71. Which of the following is not a consequence of poor ethical choices by company?
a. loss of reputation
b. loss of earning power
c. additional regulation
d. All of the above are consequences of poor ethical choices.
72. A parents’ group and the National Association of Teachers is concerned about the lyrics on the albums of some
rock music groups and has expressed the concern publicly. Capitol Records adopted a voluntary labeling system
that provides warning labels on albums that contain explicit lyrics about sex, drugs, or satanic worship. Capitol’s
action is an example of a:
a. nonmandated ethical response.
b. waste of shareholder dollars according to Milton Friedman.
c. violation of shareholder rights.
d. none of the above
73. Which of the following is not a question for the Blanchard/Peale test for ethical behavior?
a. Is it legal?
b. Does it follow industry code?
c. Is it balanced?
d. How does it make me feel?
74. Which of the following actions would be permitted under the Friedman philosophy of business involvement in social
issues?
a. a corporate contribution to a shelter program for runaway teenagers
b. a corporate contribution to a pro-choice organization
c. a corporate contribution to Mother Teresa’s worldwide organization
d. a corporate contribution to a mass transit system that will serve the offices of the company throughout the
city
75. Under which of the schools is the corporation best served by serving only the shareholders?
a. inherence school
b. enlightened self-interest school
c. invisible hand school
d. social responsibility school
76. Which school most parallels the Friedman model for social responsibility?
a. inherence school
b. enlightened self-interest school
c. invisible hand school
d. social responsibility school
77. An employer instituted a wellness program for all employees. The wellness program includes an exercise facility
and several pay incentives for losing weight, quitting smoking, or beginning an exercise program. The program is not
required under any state or national laws. Which of the following schools of social responsibility applies to this
employer?
a. inherence school
b. enlightened self-interest school
c. invisible hand school
d. social responsibility school
78. A law firm in the Phoenix area provides “sick care” for employees‘ children. Sick care can be used when the child
is too ill to go to school or its regular care facility. The law firm manager claims the program has cut down on sick
days taken by employees to care for sick children. The program is an illustration of which type of social
responsibility school?
a. inherence school
b. enlightened self-interest school
c. invisible hand school
d. social responsibility school
79. Which of the following is not an indication of a company environment ripe for unethical behavior?
a. intense competition threatening survival
b. employees with few or no personal values
c. employees who are independent
d. compensation incentive system tied only to sales
80. The policy on travel reimbursement at Public Service Company is that receipts for meals under $25.00 are not
required. Internal auditors at Public Service have recently discovered that 80 percent of all meal submissions are in
a range from $12.50 to $12.99. When one manager is questioned about his submissions and those of his employees
he responds, “So, they make a little bit on meals – it helps their miserable salaries.” The manager’s evaluation:
a. demonstrates an ethical commitment to his employees.
b. is ethical since no one is really harmed.
c. demonstrates a lapse in the company‘s ethical culture.
d. is an example of Christian consequentialism.
81. Which of the following is not a benefit of using ethics as a business strategy?
a. firm‘s profits increase
b. affords opportunity for planning
c. creates goodwill in the community
d. All of the above are benefits.
82. The “front page of the newspaper test”:
a. was developed by Laura Nash.
b. is the same as the Wall Street Journal test.
c. was developed by Blanchard/Peale.
d. uses the perspective of an objective reporter.
83. In the Parable of the Sadhu:
a. the lesson of personal values vs. organizational or group values is drawn.
b. the lesson that the rules of business prevail over personal values is drawn.
c. the lesson of survival of the fittest is given.
d. the lesson of “every man for himself” is critical for business survival.
84. In international business:
a. there are no ethical rules.
b. corruption facilitates commerce.
c. trust and honesty are required for investment and economic growth.
d. a company must operate by a set of rules different from its U.S. rules.
85. Which of the following is not an element of the Nash test?
a. Will I feel as good over the long term about this decision?
b. Is it legal?
c. How did I get into this situation in the first place?
d. Could I discuss this decision with the affected parties?
86. Which of the following is not important for capitalism to function?
a. consumer confidence
b. absence of corruption
c. grease payments
d. risk takers comfortable with trustworthiness of government officials
e. All of the above are necessary for capitalism.
