Ch1 Exam Prep Ethics, Social Responsibility, and the Law

Business Law with UCC Applications, 15e (Sukys)

Chapter 1 Ethics, Social Responsibility, and the Law

1) Law consists of values that govern a society's attitudes toward right and wrong.

Difficulty: 1 Easy

Topic: Defining the Law, Morality, and Ethics

Learning Objective: 01-01 Define law, morality, and ethics.

Bloom's: Remember

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

2) Law is a means of civil management.

Difficulty: 2 Medium

Topic: Defining the Law, Morality, and Ethics

Learning Objective: 01-01 Define law, morality, and ethics.

Bloom's: Understand

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

3) Negative rights theory holds that rights are a divine invention designed to help people escape moral law.

Difficulty: 2 Medium

Topic: Defining the Law, Morality, and Ethics

Learning Objective: 01-02 Distinguish between natural law and positive law.

Bloom's: Understand

AACSB: Ethics

Accessibility: Keyboard Navigation

4) Positive law derives from an outside source that has emerged within society.

Difficulty: 3 Hard

Topic: Defining the Law, Morality, and Ethics

Learning Objective: 01-02 Distinguish between natural law and positive law.

Bloom's: Analyze

AACSB: Ethics

Accessibility: Keyboard Navigation

5) If Sally believed in natural law, she would believe that right and wrong originate from an external objective, superior force.

Difficulty: 2 Medium

Topic: Defining the Law, Morality, and Ethics

Learning Objective: 01-02 Distinguish between natural law and positive law.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

6) Ethical rules of conduct developed by various professions are often easy to understand and follow.

Difficulty: 2 Medium

Topic: Defining the Law, Morality, and Ethics

Learning Objective: 01-02 Distinguish between natural law and positive law.

Bloom's: Understand

AACSB: Ethics

Accessibility: Keyboard Navigation

7) Ethical theories are all based on the assumption that people want to live ethical lives.

Difficulty: 2 Medium

Topic: Ethical Theories

Learning Objective: 01-03 Explain the effects of nonjudgmentalism.

Bloom's: Understand

AACSB: Ethics

Accessibility: Keyboard Navigation

8) Joe believes that there are absolute standards of right and wrong. Joe's belief is an example of market value ethics.

Difficulty: 3 Hard

Topic: Ethical Theories

Learning Objective: 01-03 Explain the effects of nonjudgmentalism.

Bloom's: Apply

AACSB: Ethics

Accessibility: Keyboard Navigation

9) In the "Opening Case", the text notes that the plaintiffs in the U.S. Supreme Court case Ziglar v. Abbasi, were alleging brutal torture by the U.S. government and based on the Bivens case, asked the Supreme Court for a permanent injunction. 

Difficulty: 3 Hard

Topic: Ethical Theories

Learning Objective: 01-03 Explain the effects of nonjudgmentalism.

Bloom's: Analyze

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

10) In his book, What Money Can't Buy: The Moral Limits of Markets, author Michael Sandel reveals that market value ethics is the new ethical relativism.

Difficulty: 2 Medium

Topic: Ethical Theories

Learning Objective: 01-03 Explain the effects of nonjudgmentalism.

Bloom's: Understand

AACSB: Ethics

Accessibility: Keyboard Navigation

11) A descriptive theory explains how to create values that permit a society to run smoothly.

Difficulty: 2 Medium

Topic: Ethical Theories

Learning Objective: 01-04 Describe social contract ethics.

Bloom's: Understand

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

12) In A Classic Case: The Declaration of Independence, the text argues that Jefferson derived his four central truths of social contract from John Locke's famous book, Leviathan.

Difficulty: 3 Hard

Topic: Ethical Theories

Learning Objective: 01-04 Describe social contract ethics.

Bloom's: Analyze

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

13) Another name for utility thinking is 'cost-benefit' thinking.

Difficulty: 3 Hard

Topic: Ethical Theories

Learning Objective: 01-05 Outline the steps in applying utilitarianism.

Bloom's: Evaluate

AACSB: Ethics

Accessibility: Keyboard Navigation

14) Utilitarianism focuses on the circumstances that an individual faces.

Difficulty: 1 Easy

Topic: Ethical Theories

Learning Objective: 01-05 Outline the steps in applying utilitarianism.

Bloom's: Understand

AACSB: Ethics

Accessibility: Keyboard Navigation

15) If Alfredo, a small business owner, engages in cost-benefit thinking, he will generally only focus on the benefits and problems his business will face as the result of a decision he makes.

