. there was transparency among all stakeholders.
c. firms had the obligation to justify bad decisions.
d. individuals were protected by limiting the liability of individuals for business activities.
Answer: d

18. According to the economic model of corporate social responsibility, the sole duty of a business is to:
a. go beyond legal responsibilities to cater to the needs of the society.
b. fulfill the economic functions that it was designed to serve.
c. think beyond economic ends that have to be met to help the society.
d. analyze the defects in society and design products to overcome these defects.
Answer: b

19. Which of the following is true about the economic model of CSR?
a. It holds that a business should prioritize environmental sustainability.
b. It has its roots in the Kantian tradition of ethics.
c. It contends that the goal of business managers should be to pursue profit within the law.
d. It holds that social goals should be at the heart of a firm’s mission.
Answer: c

20. Milton Friedman claims that a corporate executive has a “responsibility to conduct business in accordance with his or her employer’s desires, which generally will be to make as much money as possible while conforming to the basic rules of society, both those embodied in law and those embodied in ethical custom.” This view of corporate social responsibility has its roots in the _____ tradition.
a. deontological
b. Kantian
c. utilitarian
d. virtue
Answer: c

21. According to the economic model of corporate social responsibility, the pursuit of profit will continuously work toward the optimal satisfaction of consumer demand which, in one interpretation of _____is equivalent to maximizing the overall good.
a. deontological ethics
b. classicism
c. virtue ethics
d. utilitarianism
Answer: d

22. Which of the following models of corporate social responsibility holds pursuit of profit as the sole duty of a business?
a. Economic model of corporate social responsibility
b. Philanthropic model of corporate social responsibility
c. Social web model of corporate social responsibility
d. Integrative model of corporate social responsibility
Answer: a

23. A narrow view of corporate social responsibility is expressed by the:
a. social web model of corporate social responsibility.
b. integrative model of corporate social responsibility.
c. economic model of corporate social responsibility.
d. philanthropic model of corporate social responsibility.
Answer: c

24. Which of the following best describes corporate social responsibility?
a. It refers to the dedication that employees show in meeting organizational goals.
b. It refers to the accountability that a manager has over his subordinates.
c. It refers to the actions for which a business can be held accountable.
d. It refers to the actions that maximize the profit of an organization.
Answer: c

25. Corporate social responsibility refers to:
a. those things that businesses ought, or should, do, even if they would rather not.
b. those measures that are taken against the ill treatment of subordinates in a firm.
c. the avoidance of misconduct within an organization.
d. the responsibility that society has to ensure a business’s success.
Answer: a

26. Which of the following is the most demanding social responsibility?
a. A business should prevent harm even in those cases where it is not the cause.
b. A business should volunteer for society or environment-friendly work.
c. A business should engage in charitable work for the development of the society.
d. A business should not sell a product that causes harm to consumers.
Answer: d

27. Which of the following ethical requirements is the type of responsibility established by the precedents of tort law? a. Duty to not cause avoidable harm to the society
b. Duty to find employment for employees injured at work
c. Duty to engage in charitable work
d. Duty to volunteer for causes related to the environment
Answer: a

28. Which of the following statements is true about the philanthropic model of corporate social responsibility?
a. This model holds that business has no strict obligation to contribute to social causes, but it can be a good thing when they do so.
b. This model views business as a citizen of the society in which it operates and, like all members of a society, business must conform to the normal ethical duties and obligations.
c. This model begins with the recognition that every business decision affects a wide variety of people, benefiting some and imposing costs on others.
d. This model holds that a firm’s financial goals must be balanced against, and perhaps even overridden by, environmental considerations.
Answer: a

29. The _____ model of CSR holds that, like individuals, business is free to contribute to social causes as a matter of philanthropy, and business has no strict obligation to contribute to social causes; but it can be a good thing when they do so.
a. economic
b. social web
c. philanthropic
d. integrative
Answer: c

30. “Just as individuals have no ethical obligation to contribute to charity or to do volunteer work in their community, business has no ethical obligations to serve wider social goods. But, just as charity is a good thing and something that we all want to encourage, business should be encouraged to contribute to society in ways that go beyond the narrow obligations of law and economics.” Identify the model of CSR that reflects this line of thought.
a. Integrative model
b. Stakeholder theory
c. Philanthropic model
d. Social web model
Answer: c

31. In the philanthropic model of CSR, situations where a business supports a social cause for the purpose of receiving a business benefit in return are not much different from:
a. the economic model of CSR.
b. the stakeholder theory of CSR.
c. the integrative model of CSR.
d. the sustainability theory of CSR.
Answer: a

32. The philanthropic model in which business support for a social cause is done because it is the right thing to do differs from the reputational version only in terms of the:
a. level of social good done.
b. underlying motivation.
c. reach of the social good done.
d. medium used.
Answer: b

33. Which of the following is true of philanthropy in accordance with the economic model of corporate social responsibility?
a) Philanthropy done for reputational reasons is not fully ethical.
b) Philanthropy done for solely financial benefits is not truly an act of social responsibility.
c) Philanthropy done for financial reasons is ethically responsible.
d) Philanthropy is considered as a social contribution rather than an investment.
Answer: c

34. Which of the following models of corporate social responsibility considers business a citizen of the society that it operates in?
a. Philanthropic model
b. Economic model
c. Altruistic model
d. Social web model
Answer: d