87. Milton Friedman’s view of the social responsibility of business is best described as:
a. the social responsibility of a business is to make money within the rules of the game.
b. the social responsibility of a business should be dictated by its managers.
c. the social responsibility of a business requires it to be environmentally clean.
d. businesses have no social responsibility.
e. none of the above
88. Which of the two following groupings of ethical thought would you describe as opposites?
a. natural law and moral relativism
b. moral relativism and situational ethics
c. natural law and religious beliefs
d. moral absolutes and natural law
e. none of the above
89. Which of the following ethical models incorporates conscience into the decision-making process?
a. Front-page-of-the-newspaper test
b. Wall Street Journal test
c. Blanchard and Peale model
d. Positive law
e. none of the above
90. Enron Corporation filed for bankruptcy following a number of revelations about its accounting procedures. Enron
used a complex structure of corporations and off-the-books debt to mask its true financial picture from the markets.
When asked about the propriety of Enron’s reporting methods, many analysts have responded, “They simply did
what most corporations do.” Their comments:
a. reflect analysis under the Nash model.
b. reflect analysis under the Blanchard/Peale model.
c. reflect rationalization.
d. reflect Wall Street Journal analysis.
e. none of the above
91. Enron’s failure to disclose its off-the-book debts was legal. Which of the following ethical categories do you think
apply to that type of financial reporting?
a. balancing ethical dilemmas
b. giving or allowing a false impression
c. taking unfair advantage
d. both b and c
e. none of the above
92. Which of the following statements best describes the ethical position of Enron executives?
a. If it’s legal, its ethical.
b. If we are under pressure to keep the stock price up, we do what it takes.
c. Everybody does it.
d. both a and b
93. Which of the following is not a requirement of Sarbanes-Oxley?
a. code of ethics
b. ethics hotline (anonymous)
c. ethics officer
d. both a and c
94. Sarbanes-Oxley is:
a. a philosophical school that serves society first
b. federal legislation that imposed ethics requirements on corporations
c. an international accounting treaty
d. the former CEO of World.Com
95. The Corruptions Perceptions Index compiled by Transparency International:
a. shows that all countries’ governments are corrupt.
b. shows a correlation between corruption and the lack of economic development.
c. shows corruption is acceptable in most countries.
d. none of the above
96. An example of unethical behavior in the New York City and Boston marathon races was committed by:
a. Elise McDonough
b. Martha Stewart
c. Rosie Ruiz
d. Danica Patrick
97. Jane Eyring works for PharmaMeds, Inc. Jane is a physician-scientist who is responsible for running the pilot tests
on PharmaMed’s new oral spray medication for individuals with adult onset diabetes. Jane has discovered that if
those in the test group do not spray the medicine correctly or if they spray for too short of a time, the medicine is
not effective, or as effective, and insulin shock has resulted in a few of the patients. Jane talks with one of her
colleagues who responds, “Look, there’s no need to stop the testing or the drug’s release. Just tell them in the test
and in the brochures that will be with the spray, ‘Spray correctly! If you do not, you may not receive your
necessary dose.’” Jane is not sure anyone can be 100% accurate in spraying all the time. What risks does the
company run if the spray doesn’t work for the patients?
a. fines and penalties
b. litigation by patients who become ill
c. damage to its reputation
d. all of the above
98. Jane Eyring works for PharmaMeds, Inc. Jane is a physician-scientist who is responsible for running the pilot tests
on PharmaMed’s new oral spray medication for individuals with adult onset diabetes. Jane has discovered that if
those in the test group do not spray the medicine correctly or if they spray for too short of a time, the medicine is
not effective, or as effective, and insulin shock has resulted in a few of the patients. Jane talks with one of her
colleagues who responds, “Look, there’s no need to stop the testing or the drug’s release. Just tell them in the test
and in the brochures that will be with the spray, ‘Spray correctly! If you do not, you may not receive your
necessary dose.’” Jane is not sure anyone can be 100% accurate in spraying all the time. Whom is affected by
Jane’s decision, regardless of what decision she makes?