Difficulty: 3 Hard

Topic: Ethical Theories

Learning Objective: 01-05 Outline the steps in applying utilitarianism.

Bloom's: Analyze

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

16) Rational ethics, often referred to as objective ethics, states that people's ethical decisions can be judged only by understanding their situations.

Difficulty: 2 Medium

Topic: Ethical Theories

Learning Objective: 01-06 Define rational ethics.

Bloom's: Understand

AACSB: Ethics

Accessibility: Keyboard Navigation

17) In his essay, Politics as a Vocation, Max Weber argues that national leaders must practice the "ethic of ultimate ends" to govern correctly.

Difficulty: 2 Medium

Topic: Ethics and the Government

Learning Objective: 01-07 Explain the dyadic nature of ethics in government.

Bloom's: Understand

AACSB: Ethics

Accessibility: Keyboard Navigation

18) All corporations are considered "legal persons" under federal and state statutes.

Difficulty: 2 Medium

Topic: Social Responsibility in the Corporate Sector

Learning Objective: 01-07 Explain the dyadic nature of ethics in government.

Bloom's: Understand

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

19) Corporate social responsibility is based on the legal advantages granted to the corporation.

Difficulty: 2 Medium

Topic: Social Responsibility in the Corporate Sector

Learning Objective: 01-08 Explore the need for ethical responsibility in business.

Bloom's: Understand

AACSB: Ethics

Accessibility: Keyboard Navigation

20) The traditional legal view of a corporation held that corporate managers have a fiduciary duty to shareholders to make broader-based, more ethical decisions.

Difficulty: 2 Medium

Topic: Social Responsibility in the Corporate Sector

Learning Objective: 01-08 Explore the need for ethical responsibility in business.

Bloom's: Understand

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

21) Living an ethical lifestyle means simply doing what is legal.

Difficulty: 3 Hard

Topic: The Relationship Between Law and Ethics

Learning Objective: 01-09 Describe the need for law in our society.; 01-10 Clarify how the law and ethics can often benefit from anarchy.

Bloom's: Evaluate

AACSB: Ethics

Accessibility: Keyboard Navigation

22) While the law protects our rights, only ethical principles can stop us from doing something that is wrong.

Difficulty: 3 Hard

Topic: The Relationship Between Law and Ethics

Learning Objective: 01-10 Clarify how the law and ethics can often benefit from anarchy.

Bloom's: Evaluate

AACSB: Ethics

Accessibility: Keyboard Navigation

23) ________ are values that govern a society's attitude toward right and wrong and toward good and evil.

A) Ethics

B) Laws

C) Market values

D) Morals

Difficulty: 2 Medium

Topic: Defining the Law, Morality, and Ethics

Learning Objective: 01-01 Define law, morality, and ethics.; 01-02 Distinguish between natural law and positive law.

Bloom's: Understand

AACSB: Ethics

Accessibility: Keyboard Navigation

24) Martin Luther King, Jr. refused to obey the injunction in Birmingham in the early 1960s that prohibited King from speaking publicly merely because he was black. He was jailed for his disobedience. King felt that there was a higher law than the law of the land. King's actions were most likely based on a(n) ________ ethical model.

A) positive law

B) natural law

C) utilitarianism

D) cost-benefit

Difficulty: 3 Hard

Topic: Defining the Law, Morality, and Ethics

Learning Objective: 01-01 Define law, morality, and ethics.; 01-02 Distinguish between natural law and positive law.; 01-04 Describe social contract ethics.; 01-05 Outline the steps in applying utilitarianism.; 01-06 Define rational ethics.

Bloom's: Analyze; Apply

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

25) According to neoliberalism, or ethical relativism:

A) human values apply to all people at all times.

B) both natural law and positive law form the basis for its beliefs.

C) there are no objective or absolute standards of right and wrong.

D) the morality of an action is determined by its ultimate effects.

Difficulty: 2 Medium

Topic: Ethical Theories

Learning Objective: 01-01 Define law, morality, and ethics.; 01-03 Explain the effects of nonjudgmentalism.

Bloom's: Understand

AACSB: Ethics

Accessibility: Keyboard Navigation

26) ________ consist of rules of conduct established by the government of a society to maintain harmony, stability, and justice.

A) Morals

B) Ethics

C) Laws

D) Values

Difficulty: 2 Medium

Topic: Defining the Law, Morality, and Ethics

Learning Objective: 01-01 Define law, morality, and ethics.

Bloom's: Understand

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

27) Developing, formulating, and applying rules in line with our values is the job of:

A) ethics.

B) conduct.

C) law.

D) rationalism.

Difficulty: 2 Medium

Topic: Defining the Law, Morality, and Ethics

Learning Objective: 01-01 Define law, morality, and ethics.

Bloom's: Understand

AACSB: Ethics

Accessibility: Keyboard Navigation

28) ________ sees the morality of an action is determined by its ultimate effects.

A) Ethical relativism

B) Social contract theory

C) Utilitarianism

D) Natural law

Difficulty: 2 Medium

Topic: Defining the Law, Morality, and Ethics

Learning Objective: 01-02 Distinguish between natural law and positive law.

Bloom's: Understand

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

29) ________ is a vision of society in which competition for wealth is the only recognized value and virtually all social decisions are left to unregulated markets... It is a world in which... "everything [is] for sale."

A) Neoliberalism

B) Rational ethics

C) Social contract theory

D) Utilitarianism

Difficulty: 3 Hard

Topic: Defining the Law, Morality, and Ethics

Learning Objective: 01-02 Distinguish between natural law and positive law.; 01-03 Explain the effects of nonjudgmentalism.; 01-04 Describe social contract ethics.; 01-05 Outline the steps in applying utilitarianism.; 01-06 Define rational ethics.

Bloom's: Apply

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

30) According to the ethical system of ________, ethical values can be determined by a proper application of human reason.

A) natural law

B) market value ethics

C) utilitarianism

D) rational ethics

Difficulty: 2 Medium

Topic: Ethical Theories

Learning Objective: 01-02 Distinguish between natural law and positive law.; 01-03 Explain the effects of nonjudgmentalism.; 01-05 Outline the steps in applying utilitarianism.; 01-06 Define rational ethics.

Bloom's: Understand

AACSB: Ethics

Accessibility: Keyboard Navigation

31) Political scientist and philosopher, Michael Sandel, warns that our tendency to evaluate everything based on money creates two insidious results—injustice and corruption. Here, Sandel is most likely critiquing which ethical theory?

A) Market value ethics

B) Positive law

C) Utilitarianism

D) Social contract theory

Difficulty: 3 Hard

Topic: Ethical Theories

Learning Objective: 01-02 Distinguish between natural law and positive law.; 01-03 Explain the effects of nonjudgmentalism.; 01-04 Describe social contract ethics.; 01-05 Outline the steps in applying utilitarianism.

Bloom's: Analyze

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

32) Which of the following do positive law theory and natural law theory have in common?

A) Both believe that human decency will ultimately triumph over human cruelty.

B) Both believe that human values apply to all people at all times.

C) Both depend on an outside source for their understanding of law, morality, and rights.

D) Both believe in forming and dictating ethical decisions to people.

Difficulty: 3 Hard

Topic: Defining the Law, Morality, and Ethics

Learning Objective: 01-02 Distinguish between natural law and positive law.

Bloom's: Analyze

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

33) In 2005, a new doctrine called ________, declares that the leadership of every nation has a definitive duty to protect its own people from four major threats, genocide, war crimes, ethnic cleansing and crimes against humanity.

A) Responsibility to Protect (R2P)

B) Failed States Project (FSP)

C) National Ethical Dyad (NED)

D) Ethic of Ultimate Ends (EUE)

Difficulty: 2 Medium

Topic: Ethical Theories

Learning Objective: 01-03 Explain the effects of nonjudgmentalism.

Bloom's: Understand

AACSB: Ethics

Accessibility: Keyboard Navigation

34) ________ is a philosophical theory that says ethical values can be determined by a proper application of human reason.

A) Neoliberalism

B) Rational ethics

C) Social contract theory

D) Ethical relativism

Difficulty: 2 Medium

Topic: Ethical Theories

Learning Objective: 01-03 Explain the effects of nonjudgmentalism.; 01-04 Describe social contract ethics.; 01-05 Outline the steps in applying utilitarianism.; 01-06 Define rational ethics.

Bloom's: Understand

AACSB: Ethics

Accessibility: Keyboard Navigation

35) If Samantha believes that the primary way to judge whether an action is right or wrong is to use quantification as the primary tool for determining value, she would believe in:

A) market value ethics.

B) social contract theory.

C) utilitarianism.

D) natural law.

Difficulty: 3 Hard

Topic: Ethical Theories

Learning Objective: 01-03 Explain the effects of nonjudgmentalism.; 01-04 Describe social contract ethics.

Bloom's: Analyze

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

36) If the only question a corporate manager asks before she takes an action is whether the benefit to the shareholders will outweigh the cost to the corporation, she would most likely using a(n) ________ ethical model.

