1. Define business ethics.
2. Why are fairness and honesty in business important ethical concerns? Give examples.
3. What are the major ethical issues businesspeople face?
4. What are the three major sets of factors believed to affect ethical behavior in an organization?
5. What are some of the social factors that affect ethical decisions?
6. How can the government encourage ethical behavior? Give an example.
7. Define a code of ethics. Do codes cover every business situation?
8. What might be the personal and social consequences of whistle-blowing within one‘s own firm?
9. What are a few examples of companies acting socially responsible?
10. Define the doctrine of caveat emptor.
11. How does the economic model of social responsibility differ from the socioeconomic model of social responsibility?
12. What would proponents of the socioeconomic model argue to support their position?
13. What would opponents of the socioeconomic model argue to support their position?
14. Define consumerism. How have the rights of consumers changed since 1930?
15. Explain the six basic rights of consumers.
16. What are the three major consumerism forces today?
17. What is an affirmative action program? Be certain to detail the objectives of such programs in your answer.
18. Why did Congress create the Equal Employment Opportunity Commission?
19. Why is pollution of concern to most citizens? Why are some businesspeople particularly concerned about pollution?
20. Describe the four types of pollution. Who should pay for a clean environment?
21. What sort of information should be included in a social audit? Who would prepare the audit? How would such a
document be used?
22. How should social responsibility programs be funded? Explain your answer.
Excellent Air Incorporated (EAI)
Excellent Air Inc. is a well-known establishment in the airline business. It is currently one of the top firms in the
industry. The company prides itself on good customer service and being concerned with the broader societal good.
EAI management is not only concerned with doing things right, but also with doing the right things. Many of their
decisions reflect this philosophy. Initially, the company had a problem with employees reporting their suspicions
about unethical behavior to the press instead of to EAI management. As a result, the company made sure its
employees knew the firm’s guidelines on fixing ethical issues. EAI also developed a code of conduct based on
standards that continue to be upheld within the company. Since the code of conduct has been put in place, there
have been fewer ethical violations.
Although employee salaries at EAI are not as high as those at competing firms, the company experiences very low
employee turnover. The firm has created a corporate culture that not only makes its employees want to stay, but
that also results in higher profits. If EAI can maintain the relationship it has built with its employees and customers,
it will have little difficulty keeping up its remarkable success.
23. Refer to Excellent Air Incorporated. The principles that EAI choose to pride itself on show that the company has
a. a moral minority.
b. cultural diversity.
c. social responsibility.
d. caveat emptor.
e. a social audit.
24. Refer to Excellent Air Incorporated. Initially, employees were not willing to go to EAI management with ethical
issues but would instead report them to the press. This is an example of
a. whistle-blowing.
b. a social audit.
c. poor employees.
d. opportunity emptor.
e. a narc.
25. Refer to Excellent Air Incorporated. To fix the ethical issue problems, EAI management should have implemented
all of the following guidelines for making ethical decisions except which one?
a. Listen and learn.
b. Identify the ethical issue.
c. Create and analyze options.
d. Create an industry benchmark.
e. Explain your decision and resolve any differences that arise.
26. Refer to Excellent Air Incorporated. Since the company created its code of conduct, employees have limited ,
or amount of freedom to perform an unethical act.
a. time
b. responsibility
c. moral dilemmas
d. unethical options
e. opportunity
27. Refer to Excellent Air Incorporated. EAI‘s creation of its code of conduct demonstrated its application of moral
standards to business situations, which is also known as
a. moral responsibility.
b. social consciousness.
c. social responsibility.
d. moral consciousness.
e. business ethics.
XYZ Coffee
Nancy is a highly respected person within her community. She is Hispanic in a largely Caucasian-populated area.
Since Nancy was looking for a new job, she went to a new company in the area called XYZ Coffee, where she
applied for a position. After the interview, Nancy felt confident that she would be hired because of her
qualifications. However, she did not get a call back. Initially, Nancy did not think twice about it, but she felt
differently when she visited the same coffee store later to purchase something for a friend. The company had hired
an inexperienced Caucasian male with a history of unemployment. At this point, Nancy was quite aggravated, but
she left the issue alone.
She ended up asking an associate for an espresso machine. The employee informed Nancy where the machine was
located and retrieved it for her. Nancy asked if there were any other espresso machines of higher quality. When
the associate said no, Nancy purchased the item and left. After she gave the gift to her friend, she noticed a much
better quality espresso machine that someone else had given her. Nancy asked where they had purchased it, and
they responded, “XYZ Coffee.”
28. Refer to XYZ Coffee. Nancy is a(n) within her community.
a. outcast
b. active member
c. minority
d. bad influence
e. unethical person
29. Refer to XYZ Coffee. If Nancy were Caucasian and the company employees were mostly Hispanic, the way she
was treated would be referred to as
a. affirmative action.
b. legal discrimination.
c. simply unethical.
d. reverse discrimination.
e. a perfect match.
30. Refer to XYZ Coffee. Before he got his job, another description for the employee who was hired over Nancy
would be
a. hard-core unemployed.
b. minority.
c. whistle-blower.
d. caveat emptor.
e. consumerist.