35. According to Norman Bowie, the “moral minimum” that we expect of every person—either acting as individuals or within corporate institutions—is:
a. basic spirituality.
b. respect for human rights.
c. contribution to charity.
d. accountability.
Answer: b

36. According to philosopher Norman Bowie, managers have a responsibility to maximize profits as long as they:
a. respect human rights and cause no harm.
b. contribute to charitable organizations.
c. are confident and do charitable work.
d. adhere to rules and regulations.
Answer: a

37. According to the philosopher Norman Bowie, the contractual duty that managers have to stockholder-owners:
a. makes them focus on philanthropy.
b. makes them feel obliged to perform social good and prevent harm to the society.
c. overrides their responsibility to prevent harm or to do good.
d. leads them to take environment-conscious managerial decisions.
Answer: c

38. Which of the following theories recognizes the fact that every business decision affects a wide variety of people—benefiting some and imposing costs on others?
a. Stakeholder theory
b. Integrative theory
c. Altruistic theory
d. Institutional theory
Answer: a

39. Stakeholder theory is an example of the:
a. philanthropy model of corporate social responsibility.
b. social web model of corporate social responsibility.
c. economic model of corporate social responsibility.
d. stockholder model of corporate social responsibility.
Answer: b
.

40. An individual who argues that firms should be managed for the sole benefit of stockholders is defending the:
a. philanthropic model of CSR.
b. social web model of CSR.
c. integrative model of CSR.
d. economic model of CSR.
Answer: d

41. _____ theory argues that the narrow economic model fails both as an accurate descriptive and as a reasonable normative account of business management.
a. Sustainability
b. Stakeholder
c. Classical
d. Attributive
Answer: b
42. Which of the following is a similarity between utilitarianism and stakeholder theory?
a. Both place organizational benefits above other considerations.
b. Both consider the consequences of management decisions for the well-being of all affected groups.
c. Both contribute to society in ways that go beyond the narrow obligations of law and economics.
d. Both strive to focus only on consumers.
Answer: b

43. Corporate managers who fail to give due consideration to the rights of employees and other concerned groups in the pursuit of profit are treating these groups as means to the ends of stockholders. This is unjust according to the _____.
a. financial framework
b. classical tradition
c. rights-based ethical framework
d. stockholder theory
Answer: c

44. A firm that balances its social goals against economic goals and does justice to both is said to follow the:
a. integrative model of corporate social responsibility.
b. economic model of corporate social responsibility.
c. social web model of corporate social responsibility.
d. stakeholder model of corporate social responsibility.
Answer: a

45. The tension that prevails when an organization tries to meet both social and economic responsibilities is generally overcome by:
a. utilizing a small percentage of profit on social causes.
b. doing charitable work to build a good reputation within the community.
c. pursuing social ends as the very core of an organization’s mission.
d. emphasizing the importance of achieving the desired economic goals.
Answer: c

46. The for-profit organizations that prioritize social entrepreneurship and sustainability as a central part of their strategic mission are pursuing the _____ model of CSR.
a. integrative
b. economic
c. social web
d. philanthropic
Answer: a

47. Sustainability holds that:
a. a firm’s financial goals must be balanced against environmental considerations.
b. a firm must place social considerations below tasks beneficial to its growth.
c. a firm must not prioritize social goals at the expense of economic growth.
d. a firm’s sustenance is affected by overemphasis on environmental considerations.
Answer: a

48. Which of the following is an example of a firm that is failing its fundamental social responsibility?
a. A firm that has its loss margins exceeding its profit margins
b. A firm that uses resources at unsustainable rates
c. A firm that is financially unstable
d. A firm that prioritizes environmental sustainability
Answer: b

49. Which of the following versions of corporate social responsibility suggests that the long-term financial well-being of every firm is directly tied to questions of how the firm both affects and is affected by the natural environment?
a. Social web
b. Philanthropic
c. Social entrepreneurship
d. Sustainability
Answer: d

50. When a firm engages in socially responsible activities with a prime focus on reputation:
a. social responsibility tend to become a form of social marketing.
b. the measure of positive reputation gained is impossible to calculate.
c. profits have to be sacrificed for social causes.
d. it always loses employee loyalty.
Answer: a

51. The practice of attending to the “image” of a firm is referred to as:
a. reputation management.
b. branding.
c. crisis management.
d. gentrification.
Answer: a

52. Enlightened self-interest, an important justification offered for corporate social responsibility, presumes that:
a. measurement of bottom-line impact of ethical decision making is unimportant.
b. profits are independent of ethics.
c. bottom-line impact of ethical decision making can be measured and compared.
d. good ethics can also be good business.
Answer: d

53. Which of the following is the challenge associated with ethical pay offs?
a. It ruins the reputation that triggered it.
b. It is very small in comparison to profits.
c. It is very difficult to measure ethical pay offs.
d. It can easily be duplicated by competitors.
Answer: c

54. According to David Vogel, which of the following should a firm be most cautious about when engaging in CSR activities?
a. Investing in CSR when consumers are not willing to pay higher prices to support that investment.
b. Employees may become over-indulgent in activities related to social causes.
c. Attrition levels may rise due to indifference among employees engaging in activities related to social responsibility.
d. The easily measurable ethical pay off can turn out to be lower than the anticipated levels.
Answer: a