a. shareholders
b. customers
c. Jane and her reputation
d. all of the above
99. Why does the late Dr. Milton Friedman feel that managers should not involve their companies in social issues?
a. they are agents of the shareholders and should act in their best interests
b. companies lose money when they are socially responsible
c. economic studies show businesses that are socially responsible make less money
d. all of the above
100. Which country is perceived as the most corrupt country in the 2012 Corruption Perceptions Index?
a. Iraq
b. Iran
c. Somalia
d. Singapore
101. Tim Donaghy was a referee for the NBA. Mr. Donaghy began betting in 2003 on NBA games. He also provided
tips to other gamblers on who would win games in which he was serving as a referee. Mr. Donaghy’s actions:
a. were illegal under federal law, but not an ethical breach.
b. were a conflict of interest.
c. were not a breach of ethics because he used the money he made for a summer camp for underprivileged
children.
d. none of the above
102. Michael Chertoff was the head of the Department of Homeland Security. Mr. Chertoff paid 25 cents to the federal
government each time a personal fax came to him at his federal office. Mr. Chertoff’s actions:
a. are meant to establish an effective tone at the top.
b. are unnecessary because there is no ethical breach when you have no control over who sends faxes.
c. are inconsequential for the agency.
d. none of the above
103. “If you think what we’re doing now is bad, you should have seen 10 years ago at this company…” is an example of:
a. ethical analysis.
b. rationalization.
c. comparative or relative ethics.
d. both a and c
104. Discuss the following advertising issues and determine whether the ads are ethical.
a. Mrs. Butterworth’s syrup has a label that states there is “Grade A Butter” in the syrup. The fine print
on the label describes “0.4 percent butter” in the “syrup product.”
Carnation Coffeemate Lite is advertised as having “50% LESS FAT.” The claim is true but there is
b. less than 0.5 grams of fat eliminated from Lite as compared to regular Coffeemate. It is important to
understand that the average American consumes 100 grams of fat per day.
The students should address the issues of whether the ad is legal (it is) and then
move on to whether it is balanced and how it would make them feel to have a
product using these descriptions. The example is similar to the manner in which
a. some grocers display strawberries in the store: Only the ones on top are good, and
the description or appearance may mislead the customer. The student should also
discuss the fallout from such claims when consumers discover the discrepancy:
105. Harvard University recently sold most of its investments in tobacco companies. The investments were quite
profitable for the Harvard endowment. Derek Bok, who was Harvard‘s president at that time, said the divestiture
was prompted by recognition of the dangers of smoking and concern over aggressive marketing tactics to promote
tobacco products to teenagers and in countries where the dangers of smoking are not widely known. Bok stated the
university was “motivated by a desire not to be associated as a shareholder with companies engaged in significant
sales of products that create a substantial and unjustified risk of harm to other human beings.” Harvard owned $58
million in tobacco company shares. An investment analyst noted that Harvard’s action will have a “strong ripple
effect across the country.” Evaluate the actions of Harvard and evaluate the conduct of the tobacco companies to
this point using both the Blanchard/Peale model and the moral reasoning process.
106. The breakfast cereal aisle of the grocery store is a delightful place with boxes decorated with Barbie, Ninja Turtles,
and Batman. The boxes are filled with toys, special offers, and plenty of sugar in the cereal. Several parent groups
are concerned about the marketing techniques, the sugar levels, and the diet of American children. One group
proposed regulation on the location of the boxes in the aisles (they should be placed in a way that eliminates the
snazzy boxes from the child‘s view). Discuss the ethics of the cereal manufacturers in their marketing approaches.
What action would a firm in the social responsibility school take?
107. ABC, Inc. is the manufacturer of a line of bumper stickers and T-shirts that display the phrase “Sex, Drugs, and
Rock & Roll.” Evaluate the ethical posture of the firm.
108. The Alabama Attorney General recently filed suit in federal court in Montgomery, Alabama, alleging that Maytag
secretly reconditioned defective microwave ovens at its Magic Chef plant in Anniston, Alabama; altered their serial
numbers; and sold them as new. Janis Cooper, a vice president for Maytag, says the company is reviewing its
procedures at the plant and that Maytag “considers the trust of our customers very important.” Regardless of
whether the allegations are true, what problems will Maytag experience as a result of the incident?
109. A bar and restaurant located directly next to the edge of the campus at Arizona State University is called “The
Dash Inn.” The Inn is a favorite stop for students and is generally very crowded in the afternoon and evenings.
