The Legal Environment of Business, 8e (Kubasek)
Chapter 7 Ethics, Social Responsibility, and the Business Manager
1) Since the late 1960s, an outcry has arisen for business to be more socially responsible. This
expression of public concern has resulted in part from all but which of the following factors?
A) the complexity and interdependence of a postindustrial society
B) political influence that has translated public outcry for socially responsible conduct into
government regulation
C) a consensus among citizens that the sole responsibility of business is to generate a profit
D) philosophical differences about what the obligation of business should be
2) Which of the following best defines the term “business ethics”?
A) understanding that, in business, justice is more important than freedom
B) understanding that, in business, freedom is more important than justice
C) the study of what makes up good and bad business conduct
D) the study of the legal environment of business
3) The ________ of business is defined as a concern by business about both its profit-seeking
and its non-profit-seeking activities and their intended and unintended impacts on groups and
individuals other than management or the owners of a corporation.
A) corporate duty
B) social responsibility
C) industrial code of ethics
D) professional responsibility
4) A theory of social responsibility is concerned with whether a firm’s ________.
A) production processes were outsourced
B) executive managers were appointed or elected
C) code of conduct was drafted with the participation of the chief executive officer
D) conduct has an unintended impact on the community
5) Ethics is the study of good and bad behavior.
6) Business ethics is a subset of the study of ethics and is defined as the study of what makes up
bad, not good, business conduct.
7) The social responsibility of business is defined as concern by business about both its profit-
seeking and its non-profit-seeking activities and their intended and unintended impacts on groups
and individuals other than management or the owners of a corporation.
8) Since the late 1960s, an outcry has arisen for business to be more socially responsible. This
expression of public concern has resulted in part from the complexity and interdependence of a
postindustrial society.
9) Define the terms “ethics,” “business ethics,” and “social responsibility.”
10) Explain the factors, beginning in the late 1960s, that led to a public outcry for business to be
more socially responsible.
11) Theories of ethical thought include all but which of the following?
A) consequential
B) deontological
C) humanist
D) incremental
12) Consequential theories look at whether ________.
A) the desired results were achieved
B) the desired people were involved
C) the appropriate methods were used
D) legitimate goals were selected
13) The utilitarian school of thought is divided into which of the following subcategories?
A) act utilitarianism and rule deontology
B) act deontology and rule utilitarianism
C) act utilitarianism and rule utilitarianism
D) act deontology and rule deontology
14) In general, proponents of the utilitarian school of thought judge all conduct of individuals or
businesses on whether that conduct brings net ________ to a society.
A) productivity
B) profit
C) happiness
D) spirituality
15) Deontology is derived from the Greek word deon, meaning ________.
A) duty
B) science
C) reason
D) happiness
16) The ________ theory of ethics is best exemplified by the utilitarian school of thought.
A) humanist
B) deontological
C) consequential
D) relativist
17) Adherents to the ________ school of thought judge all conduct of individuals or businesses
on whether that conduct brings net happiness or pleasure to a society.
A) utilitarian
B) deontological
C) humanist
D) stoic
18) Which of the following is a characteristic of rule utilitarianism?
A) Actions can be judged good or bad based on rules and principles that are applied universally.
B) An act is ethically right if the performance of similar acts by all similar agents would produce
the best results in society or has done so in the past.
C) An act is right or wrong on the basis of whether that individual act alone brings net happiness
to society.
D) Actions are evaluated as good or bad depending on whether they contribute to improving
inherent human capacities such as intelligence, wisdom, and self-restraint.
19) ________ argue that an act is ethically right if the performance of similar acts by all similar
agents would produce the best results in society or has done so in the past.
A) Humanists
B) Act utilitarians
C) Rule utilitarians
D) Deontologists
20) Which of the following is a characteristic of rule utilitarians?
A) They take the position that whatever applicable rule has been established by political
representatives must be followed and should serve as a standard in the evaluation of similar acts.
B) They focus on the question of verifying whether an act is ethically good or bad.
C) They determine if an action is right or wrong on the basis of whether that individual act alone
brings net happiness to society, as opposed to whether other alternatives would bring more or
less net happiness.