Chap 4
16. Which of the following is true about corporate cultures?
a. Corporate cultures are not influenced by the people comprising that organization.
b. Corporate cultures are not subject to changes over time.
c. Corporate cultures can hinder individuals in making the “right” decisions.
d. Corporate cultures in a global firm differ significantly across different countries.
Answer: c

17. Corporate culture:
a. is fashioned by a shared pattern of beliefs, expectations, and meanings that influence and guide the thinking and behaviors of the members of that organization.
b. shapes the people who are members of the organization, but it is not shaped by the people who comprise that organization.
c. is not influenced by unspoken standards and expectations.
d. is generally easy to modify.
Answer: a

18. Which of the following is true about culture?
a. The specific culture within an organization can be defined easily and objectively.
b. The incentives an organization employs do not help in determining the organization’s specific culture.
c. Attitude and behavior are the biggest fraction of the elements that determine culture.
d. Perception may actually impact the culture in a circular way.
Answer: d

19. Which of the following situations could result in the business culture becoming a determining factor in ethical decision making?
a. Lack of competition
b. Law providing incomplete answers
c. Lack of strong leadership
d. Stagnant or decreasing profits
Answer: b
.
20. Which of the following statements is true of ethical cultures?
a. Workplace ethical cultures have no impact on decision making.
b. Subordinates are expected not to act unless directed by superior authorities.
c. Decisions are expected to be taken based on laws and not on ethical values.
d. Employees are expected to act in responsible ways, even if the law does not require it.

21. According to the _____ ethics tradition, people act out of habit than out of deliberations.
a. Kantian
b. virtue
c. utilitarian
d. principle-based
Answer: b

22. Which of the following is a traditional approach to corporate culture?
a. Values-based
b. Integrity-based
c. Customer-based
d. Compliance-based
Answer: d

23. Which of the following is true about value-based cultures?
a. They emphasize obedience to the rules as the primary responsibility of ethics.
b. They are only as strong and as precise as the rules with which workers are expected to comply.
c. They reflect the traditional approach of classifying corporate culture.
d. These cultures are perceived to be more flexible and far-sighted corporate environments.
Answer: d

24. Which of the following is emphasized by a compliance-based culture?
a. Reliance on personal integrity of employees for decision making
b. Use of values as the principle for decision making
c. Obedience to rules as the primary responsibility of ethics
d. Reinforcement of a set of values rather than a set of rules
Answer: c

25. Which of the following cultures will empower legal counsel and audit offices to mandate and to monitor conformity with the law and with internal codes?
a. Customer-based culture
b. Integrity-based culture
c. Values-based culture
d. Compliance-based culture
Answer: d

26. Which of the following is true about an integrity-based culture?
a. It reinforces a particular set of rules.
b. It reinforces a particular set of values.
c. It empowers legal bodies to monitor compliance.
d. It emphasizes rules as the primary responsibility of ethics.
Answer: b

27. When would a values-based culture rely on the personal integrity of its workforce for making decisions?
a. In situations where the rules of the organization do not apply
b. When legal bodies are empowered to monitor compliance
c. In situations where rules are applicable to make decisions
d. In situations where a set of principles should be enforced
Answer: a
.
28. Which of the following is true about a compliance-based culture and/or a value-based culture?
a. A compliance-based culture recognizes that where a rule does not apply the firm must rely on the personal integrity of its workforce when decisions need to be made.
b. A values-based culture is one that reinforces a particular set of rules rather than a particular set of values.
c. Values-based organizations include a compliance structure.
d. Value-based organizations do not have codes of conduct.
Answer: c

29. As compared to a traditional compliance-oriented program, an evolved and inclusive ethics program:
a. focuses on meeting regulatory requirements.
b. entails helping to unify a firm’s global operations.
c. strives to minimize risks of litigation and indictment.
d. works mainly toward improving accountability mechanisms.
Answer: b

30. What is the role of an ethical leader in corporate cultures?
a. A leader should be ethical within the confines of the top management team.
b. An ethical leader must shrink his or her duties in the corporate structure.
c. An ethical leader should not place her or his own ethical behavior above any other consideration.
d. A leader must clearly advocate and model ethical behavior.
Answer: d

31. Which of the following is true about ethical leaders?
a. Ethical business leaders do not need to talk about ethics and act ethically on a personal level.
b. They do not say “no” to conduct that would be inconsistent with their organization’s and their own personal values.
c. If an executive is “quietly ethical” within the confines of the top management team, but more distant employees do not know about her or his ethical stance, they are more likely to be perceived as an ethical leader.
d. They expect others to say no to them.
Answer: d

32. Identify the correct statement about ethical leaders.
a. Individuals perceived as ethical leaders avoid doing things that “traditional leaders” do.
b. A “quietly ethical” executive is likely to be perceived as an ethical leader.
c. An ethical leader’s traits and behaviors must be socially visible.
d. Ethical leaders are not people-oriented leaders.
Answer: c

33. How is an ethical, effective leader different from an effective leader?
a. An ethical leader will take decisions based only on a set of rules.
b. An ethical leader will follow a set of rules regardless of consequences.
c. An ethical leader will empower the employees in decision making.
d. An ethical leader will achieve his or her goals through intimidation.
Answer: c