When a student uses a credit card to pay his or her tab at the Dash Inn, the receipt for the student and the credit
card data have recorded automatically at the top, “The Dash Inn Bookstore.” Why do the receipts have this
inscription at the top? What ethical problems do you see with this inscription?
110. Ralph Dewey is an assistant superintendent in the Maple Leaf school district. Mr. Dewey’s job is to award
contracts for all facilities management. Dewey awarded an asbestos removal contract to his brother’s firm. Discuss
the ethical issues. What models could have helped Dewey in his decision-making process?
111. Anna Woodruff is the purchasing manager for Allied Transport. One of Allied suppliers has just had a Schwinn
bicycle delivered to Anna as a gift. What should she do?
112. As video games have become more advanced, some of the games have also increased in violence. While the
games are rated, many of the advertisements for the games are targeted for a market who are not supposed to buy
them under the rating system. Discuss the ethical issues in these marketing strategies.
113. During the 2002 Winter Olympics in Salt Lake City, one of the French judges on the judging panel for the pairs ice
skating competition indicated that she felt pressure to vote for the Russian team, the team that was awarded the
gold medal for the competition. She indicated that there would be a quid pro quo, that is, the Russian judge would
then vote for the French team in the ice dancing competition. Following the award of the medal in the pairs
competition, there was international outcry because the silver medal Canadian duo had skated flawlessly whereas
the Russian team had several flaws in its performance. The International Olympic Committee (IOC) awarded a
second gold medal to the Canadian team and launched an investigation and vowed to reform judging practices and
rules. Discuss the ethical issues in this case and be sure to discuss why these types of deals among judges create
problems.
114. Discuss some similarities of the countries listed as the most corrupt in the 2012 Corruption Perceptions Index.
115. Google was asked by the Justice Department to turn over information about users who were running searches for
child pornography. Google refused to turn over the information to the federal government. Discuss the ethical issues
Google was grappling with in making its decision.
116. Sarah Blankenship was traveling for business. She took a cab from the office where she was doing her company
assignment to the airport. As she paid the cab driver, she asked for a receipt and the driver insisted that she take
two receipts, one that was blank so that she could fill it in and “get a little extra from her company for travel
reimbursement.” Sarah accepted the blank receipt and wonders if there would be any problem in submitting for
reimbursement for an extra cab ride. “It wouldn’t be a lot,” she thinks to herself, “just a little bit that I can say was
for purposes of getting to dinner one night while I was there.” Which of the following best describes Sarah’s
situation?
a. The cab driver committed the ethical breach, not Sarah, so she should use the receipt.
b. There are many unreimbursed expenses when you travel for your company, so the extra receipt is a way of
recouping those expenses.
c. If Sarah submits the extra receipts for reimbursement she is taking something that does not belong to her.
d. Sarah should save the receipt and use it another time when she forgets to get a receipt.
117. Yucca Mountain is the proposed location for the disposal of spent nuclear fuel rods from the nuclear plants located
in the United States. Who of the following are stakeholders in the decision about whether to open Yucca
Mountain?
a. Those who live in and around Yucca Mountain.
b. The shareholders in nuclear utility plants.
c. Those who live around nuclear plants where the rods are stored temporarily.
d. a and c
e. a, b, and c
118. President Obama said in a number of speeches advocating his health care plan, “If you like your health care plan,
you can keep your health care plan, period.” After the law was passed and as its provisions took effect, about 5
million Americans had their policies canceled because the policies no longer met federal minimum standards for
coverage. A provision in the law required insurers to cancel any policies that did not meet those federal standards.
Which of the following categories does the President’s statement fall into?
a. Giving or allowing a false impression
b. Conflict of interest
c. Personal decadence
d. a, b and c
119. Which of the following models for ethical analysis includes the following question: Could you share what you are
about to do with your boss, friends, family?
a. Blanchard/Peale
b. Laura Nash
c. Milton Friedman
d. both a and b
120. The state troopers in one state have a motto, “Nine you’re fine; ten you’re mine,” which is the standard that they
use for pulling over speeders on the state highways. In other words, if the posted speed limit is 55 mph, drivers can
drive at a rate up to 64 mph without fear of getting a ticket. Which of the following best describes the ethical
culture in the state?
a. The troopers are following a standard of positive law.
b. The troopers are following a normative standard.
c. The troopers are following a headline test.
d. The troopers are following the Blanchard/Peale standard.