D) They evaluate actions as ethically good or bad depending on whether they contribute to
improving inherent human capacities.
21) Which of the following is a similarity between act utilitarianism and rule utilitarianism?
A) Both schools of thought focus on the consequences rather than the intent of actions.
B) Both schools of thought focus on the question of verifying whether an act is ethically good or
bad.
C) Both schools of thought focus on the methods used to achieve a desired outcome.
D) Both schools of thought focus on the absolute morality of actions.
22) Ralph believes it is ethically permissible to bribe a foreign government official to gain a
contract. He reasons that not only will the contract bring him a great deal of profit, but it will
also create jobs, and nobody will be directly harmed in the process. Ralph’s beliefs are in accord
with which of the following theories of ethical thought?
A) act utilitarianism
B) rule utilitarianism
C) deontology
D) humanism
23) Chelsea believes that it is ethical for companies to outsource all work to under-developed
countries so that the outsourcing companies can pay lesser wages. By doing so, the outsourcing
company can reduce manufacturing expenses and, instead, pay its managers higher salaries.
Which of the following theories of ethical thought is associated with her beliefs?
A) pacifism
B) rule utilitarianism
C) humanism
D) unitarianism
24) For advocates of ________, rules and principles determine whether actions are ethically
good or bad.
A) consequential theories
B) utilitarianism
C) humanist theories
D) deontology
25) Which of the following statements is true of the deontological theory of ethics?
A) It evaluates actions as ethically good or bad depending on what they contribute to improving
inherent human capacities.
B) It claims that actions can be judged ethically good or bad on the basis of absolute moral
principles arrived at by human reason.
C) It asserts that humans would arrive by reason alone at standards of conduct that ultimately
derive from a divine being.
D) It uses the principle of utility (adding up the costs and benefits of an act to arrive at net
happiness) to focus on an individual action at one point in time.
26) Which of the following theories of ethical thought is illustrated by the phrase “Do unto
others as you would have them do unto you”?
A) utilitarianism
B) consequentialism
C) deontology
D) humanist theory
27) Immanuel Kant’s “categorical imperative” asserts that a person should ________.
A) engage in acts based on legal rather than ethical principles
B) engage only in acts that could become universal standards
C) act only after determining the marginal or net utility of that action
D) act only after determining the ethical category of that action
28) Nina is a volunteer at an animal shelter who takes home animals that are scheduled to be put
down. Even though her act results in her apartment often getting overcrowded and smelly, Nina
does this because she considers it ethically wrong to willfully take the life of another living
creature. Which of the following theories of ethical thought best explains Nina’s behavior?
A) act utilitarianism
B) consequential theory
C) deontology
D) rule utilitarianism
29) Which school of ethical thought evaluates actions as ethically good or bad depending on
what they contribute to improving intelligence, wisdom, and self-restraint?
A) deontological
B) humanist
C) consequential
D) utilitarian
30) The humanist school of ethical thought would evaluate the ethics of an action based on
whether the ________.
A) action would contribute to improving intelligence, wisdom, and self-restraint
B) action would cause an increase in net utility and happiness
C) action would be true to the golden rule
D) benefits of the action would outweigh the risks
31) The deontological and humanist theories of ethical thought are similar in that both theories
________.
A) take the view that human beings have valuable inherent traits
B) apply principles of rule utilitarianism to determine ethical choices
C) apply the categorical imperative to ethical decision making
D) focus on consequences instead of actions or intentions
32) Lucas is the general manager of an organization that manufactures school uniforms.
Numerous competing firms have outsourced their production to sweatshops in developing
countries where workers are paid less than minimum wages. However, Lucas refuses to do this,
and his firm consequentially starts to lose market share. In this instance, which of the following
schools of ethical thought is guiding Lucas’s actions?
A) deontological
B) humanist
C) utilitarian
D) consequential
33) Which of the following is a belief held by advocates of the humanist school of ethical
thought?
A) Actions can be judged ethically good or bad on the basis of absolute moral principles arrived
at by human reason regardless of the consequences of an action.
B) One should focus on a general rule that exemplifies net happiness for the whole society.