34. The means used to motivate others and achieve one’s goals plays a key role in distinguishing between:
a. silent leaders and visible leaders.
b. effective leaders and ethical leaders.
c. informal leaders and formal leaders.
d. silent leaders and ethical leaders.
Answer: b

35. Which of the following is an essential element in establishing an ethical leadership?
a. The end or objective toward which the leader leads
b. The prevailing culture in the external environment
c. The ethical nature of the team members
d. The personality traits of the team members
Answer: a

36. If we judge a leader solely by the results produced, we are following the _____ ethical tradition.
a. deontological
b. virtual
c. Kantian
d. utilitarian
Answer: d

.37. Which of the following is a value that will impact the culture of an organization in the absence of any other established values?
a. Profit—at any cost
b. Ethical behavior
c. Legal compliance
d. Customer satisfaction
Answer: a

38. A(n) _____ provides concrete guidance for internal decision making creating a built-in risk management system.
a. code of conduct
b. organization vision
c. income statement
d. ombudsman
Answer: a

39. The _____ serves as an articulation of the fundamental principles at the heart of the organization and should guide all decisions without abridgment.
a. annual report
b. vision statement
c. mission statement
d. income statement
Answer: c
Difficulty: Easy

.40. The first step in constructing a personal code or mission for a firm is to:
a. articulate a clear vision regarding the firm’s direction.
b. ask oneself what one stands for or what the firm stands for.
c. believe that the culture is actually possible, achievable.
d. identify clear steps as to how the cultural shift will occur.
Answer: b

41. The second step in the development of guiding principles for a firm is to:
a. ask oneself what one stands for or what the company stands for.
b. articulate a clear vision regarding the firm’s direction.
c. identify clear steps as to how the cultural shift will occur.
d. believe that the culture is actually possible, achievable.
Answer: b

42. Identify the most determinative element in integration, without which, there is no clarity of purpose, priorities, or process.
a. Ethics
b. Leadership
c. Tradition
d. Communication
Answer: d

43. Which of the following is true about communicating unethical behavior in a corporate structure?
a. Reporting ethically suspect behavior is a simple thing to do.
b. Employees are always comfortable in raising questions against superiors.
c. Reporting individuals can face retaliation from superiors.
d. Whistleblowing is the most preferred mechanism for communicating ethical behavior.
Answer: c

44. Which of the following involves the disclosure of unethical or illegal activities to someone who is in a position to take action to prevent or punish the wrongdoing?
a. Whistleblowing
b. Redlining
c. Gentrification
d. Flyposting
Answer: a

45. An effective internal mechanism of whistleblowing:
a. occurs when employees report wrongdoing to legal authorities.
b. must expose unethical behaviors to the press.
c. should not protect the rights of the accused.
d. must allow confidentiality, if not anonymity.
Answer: d

46. Which of the following statements is true about whistleblowing?
a. It involves the disclosure of ethical activities.
b. It may seem disloyal, but it does not harm the business.
c. It can occur both internally and externally.
d. It does not cause any harm to the whistleblower.
Answer: c

47. Which of the following mechanisms allows employees to report wrongdoing and to create mechanisms for follow-up and enforcement?
a. Accountability
b. Ombudsman
c. Appraisals
d. Code of conduct
Answer: b

48. Which of the following is an effective way of creating clear and successful reporting schemes?
a. Leaders empowering subordinates to take decisions without providing guidance
b. Managers ignoring the risk and taking a wait-and-see attitude
c. Consistent and continuous communication of the firm’s values to all stakeholders
d. Subordinates staying away from reporting unethical behaviors of superiors
Answer: c

49. Which of the following allows organizations to uncover silent vulnerabilities that could pose challenges later to the firm, serving as a vital element in risk assessment and prevention?
a. Code of conduct
b. Ongoing ethics audit
c. Whistleblowing
d. Ombudsman
Answer: b

50. What is the term used to describe a potentially damaging or ethically challenged corporate culture?
a. “Caustic” culture
b. “Pyrophoric” culture
c. “Corrosive” culture
d. “Toxic” culture
Answer: d

51. Which of the following statements is true about the Federal Sentencing Guidelines for Organizations?
a. They provide uniformity and fairness to the judiciary system.
b. They are used to provide arbitrary punishments.
c. They are applicable only to organizations and not to individuals.
d. They assign most federal crimes to one of 5 “offense levels.”.
Answer: a

52. The Supreme Court separated the “mandatory” element of the Federal Sentencing Guidelines for Organizations from their advisory role, holding that their mandatory nature:
a. was only applicable to individuals and not to organizations.
b. provided arbitrary punishments.
c. violated the Sixth Amendment right to a jury trial.
d. encouraged internal whistleblowing.
Answer: c
Difficulty: Easy

53. Which of the following directed the USSC to consider and to review its guidelines for fraud relating to securities and accounting, as well as to obstruction of justice, and specifically asked for severe and aggressive deterrents in sentencing recommendations?
a. Bank Secrecy Act
b. Sarbanes-Oxley Act
c. Gramm-Leach-Bliley Act
d. Fair Credit Reporting Act.
Answer: b

54. Which of the following is true about the Sarbanes-Oxley Act?
a. It specifically asked for lenient penalties in sentencing recommendations.
b. It required public companies to establish a code of conduct for top executives and, if they did not have one, to explain why it did not exist.
c. Its mandatory nature violated the Sixth Amendment right to a jury trial.
d. It did not support the United States Sentencing Commission’s guidelines to create both a legal and an ethical corporate environment.
Answer: b

55. Which of the following should an organization do in order to have an effective compliance and ethics program?
a. It should do a public display of an employee’s report on an unethical behavior.
b. It should ensure that people who have previously engaged in unethical activities are placed in charge of programs.
c. The organization should communicate its standards and procedures to all members.
d. Low-level personnel must be assigned to have responsibility for the program.

