Chapter 01
Ethics and Business
Chapter 01
Ethics and Business
True/False Questions
1. Ethical decision making in business is limited to major corporate decisions with dramatic social consequences.
2. In business, every decision can be covered by economic, legal, or company rules and regulations.
3. The direct costs of unethical business practice are more visible today than they have ever been before.
4. In a general sense, a business stakeholder is one who has made substantial financial investments in the business.
5. A firm’s ethical reputation can provide a competitive advantage in the marketplace with customers, suppliers, and employees.
6. The Grayson-Himes Pay for Performance Act was passed to amend the executive compensation provisions of the Emergency Economic
Stabilization Act of 2008.
7. Ethics refers to how human beings should properly live their lives.
8. Ethical business leadership is the skill to create circumstances in which bad people are taught to do good.
9. Norms appeal to certain values that would be promoted or attained by acting in a certain way.
10. Technically speaking, values are not necessarily positive or ethical in nature.
11. Ethical values are personal codes of ethics that ensure that individually, a person meets his or her standards of well-being.
12. The well-being promoted by ethical values is not a personal and selfish well-being.
13. Societies that value individual freedom will be reluctant to legally require acts of charity, personal integrity, and common decency.
14. In civil law, there is no room for ambiguity in applying the law because much of the law is established by past precedent.
15. Ethical theories are patterns of thinking, or methodologies, to help us decide what to do.
Multiple Choice Questions
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.
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.
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.
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
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
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
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
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
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.
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
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.
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
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
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
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
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
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
33. _____ is that aspect of ethics that is referred to by the phrase “personal integrity.”
a. Values
b. Morality
c. Social ethics
d. Norms
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
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.
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
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.
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.
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
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.
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
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
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.
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.
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.
46. The failure of personal ethics among companies like Enron and WorldCom led to the creation of the:
