Collins, Business Ethics 3e
SAGE Publishing, 2021
Test Bank
CHAPTER 2: THE EVOLUTION OF BUSINESS ETHICS
Multiple Choice
1. How does Michael Shermer characterize the current state of humanity in terms of
ethics?
a. the most moral period in our collective history
b. in a slight state of decline over the last 50 years
c. under serious threat from technology during the 21st century
d. in a steep decline due to fraying communal values
2. As described by the text, in which of the following ways can Charles Darwin’s theory
of natural selection be applied to businesses in the present day United States?
a. Government regulation and advance of ethical norms have largely eliminated the
“natural selection” of one business over another.
b. Employees who are not evolved to be ethically flexible cannot advance in the
competitive culture of modern business.
c. Businesses that fail to be ruthless in their pursuit of profits fail to survive in a harsh
marketplace.
d. Businesses that do not adapt to current ethical norms are punished and do not
survive.
3. Which of the following statements about the development of the human race is
accurate?
a. Kinship-based groups ended and larger human societies appeared around 3,000 BC.
b. Remains of Neanderthals demonstrated that humans had little contact with other
thinking species.
c. Humans migrated out of Africa around 200,000 years ago.
d. Some social cooperation became essential to survival roughly around 3,000 BC.
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4. Which of the following went hand–in-hand with the development of agriculture in all
agrarian civilizations?
a. written law codes
b. democratic government structures
c. the use of enslaved people
d. the appearance of lawyers
5. How did the earliest English colonies in America differ from the earliest Spanish ones,
such as the Columbus voyage?
a. They were sanctioned by the royal government.
b. They were group business projects created by charters.
c. They outlawed the taking of slaves.
d. They were interested in gold and silver as primary commodities.
6. Jamestown was the first chartered colony established by the Virginia Company of
London. If you were young and found yourself working there, either searching for
precious metals or toiling in the fields, what is the most likely reason you ended up
there?
a. brought from England as an indentured servant
b. brought from Africa as an enslaved person
c. captured among the indigenous people and used as an enslaved person
d. traveled from England as a free volunteer to work in exchange for land
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SAGE Publishing, 2021
7. How did the Plymouth Company endeavor to create a colony in New England differ
from previous English colonies like Jamestown?
a. It had a strong religious component and goal.
b. It lacked backing by a royal charter.
c. It involved no debts to the crown.
d. It was not a business venture.
8. What was the primary grievance that amplified anti-English sentiment in the American
colonies and ultimately sparked the first violent rebellions?
a. economic depression
b. rough treatment by British soldiers
c. unfair taxation
d. government failure to protect colonists against indigenous attacks
9. What factor was the primary basis for the earliest division of labor in human history?
a. urban/rural divide
b. social status
c. wealth
d. gender
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10. Which of the following phrases best describe the four voyages that Christopher
Columbus undertook to the Americas?
a. searches for habitable land
b. military missions
c. religious quests
d. business ventures
11. Which of the following can be deduced from the provisions in the Code of
Hammurabi?
a. Unethical business practices existed many thousands of years ago.
b. Civilization in ancient Mesopotamia understood that slavery was unethical.
c. Unethical business practices appeared with the emergence of capitalism.
d. Division of labor reduced the quality of life for workers even in ancient times.
12. According to Adam Smith’s writings, in which of the following ways would piece-rate
incentives differ from excessive division of labor?
a. They would create a net outflow of workers instead of inflow.
b. They would create less competition for skilled labor, not more.
c. They would lower a worker’s income instead of raising it.
d. They would hurt a worker’s physical health rather than mental health.
13. In which of the following ways would Adam Smith have most likely thought about the
concept of a living wage?
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a. Smith warned managers to only pursue the pursuit of profits within the law, so he
would likely have opposed a livable wage.
b. Smith warned managers not to negotiate wages below subsistence levels, so he
would likely have supported some version of a living wage.
c. Smith supported regulation by the government of worker’s welfare, so he would have
supported a livable wage.
d. Smith felt that high bargaining power on the part of workers was damaging to
competition, and so he would have opposed a livable wage.
14. Which of the following was a core demand of colonial leaders seeking
independence from England as expressed in the Declaration of Independence?
a. an end to the practice of impressment
b. government based on the consent of the governed
c. lower taxation
d. the right to expand westward
15. What part of the Bill of Rights’ Fifth Amendment is particularly salient to healthy
commerce?
a. freedom to petition the government
b. property rights
c. freedom from excess taxation
d. freedom of speech
16. What did Adam Smith’s capitalism have that was lacking in the old mercantilist way
of organizing the economy?
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a. freedom to pursue high demand or low supply
b. import quotas
c. sanctioning monopolies
d. regulation of tradesmen
17. How did Adam Smith define self-interest?
a. the application of ethical standards to the gathering of wealth
b. concern only for the self
c. concern for self in relation to others
d. the pursuit of wealth and happiness
18. In which of the following situations would Adam Smith argue that government
intervention in the marketplace is justified?
a. Many food items begin to arrive from abroad, and their cheap price is putting many
local farmers out of work.
b. A general economic downturn has occurred, leaving many out of work.
c. A clothing manufacturer invents a new machine that makes it much more competitive
than its rivals.
d. Two growing cities have no road to connect them and no private party is seeking to
build one.
19. Which of the following would Adam Smith have opposed, should he have witnessed
it occurring?
a. working laborers relatively normal hours even though it damages productivity and
makes a business less competitive
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b. the payment of laborers producing rivets at a flat salary rate instead of a per-piece
incentive rate
c. providing healthy food rations to workers even though it increases costs for the
business
d. developing a manufacturing assembly line that divided human labor into tiny,
repetitive tasks
20. What morally admirable accomplishment does the text credit to the United States
during its development between the 1700s and 1900?
a. granting full equality of opportunity
b. eliminating unfair competition
c. creating ideal work conditions
d. increasing life expectancy
21. Which of the following statements about the development of the U.S. economy is
accurate?
a. Westward expansion thinned out the population and caused a temporary economic
stagnation.
b. Westward expansion broke down the integrated businesses and brought more
competition.
c. Economic growth resulted in the fall of chartered organizations and increased the
power of banks.
d. The Industrial Revolution brought about an economic boom in the United States.
22.The text states, “Capitalism has an inherent contradiction.” What does that mean?
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a. Capitalism ultimately lowers the amount of wealth in an economy.
b. Competition is supposed to help the average worker succeed, but it only helps
owners and managers.
c. Competition is designed to be ethical but actually forces unethical behavior.
d. Competition naturally leads to monopoly, which ends competition.
23. What was the purpose of the Sherman Antitrust Act of 1890?
a. Force businesses to treat workers more ethically.
b. Increase competition in the economy.
c. Reduce foreign competition against American workers.
d. Reduce the boom-and-bust cycle in the economy.
24. Why was slavery allowed by the Constitution?
a. The Constitution sought to end slavery through omission.
b. The Constitution did not deal with what the creators considered “economic matters.”
c. Slavery was universally considered acceptable at the time.
d. It was allowed in order to obtain ratification from southern states.
25. Roughly how many enslaved people were there in the United States on the eve of
the Civil War?
a. 4,000,000
b. 2,000,000
c. 10,000,000
d. 800,000
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26. How does the text define a labor union?
a. an association of businesses that advances its collective interest by coordinating
actions in a particular industry
b. an association of employees that seeks to reduce the power of management through
collective action
c. an association of employees that advances its members interests through collective
bargaining with an employer
d. the collection of employees across a specific industry or trade, organized into a single
organization
27. Which of the following best characterizes the success of union efforts in the United
States in the 19th century?
a. broad success in forcing humane working conditions across a wide range of
industries
b. major success on the working-hours issue but little else
c. some isolated, small victories but overall very little progress
d. near-total failure even to form a single functioning union
28. How did the union movement under Cesar Chavez broadly differ from union action
under the International Brotherhood of Teamsters?
a. It was formed to help elevate conditions for laborers.
b. It emphasized nonviolence.
c. It focused more on factory workers than agricultural workers.
d. It used corrupt tactics, such as extortion of business owners.
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29. Which of the following statements about Cesar Chavez and the unions he helped is
accurate?
a. He sought a nationwide boycott of a major company.
b. He modeled his leadership style on the founding fathers of the United States.
c. He kept up his efforts for the rest of his life but never achieved any of his major goals.
d. He organized the very first strike of grape workers in 1965.
30. How does the state of unions in 2016 differ from that at the end of WWII?
a. Overall membership is far lower, and the movement is politically weaker.
b. Factory worker unions have grown in power as public sector unions have declined.
c. Unions have won far more legal concessions from business owners than they did in
1945.
d. Unions now use private property arguments to win most of their concessions.
31. How did late 1960s business climate and operation in the United States differ from
that of the late 1950s?
a. Businesses generally had more freedom to compete in the marketplace in ways they
saw fit.
b. Fewer businesses were behaving ethically.
c. Unions had become more powerful, with larger memberships.
d. More common business practices were regulated by the government.
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32. The new protective and regulatory agencies and acts passed in the 1960s and early
1970s sought to force businesses to make greater efforts to seek the well-being of
______.
a. stakeholders
b. shareholders
c. business owners
d. governmental bodies
33. What 1970s trend among major American businesses damaged the integrity of
capitalism and required passage of a major regulatory act in 1977?
a. unfair tactics to reduce the power of unions
b. widespread economic degradation
c. secret collusion to create monopolistic conditions
d. corrupt collusion with foreign nations
34. In the interpenetrating systems model, the most powerful system is ______ which
forms the basis upon which the other systems work.
a. Business
b. Government
c. Nonprofit
d. Social
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35. Which of the following characterizes a broad trend of the Reagan administration in
dealing with the U.S. economy?
a. increasing government payments to businesses
b. strengthening unions
c. deregulating the economy
d. raising taxes
36. In terms of union organization and management, the experience of Cezar Chavez is
most representative of which of the following qualities?
a. self-sacrifice for the plight of the laborer
b. self-enrichment through corrupt dealings
c. achievement of political power through violent union action
d. championing a lost cause
37. Living wage regulations have largely been established by which level of
government?
a. federal
b. state
c. municipal
d. tribal
38. Which of the following was a major legislative act of regulation or deregulation under
the Obama administration?
a. creation of the Consumer Product Safety Commission
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b. Dodd-Frank Wall Street Reform and Consumer Protection Act
c. dismantling of the Affordable Care Act
d. Air Pollution Control Act
39. According to your text, what event began the general swing toward greater
regulation of business in the United States?
a. 1840 Philadelphia workers strike
b. Fair Packaging and Labeling Act
c. Sherman Antitrust Act
d. Equal Employment Opportunity Commission
40. How did Franklin Roosevelt’s establishment of the minimum wage fit with Adam
Smith’s economic philosophy?
a. It satisfied Smith’s argument for a livable wage for every full-time worker.
b. It violated Smith’s argument for government nonintervention in the economy.
c. It violated Smith’s argument that businesses should obey the law and seek profits
and nothing else.
d. It satisfied Smith’s argument that governments should seek to regulate businesses to
force ethical behavior in all ways possible.
41. Which of the following characteristics match the highest percentage of those earning
minimum wage in the United States?
a. employed in the retail industry
b. employed in the restaurant and leisure industry
c. near retirement age or postretirement
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d. possessing an associate’s degree
42. How does Congress determine the federal minimum wage level?
a. congressional vote based on proposed raises
b. indexed to inflation
c. indexed to poverty threshold
d. matched to highest state minimum wage levels
43. Which of the following statements about the minimum wage is accurate?
a. Free market advocates support higher minimum wages to keep the labor force
healthy.
b. States can establish their own minimum wages, but only if they are higher than the
federal minimum wage.
c. The federal minimum wage is generally determined based on what is believed to be a
living wage.
d. In 2015, about 12.6 million workers were paid a minimum wage.
44. How does the living wage concept differ from the minimum wage concept?
a. It is designed to provide comfort, not simply exceed the poverty threshold.
b. It does not take into account support of a family, only an individual.
c. It covers part-time workers and full-time workers instead of only full-time workers.
d. It is most often introduced in municipal ordinances, not state and federal
governments.
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45. By using employee benefits packages, companies can help reduce ______.
a. income inequality
b. the racial wealth gap
c. unethical executive behaviors
d. opportunity hoarding
46. The ______ was created as an act of voluntary self-regulation in order to curb fraud
and corruption.
a. chamber of commerce
b. Better Business Bureau
c. Defense Industry Initiative
d. business roundtable
47. The Defense Industry Initiative was created in order to ______ in the industry.
a. professionalize members
b. stabilize executive pay
c. preempt government regulation
d. increase pay for managers
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48. Which of the following organizations provides incentives for companies to act more
socially and ethically responsible?
a. Securities and Exchange Commission
b. Just Capital
c. Six Sigma Certification
d. Chamber of Commerce
49. What employee benefit do employees say they desire the most?
a. bonus packages
b. personal and vacation time
c. stock options
d. health insurance
50. The CEO of a defense industry contractor company discovers, through some
internal audits, that significant amounts of unsupported and unethical cost inflation have
been going on in her company. As a result, she chooses to sign the Defense Industry
Initiative. Which of the following will result from her decision?
a. A voluntary commitment to create a written business ethics code.
b. A legal requirement to allow inspections by an independent regulatory agency.
c. A voluntary commitment to reduce the CEO to employee compensation ratio.
d. A legal requirement to establish an internal ethics program.
51. Which of the following conditions inspired the establishment of the Federal
Sentencing Guidelines for Organizations (FSG) in 1991?