Chap 3
16. The three major categories of an ethical framework are:
a. utility, virtue, and values.
b. universal rights, values, and moral principles.
c. universal rights, cultural norms, and morals.
d. consequences, principles, and personal character.
Answer: d
Difficulty: Easy

17. Which of the following ethical frameworks directs us to decide based on overall consequences of our acts?a. Principle-based ethics
b. Kantian tradition
c. Utilitarianism
d. Virtue ethics
Answer: c
Difficulty: Easy

18. Identify the ethical tradition that directs us to act on the basis of
moral principles.
a. Principle-based ethics
b. Utilitarianism
c. Virtue ethics
d. Consequence-based ethics
Answer: a
Difficulty: Easy

19. The study of various character traits that can contribute to, or obstruct, a happy and meaningful human life is part of _____.
a. Kantian tradition
b. virtue ethics
c. principle-based ethics
d. utilitarianism
Answer: b
Difficulty: Easy

20. Utilitarianism’s fundamental insight is that we should decide what to do by:
a. considering the moral character of individuals.
b. following the rules, regardless of consequences.
c. acting only out of a self-interest.
d. considering the consequences of our actions.
Answer: d
Difficulty: Easy

21. Utilitarianism has been called a(n):
a. commonsensical approach to ethics.
b. behavioral approach to ethics.
c. consequentialist approach to ethics.
d. intuitive approach to ethics.
Answer: c
Difficulty: Easy

22. What is the difference between a principle-based framework of ethics and utilitarianism?
a. Ethics of principles is based on self-interest, whereas utilitarianism is based on human rights.
b. Ethics of principles is based on human rights, whereas utilitarianism is based on self-interest.
c. Ethics of principles is based on rules, whereas utilitarianism is based on consequences.
d. Ethics of principles is based on consequences, whereas utilitarianism is based on rules.
Answer: c
Difficulty: Easy

23. Which of the following traditions is commonly identified with the rule of producing “the greatest good for the greatest number”?
a. Principle-based
b. Kantian
c. Virtue
d. Utilitarianism
Answer: d
Difficulty: Easy

24. Which of the following principles does utilitarianism emphasize?
a. Producing the greatest good for the greatest number
b. Acting only out of self-interest
c. Ensuring that a fair decision is an impartial decision
d. Obeying the law and keeping promises
Answer: a
Difficulty: Medium

25. Which of the following traditions would support child labor if it produces better overall consequences than the available alternatives?
a. Virtue ethics
b. Deontological ethics
c. Utilitarianism
d. Classicism
Answer: c
Difficulty: Medium

26. The utilitarian tradition relies on _____ for deciding on the ethical legitimacy of alternative decisions.
a. intuition
b. experience
c. variable analysis
d. social sciences
Answer: d
Difficulty: Easy

27. According to the _____, the most efficient economy is structured based on the principles of free market capitalism.
a. Kantian framework of ethics
b. principle-based framework of ethics
c. utilitarian framework of ethics
d. virtue-based framework of ethics
Answer: c
Difficulty: Easy

28. Which of the following is true of a market version of utilitarianism?
a. Questions of safety and risk are determined by experts.
b. Social science determines policies to maximize the overall good.
c. Individuals calculate for themselves what risks they wish to take.
d. A government regulator determines the safety standards in the marketplace.
Answer: c
Difficulty: Medium

29. Which of the following would be advocated by the “administrative” version of utilitarianism?
a. Deregulation of advertising standards
b. Reliance on free and competitive markets
c. Risk-taking by consumers
d. Government regulation of business
Answer: d
Difficulty: Easy

30. How is a market version of utilitarianism different from an administrative version?
a. The market version ensures that experts establish the safety standards a business is expected to meet.
b. The market version uses social sciences to predict consequences.
c. The market version requires a government body to regulate business.
d. The market version produces those goods that the consumers want.
Answer: d
Difficulty: Medium

31. The essence of utilitarianism is its:
a. focus on personal character.
b. reliance on consequences.
c. focus on principles.
d. reliance on moral systems.
Answer: b
Difficulty: Easy

32. Which of the following is a problem with utilitarian ethics?
a. Its need to count, measure, compare, and quantify consequences
b. Utilitarianism’s focus on the means
c. The focus on the good of individuals compared to the overall good
d. The necessity to follow rules with no regard to consequence
Answer: a
Difficulty: Medium

33. Which ethical framework goes against the ethical principle of obeying certain duties or responsibilities, no matter the end result?
a. Principle-based framework of ethics
b. Kantian framework of ethics
c. Virtue ethics framework of ethics
d. Utilitarian framework of ethics
Answer: d
Difficulty: Easy

34. Which of the following ethical approaches binds us to act or decide in certain ways?
a. Kantian ethics
b. Utilitarianism
c. Virtue ethics
d. Principle-based ethics
Answer: d
Difficulty: Medium

35. Which of the following statements reflects the approach of a principle-based ethical tradition?
a. Obey the law
b. Ends justify the means
c. Maximize the overall good
d. Survival of the fittest
Answer: a
Difficulty: Medium

36. Which of the following approaches emphasizes the need to follow legal rules regardless of unfavorable consequences?
a. Virtue ethics
b. Utilitarianism
c. Principle-based
d. Egoism
Answer: c
Difficulty: Easy

37. “We ought to stop at a red light, even if no cars are coming and I could get to my destination that much sooner.” Identify the ethical approach that follows this line of thought.
a. Virtue ethics
b. Utilitarianism
c. Role ethics
d. Ethics of principles
Answer: d
Difficulty: Medium

38. _____ ensure the integrity and proper functioning of the economic, legal, or financial systems.
a. Social functions
b. Administrative functions
c. Marketing functions
d. Gatekeeper functions
Answer: d
Difficulty: Easy

39. No group could function if members were free at all times to decide for themselves what to do and how to act. Which of the following functions to organize and ease relations between individuals?
a. Autocracy
b. Self-rule
c. Social contract
d. Personal norms
Answer: c
Difficulty: Medium

40. According to Immanuel Kant, there is essentially one fundamental moral duty:
a. to treat people as objects that exist for our purposes.
b. to consider the consequence of our actions.
c. to treat each person as an end in themselves.
d. to do whatever we choose to do to another person.
Answer: c
Difficulty: Easy

41. A rights-based ethical framework would object to child labor because:
a. of all the likely consequences of a practice of employing young children in factories.
b. such practices are a means to production and economic growth.
c. such practices violate our duty to treat children with respect.
d. child labor does not produce beneficial consequences.
Answer: c
Difficulty: Medium

42. The concept of moral rights is central to the:
a. virtue-based ethical tradition.
b. consequence-based ethical tradition.
c. behavior-based ethical tradition.
d. principle-based ethical tradition.
Answer: d
Difficulty: Easy

43. The _____ tradition claims that our fundamental human rights, and the duties that follow from them, are derived from our nature as free and rational beings.
a. utilitarian
b. virtue-based
c. role-based
d. Kantian
Answer: d
Difficulty: Ethics

44. The Kantian tradition claims that humans do not act only out of instinct and conditioning; they make free choices about how they live their lives, about their own ends. In this sense, humans are said to have a fundamental human right of:
a. dignity.
b. rationality.
c. autonomy.
d. dependency.
Answer: c
Difficulty: Easy

45. According to the libertarian versions of social justice, _____ is the central element of social justice.
a. equality
b. government control
c. individual liberty
d. employment
Answer: c
Difficulty: easy

46. Which of the following statements is inferred from Rawls’s theory of justice?
a. Decisions taken my seniors should be acceptable to everyone.
b. A decision which is partial is considered an unfair decision.
c. Each individual in the society should be treated differently.
d. Rights to liberty depend on the economic status of individuals.
Answer: b
Difficulty: easy

47. Which among the following is a legal right?
a. The right to select a specific health care package
b. The right to bargain collectively as part of a union
c. The right to select a particular pension fund
d. The right to select the number of paid holidays
Answer: b
Difficulty: Easy

48. Which of the following is true of ethics based on rights?
a. Rights and duties can be easily defined.
b. There is no agreement on the scope and range of rights.
c. Application of theory to real-life situations is easy.
d. Rights and desires can be easily differentiated.
Answer: b
Difficulty: Medium

49. Which of the following approaches conceives of practical reason in terms of deciding how to act and what to do? a. Utilitarianism
b. Virtue-based
c. Kantian
d. Altruism
Answer: a
Difficulty: Easy

50. What is the difference between virtue ethics and principle-based ethics?
a. Virtue ethics is based on character traits, whereas principle-based ethics is based on a set of rules.
b. Virtue ethics is based on the consequences of actions, whereas principle-based ethics is based on character traits.
c. Virtue ethics is based on set of rules, whereas principle-based ethics is based on consequences of actions.
d. Virtue ethics is based on producing the greater good, whereas principle-based ethics is based on self-interest.
Answer: a
Difficulty: Easy

51. Which of the following traditions seeks a full and detailed description of those character traits that would constitute a good and full human life?
a. Kantian ethics
b. Principle-based ethics
c. Utilitarianism
d. Virtue ethics
Answer: d
Difficulty: Easy

52. Identify the view which holds that people act only out of a self-interest.
a. Altruism
b. Egoism
c. Utilitarianism
d. Libertarianism
Answer: b
Difficulty: Easy

53. Which of the following approaches shifts the focus from questions about what a person should do, to a focus on who that person is?
a. Altruism
b. Principle-based
c. Utilitarianism
d. Virtue ethics
Answer: d
Difficulty: Easy

54. Virtue ethics emphasizes the more _____ side of our character.
a. affective
b. cognitive
c. conative
d. intuitive
Answer: a
Difficulty: Easy