C) Individuals would arrive by reason alone at standards of conduct that ultimately derive from a
divine being.
D) Whatever applicable rule has been established by political representatives must be followed
and should serve as a standard in the evaluation of similar acts.
34) Theories of ethical thought include consequential theories, deontological theories, and
humanist theories.
35) The deontological theory is best exemplified by the utilitarian school of thought.
36) Businesspeople who adhere to a consequential theory of ethics look at the actions of a
business or any other societal unit only in terms of whether the results can be rationalized.
37) If payment of bribes has been determined by the society to bring net happiness, and a rule
allowing bribes exists, then rule utilitarians would allow the bribe.
38) Both act and rule utilitarians focus on verifying whether an act is ethically good or bad.
39) Humanists believe that one should focus on a general rule that exemplifies net happiness for
the whole society.
40) Deontology considers the consequences of individual actions.
41) Define the consequential theories, deontological theories, and humanist theories of ethical
thought.
42) What are the differences between the “act utilitarianism” and “rule utilitarianism” theories of
ethical thought?
43) The production and marketing emphases of organizations have evolved into what is called
a(n) ________.
A) corporate culture
B) industry code
C) organizational hierarchy
D) corporate code
44) Which of the following codes of ethics generally provide a “hybrid model” including “dos
and don’ts” that address subjects such as honest and fair dealings with customers and non-
deceptive advertising?
A) professional
B) individual
C) corporate
D) industry
45) Section 806 of the Sarbanes-Oxley Act ________.
A) protects federal whistleblowers who report agency misconduct
B) limits the securities activities of commercial banks and affiliations between commercial banks
and securities firms
C) imposes liability on persons and companies who defraud governmental programs
D) prohibits any publicly traded company from discriminating against an employee who
provides information to the government regarding violation of the securities laws
46) Membership in the American Institute of Certified Public Accountants (AICPA) is
suspended without a hearing if a judgment of a ________ conviction is filed with the secretary of
the institute.
A) tort
B) civil
C) misdemeanor
D) felony
47) Membership in the American Institute of Certified Public Accountants (AICPA) is
suspended without a hearing if a judgment of conviction is filed with the secretary of the institute
related to all but which of the following?
A) willful failure to file an income tax return, which the CPA as an individual is required to file
B) filing a fraudulent return on the part of the CPA for his or her own return or that of a client
C) aiding in the preparation of a fraudulent income tax return of a client
D) negligent failure to file an income tax return, which the CPA as an individual is required to
file
48) Which of the following is not a characteristic of professions or professionals?
A) mandatory university educational training before licensing, as well as continuing education
requirements
B) licensing-examination requirements
C) a formal association or group that meets regularly
D) strict, unexamined adherence to the ideology of one political party
49) The ________ required publicly traded companies to set up confidential internal systems by
April 2003 so that employees and others could have a method of reporting possible illegal or
unethical auditing and accounting practices.
A) Homeland Security Act
B) Whistleblower Protection Act
C) Glass-Steagall Act
D) Sarbanes-Oxley Act
50) Which of the following is a characteristic of people who are referred to as professionals?
A) They have immunity from tort (specifically, malpractice) liability.
B) They are entitled to a minimum wage that is higher than the average.
C) They belong to a formal association or group that functions only through online
communication.
D) They have a set of written ethical standards that is continually enforced by the group.
51) Membership in the American Institute of Certified Public Accountants (AICPA) is
suspended without a hearing if a judgment of conviction is filed with the secretary of the institute
as related to ________.
A) the willful failure to file an income tax return
B) a petty crime as defined under any state law
C) a misdemeanor as defined under any state law
D) an inability to file an income tax return
52) The Model Rules of Professional Responsibility were established by the ________.
A) National Association of Broadcasters
B) American Bar Association
C) American Institute of Certified Public Accountants
D) National Association of Securities Dealers
53) In general, corporate codes of ethics apply to upper- and middle-level managers.
54) The AICPA Division for CPA Firms requires member firms to ensure that all professionals
participate in continuing education programs.
55) Failure to provide a taxpayer with a copy of his or her return may subject a tax preparer to
criminal penalties.