31. Refer to XYZ Coffee. Which basic consumer right was infringed when Nancy bought the espresso machine?
a. The right to safety
b. The right to be heard
c. The right to service
d. The right to respect
e. The right to choose
32. Refer to XYZ Coffee. Nancy’s right to product options in buying an espresso machine is known as
a. caveat emptor.
b. consumerism.
c. affirmative action.
d. social audit.
e. business ethics.
33. The Jackson Springs Coal Mine recently discovered that the mine was contaminating the local drinking water.
Cleaning up the mine and the surrounding areas would probably bankrupt the mine, causing the loss of hundreds of
local jobs, but doing nothing would endanger the health of the community. The mine faces a serious decision.
a. business
b. ethical
c. environmental
d. social responsibility
e. cost
34. Business ethics
a. is laws and regulations that govern business.
b. is the application of moral standards to business situations.
c. do not vary from one person to another.
d. is most important for advertising agencies.
e. is well-defined rules for appropriate business behavior.
35. The study of the morality of choices made by people is known as
a. ethics.
b. business ethics.
c. freedom of choice.
d. moral aptitude.
e. standard of behavior.
36. Brant promised to repair Carolyn’s car on Thursday. After picking up the necessary part at a junkyard, he
discovered he could not do the job after all and that the junkyard would not buy back the part. Carolyn does not
know about these developments. However, she thinks Brant will be finished with her car sometime today. What
should Brant do?
a. Try to repair the car even though he does not really know how.
b. Try to repair the car so he can at least get his money‘s worth out of it.
c. Call Carolyn to inform her of the problem, and recommend a reputable repair shop.
d. Fake an emergency and contact Carolyn on Monday.
e. Stall for time to read up on car repairs so he can practice on Carolyn’s car.
37. Customers expect a firm‘s products to
a. boost sales.
b. be profitable.
c. earn a reasonable return on investment.
d. be available everywhere.
e. be safe, reliable, and reasonably priced.
38. Investors expect management to do all of the following except
a. consult them on ethical decisions.
b. increase sales.
c. boost the company’s profit.
d. increase the return to the investor.
e. make sensible financial decisions.
39. Tony Shinn is applying for a mortgage to purchase his first home. His credit rating is mediocre due to several late
payments on his credit cards and car loan. He is upset because his friend Jerry was offered an interest rate 3
percent less than what Tony was offered by the same mortgage company. This mortgage company’s actions were
a. unethical—both Tony and Jerry should have been charged the same interest rates, regardless of their credit
histories.
b. ethical—this is just a part of doing business because credit history is an important indicator of future
payments.
c. illegal—subjective factors may not be used when determining which credit offers may be extended to certain
customers.
d. unethical if Tony is a minority and Jerry is not.
e. unethical and illegal—customers must all be treated the same.
40. Metabo-Miracle offers a guaranteed weight loss of 10 pounds in one week without dieting or exercise. Thousands
of customers purchase the products and about 200 call in with complaints that the product was ineffective. What
action should Metabo-Miracle take?
a. It should immediately remove its products from the market, fully refund the thousands of customers’ money,
and close its business.
b. It should use persuasive techniques to get the 200 disappointed customers to try the product again each time
it fails in order to decrease refunds.
c. It should explain to the customers that they misused the product and try to sell them more of the product.
d. It should discuss the product failure with the customers and then provide them with a full refund of their
purchase price.
e. It should ignore the customers’ complaints and hope they will tire of calling and writing letters.
41. Ranee is a businessperson who works for a successful and admired Fortune 500 company. About how often is
Ranee likely to encounter ethical issues in the workplace?
a. Once or twice during her career
b. About two to three times per year
c. Approximately once a month
d. Almost every week
e. On a daily basis
42. Mattel, the maker of Barbie dolls, frequently shows television ads aimed at children on Saturday mornings, when
many children are known to watch cartoons. Some of these ads mix cartoon-type animation and “real” shots of the
dolls so that it is sometimes difficult for even an adult to determine what the doll can or cannot do. This most likely
represents
a. a conflict of interest.
b. an ethical problem because children may be deceived about what Barbie can do.
c. an ethical concern for many creditors of Mattel.
d. illegal payoffs, if parents are getting more than they actually know they are paying for.
e. that Mattel employees need better working conditions and higher pay.
43. You are the executive vice president for Cooper Tire, the sixth largest U.S. tire maker. You have the responsibility
to locate land for a new distribution center in Mississippi, and you own over 1,000 acres of land near one site in
Tupelo. This could create for you
a. a code of ethics.
b. the usual decision-making problems of cost versus benefit to Cooper Tire.
c. a wonderful, ethical opportunity to make a lot of money.
d. an ethical opportunity to move the distribution center to your hometown.
e. a conflict of interest.
44. Taking credit for others’ ideas or work or not meeting one’s commitments in a mutual agreement are ethical issues
concerning
a. fairness and honesty.
b. organizational relationships.
c. conflict of interest.
d. communications.
e. freedom of choice.
45. Bribes are
a. unethical.
b. ethical only under certain circumstances.
c. uncommon in many foreign countries.
d. economic returns.
e. ethical.
46. When medical research indicated that a high-fiber diet might help reduce one’s risk of colon cancer, a few
producers of fiber cereals suggested in their advertisements that if you eat fiber cereal, you will not get cancer.
This is an example of
a. an unethical organizational relationship.
b. a conflict of interest.
c. social responsibility.
d. unethical communications.
e. ethical persuasion.