55. Which of the following focuses on the concept of business practices and what type of people these practices are creating?
a. Virtue ethics
b. Kantian ethics
c. Utilitarian ethics
d. Principle-based ethics
Answer: a
Difficulty: Easy

Chap 1
16. Which of the following statements is true about ethical decision making in business?
a. Ethical decision making is not limited to the type of major corporate decisions with dramatic social consequences.
b. Every employee does not face an issue that requires ethical decision making.
c. All ethical decisions can be covered by economic, legal, or company rules and regulations.
d. Ethical decision making should not rely on the personal values and principles of the individuals involved.
Answer: a
Difficulty: Medium

17. Which of the following statements is true about ethical decision making in business?
a. Ethical decision making is limited to the type of major corporate decisions with social consequences.
b. At some point, every worker will be faced with an issue that will require ethical decision making.
c. All ethical decisions can be covered by economic, legal, or company rules and regulations.
d. Ethical decision making should not rely on the personal values and principles of the individuals involved.
Answer: b
Difficulty: Medium

18. Which of the following statements is true about ethical decision making in business?
a. Ethical decision making is limited to the type of major corporate decisions with social consequences.
b. Every employee does not face an issue that requires ethical decision making.
c. All ethical decisions can be covered by economic, legal, or company rules and regulations.
d. Ethical decision making should rely on the personal values and principles of the individuals involved.
Answer: d
Difficulty: Medium

19. In a general sense, a business _____ is anyone who affects or is affected by decisions made within the firm, for better or worse.
a. nominee
b. stakeholder
c. stockholder
d. watchdog
Answer: b
Difficulty: Easy

20. Which of the following best describes a business stakeholder?
a. Only the minority shareholders in a business entity
b. Only those who have acquired significant shares in a firm c. Anyone who audits a firm
d. Anyone who affects or is affected by decisions made within a firm Answer: d
Difficulty: Easy

21. Identify the bill that was passed in April 2009 to amend the executive compensation provisions of the Emergency Economic Stabilization Act of 2008 to prohibit unreasonable and excessive compensation and compensation not based on performance standards.
a. Gramm–Rudman–Hollings Performance and Results Act
b. Employee Pay Comparability Act
c. Grayson-Himes Pay for Performance Act
d. Statutory Pay-As-You-Go Act
Answer: c
Difficulty: Easy

22. Which of the following is the objective of the Grayson-Himes Pay for Performance Act?
a. To ban future “unreasonable and excessive” compensation at companies receiving federal bailout money
b. To set up the Public Company Accounting Oversight Board in the wake of accounting scandals that rocked the private sector
c. To outlaw the practice of backdating of stock options awarded to senior management
d. To set upper limits on executive pay based on average employee salary in all private sector organizations
Answer: a
Difficulty: Easy

23. Which of the following best describes ethics?
a. An academic discipline which originated in the early 1900s
b. A descriptive approach that provides an account of how and why people do act the way they do
c. The study of how human beings should properly live their lives
d. A descriptive approach such as psychology and sociology
Answer: c
Difficulty: Easy

24. Which of the following is an approach advocated while teaching ethics?
a. Teachers should teach ethical dogma to a passive audience.
b. Teachers should consider acceptance of customary norms as an adequate ethical perspective.
c. Teachers should understand that their role is only to tell the right answers to their students.
d. Teachers should challenge students to think for themselves.
Answer: d
Difficulty: Medium

25. Philosophers often emphasize that ethics is _____, which means that it deals with a person’s reasoning about how he or she should act.
a. normative
b. descriptive
c. stipulative
d. persuasive
Answer: a
Difficulty: Easy

26. Which of the following observations is true of ethics?
a. It is descriptive in nature.
b. It deals with our reasoning about how we should act.
c. It provides an account of how and why people act the way they do.
d. It is equivalent to law-abiding behavior.
Answer: b
Difficulty: Easy

27. Like ethics, social sciences such as psychology and sociology also examine human decision making and actions. However, these fields differ from ethics because they are _____.
a. normative in nature
b. descriptive in nature
c. persuasive in nature
d. stipulative in nature
Answer: b
Difficulty: Easy

28. Ethics seeks an account of how and why people should act a certain way, rather than how they do act. This nature of ethics makes it a(n) _____ discipline.
a. descriptive
b. supererogatory
c. normative
d. stipulative
Answer: c
Difficulty: Medium

29. As a _____ discipline, ethics seeks an account of how and why people should act a certain way.
a. descriptive
b. supererogatory
c. normative
d. stipulative
Answer: c
Difficulty: Medium

30. The _____ discipline provides an account of how and why people do act the way they do.
a. descriptive
b. supererogatory
c. normative
d. stipulative
Answer: a
Difficulty: Medium

31. Individual codes of conduct based on one’s value structures regarding how one should live, how one should act, what one should do, what kind of a person should one be etc. is sometimes referred to as _____.
a. morality
b. independence
c. leadership
d. rationality
Answer: a
Difficulty: Medium

32. Morality is the aspect of ethics that we can refer to by the phrase “_____.”
a. personal freedom
b. individual rationality
c. personal integrity
d. persuasive rationality
Answer: c
Difficulty: Easy

33. _____ is that aspect of ethics that is referred to by the phrase “personal integrity.”
a. Values
b. Morality
c. Social ethics
d. Norms
Answer: b
Difficulty: Easy

34. Which of the following raises questions about justice, law, civic virtues, and political philosophy?
a. Stipulative ethics
b. Morality
c. Descriptive discipline
d. Social ethics
Answer: d
Difficulty: Easy

35. The aspect of business ethics that examines business institutions from a social rather than an individual perspective is referred to as:
a. decision making for social responsibility.
b. corporate cultural responsibility.
c. institutionalized ethical responsibility.
d. institutional morality.
Answer: a
Difficulty: Easy

36. _____ establish the guidelines or standards for determining what one should do, how one should act, what type of person one should be.
a. Roles
b. Attitudes
c. Norms
d. Laws
Answer: c
Difficulty: Easy

37. Norms:
a. are the underlying beliefs that cause people to act or to decide one way rather than another.
b. are standards of appropriate and proper behavior.
c. are referred to by the phrase “personal integrity.”
d. do not presuppose any underlying values.
Answer: b
Difficulty: Easy

38. The crux of normative ethics is that these disciplines:
a. presuppose some underlying values.
b. describe what people do.
c. should always involve the study or discipline of ethics.
d. branch away from social ethics to personal ethics.
Answer: a
Difficulty: Medium

39. Which of the following are underlying beliefs that cause us to act or to decide one way rather than another?
a. Patterns
b. Codes
c. Sets
d. Values
Answer: d
Difficulty: Easy

40. Which of the following is true about values?
a. Values are the highest standards of appropriate and proper behavior.
b. Corporate scandals prove the fact that individuals have personal values, but institutions lack values.
c. Values cannot lead to unethical results.
d. Values are underlying beliefs that cause us to act or to decide in a certain way.
Answer: d
Difficulty: Medium

41. Which of the following are beliefs and principles that provide the ultimate guide to a company’s decision making? a. Mission statement
b. Core values
c. Historical milestones
d. Vision statement
Answer: b
Difficulty: Easy

42. Which of the following best describe the norms that guide employees,
implicitly more often than not, to behave in ways that the firm values and finds worthy?
a. Organizational culture
b. Government’s financial regulations
c. Industrial norms
d. Legal statutes
Answer: a
Difficulty: Easy

43. Ethics requires that the promotion of human welfare be done:
a. based on the personal opinions of the decision maker.
b. based on the level of need of the beneficiaries.
c. understanding the religious beliefs of the beneficiary.
d. in a manner that is acceptable and reasonable from all relevant points of view.
Answer: d
Difficulty: Easy

44. Dramatic examples from history, including Nazi Germany and apartheid in South Africa, demonstrate that:
a. societies valuing freedom welcome laws that require more than the ethical minimum.
b. ethical responsibilities give rise to more and more regulations.
c. obedience to law is sufficient to fulfill one’s ethical duties.
d. one’s ethical responsibility may run counter to the law.
Answer: d
Difficulty: Medium

45. Telling organizations that their ethical responsibilities end with obedience to the law:
a. is just inviting more legal regulation.
b. is enough to maintain an ethical business environment.
c. reduces the frequency of corporate scandals.
d. eliminates ambiguity while making personal ethics-related decisions. Answer: a
Difficulty: Hard

46. The failure of personal ethics among companies like Enron and WorldCom led to the creation of the:
a. Brooks Act.
b. Gramm-Leach-Bliley Act.
c. Clinger–Cohen Act.
d. Sarbanes–Oxley Act.
Answer: d
Difficulty: Easy

47. Which of the following observations is true?
a. Obedience to the law is sufficient to fulfill one’s ethical duties.
b. The law is very effective at promoting “goods.”
c. The law cannot anticipate every new dilemma that businesses might face.
d. An individual’s ethical responsibility can never run counter to the law.
Answer: c
Difficulty: Medium

48. Which of the following helps identify potential events that may affect the entity, and manage risk to be within its risk appetite, to provide reasonable assurance regarding the achievement of entity objectives?
a. Risk aversion
b. Risk benchmarking
c. Risk assessment
d. Risk minimization
Answer: c
Difficulty: Easy

49. Practical reasoning is reasoning about:
a. what we should think.
b. what we should do.
c. what we should believe.
d. what we should share.
Answer: b
Difficulty: Easy

50. _____ reasoning is reasoning about what we should do.
a. Practical
b. Descriptive
c. Theoretical
d. Notional
Answer: a
Difficulty: Easy

51. Theoretical reasoning is reasoning about:
a. what we actually do.
b. what we should do.
c. what we should believe.
d. what we should implement.
Answer: c
Difficulty: Easy

52. _____ reasoning is reasoning about what we should believe.
a. Practical
b. Abstract
c. Theoretical
d. Descriptive
Answer: c
Difficulty: Easy

53. Which of the following refers to the pursuit of truth and the highest standard for what we should believe?
a. Theoretical reason
b. Critical reason
c. Philanthropic reason
d. Practical reason
Answer: a
Difficulty: Easy

54. According to the tradition of theoretical reason, _____ is the great arbiter of truth.
a. religion
b. perception
c. science
d. ethics
Answer: c
Difficulty: Easy

55. Which of the following can be thought of as the answer to the fundamental questions of theoretical reason?
a. The scientific method
b. The practical approach
c. The contingency approach
d. The normative model
Answer: a