A) descriptive theory

B) concurrent validity

C) prescriptive theory

D) utility thinking

Difficulty: 3 Hard

Topic: Social Responsibility in the Corporate Sector

Learning Objective: 01-05 Outline the steps in applying utilitarianism.; 01-08 Explore the need for ethical responsibility in business.

Bloom's: Apply

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

37) If Anthony is concerned only with corporate benefits and problems, rather than the benefits and problems that will result for others outside the boardroom, he most likely believes in:

A) utility thinking.

B) rational ethics.

C) social contract theory.

D) ethical relativism.

Difficulty: 3 Hard

Topic: Ethical Theories

Learning Objective: 01-03 Explain the effects of nonjudgmentalism.; 01-04 Describe social contract ethics.; 01-05 Outline the steps in applying utilitarianism.; 01-06 Define rational ethics.

Bloom's: Analyze

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

38) If George believes in a "state of nature", where people must fend for themselves rather than give up the freedom to do as they please, and in return receive a guarantee that other individuals will curb their behavior, he would most likely be rejecting the ________ ethical theory.

A) market value

B) state of society

C) social contract

D) cost-benefit

Difficulty: 3 Hard

Topic: Ethical Theories

Learning Objective: 01-03 Explain the effects of nonjudgmentalism.; 01-04 Describe social contract ethics.; 01-05 Outline the steps in applying utilitarianism.

Bloom's: Analyze

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

39) The social contract ethical theory:

A) explains how to formulate values that permit a society to run smoothly.

B) advocates a society in which people must fend for themselves.

C) states that to live harmoniously, people must give up certain rights and freedoms.

D) states that people cannot be forced to adhere to rules, or be punished for not doing so.

Difficulty: 2 Medium

Topic: Ethical Theories

Learning Objective: 01-04 Describe social contract ethics.

Bloom's: Understand

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

40) The ethic of ________ must be practiced by individuals because individuals can never foresee the result of their actions.

A) responsibility

B) relativism

C) ultimate ends

D) ultimate needs

Difficulty: 2 Medium

Topic: Ethics and the Government

Learning Objective: 01-07 Explain the dyadic nature of ethics in government.

Bloom's: Understand

AACSB: Ethics

Accessibility: Keyboard Navigation

41) Until recently, the goal of making a profit for ________ was the only view of corporate responsibility built into statutory and common law.

A) its creditors

B) its shareholders

C) social responsibility

D) the government

Difficulty: 2 Medium

Topic: Social Responsibility in the Corporate Sector

Learning Objective: 01-07 Explain the dyadic nature of ethics in government.; 01-08 Explore the need for ethical responsibility in business.

Bloom's: Understand

AACSB: Ethics

Accessibility: Keyboard Navigation

42) The law exercises the power of ________ to confiscate privately owned land for community purposes.

A) eminent domain

B) the ultimate ruler

C) social justice

D) property statutes

Difficulty: 2 Medium

Topic: The Relationship Between Law and Ethics

Learning Objective: 01-07 Explain the dyadic nature of ethics in government.; 01-09 Describe the need for law in our society.

Bloom's: Understand

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

43) Which of the following is true of ethical and legal harmony?

A) In a utopian society, ethics and law would always differ.

B) Ethical considerations cannot form the foundation of a legal system.

C) A legal system founded on ethics will rarely succeed in reaching its objectives.

D) Ethics can lead the way in difficult situations where the law has yet to venture.

Difficulty: 3 Hard

Topic: The Relationship Between Law and Ethics

Learning Objective: 01-07 Explain the dyadic nature of ethics in government.; 01-09 Describe the need for law in our society.; 01-10 Clarify how the law and ethics can often benefit from anarchy.

Bloom's: Evaluate

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

44) In terms of social responsibility, which of the following arguments is true?

A) Under provisions of most incorporation statutes, a corporation is considered nothing more than a company.

B) The decisions of corporate managers must always be narrowly focused on the profits of the shareholders.

C) Corporate social responsibility is based on the premise that it is unethical for corporations to earn profits for themselves.

D) Corporate decisions have an impact on more people than just the shareholders and managers.

Difficulty: 3 Hard

Topic: Social Responsibility in the Corporate Sector

Learning Objective: 01-08 Explore the need for ethical responsibility in business.

Bloom's: Analyze

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

45) Matrix Corporation's board of directors decides not to outsource its U.S. jobs to China, even though it would cut labor costs by fifty percent. Shareholders subsequently sued the directors for failing to maximize profits. Under the traditional view, the directors would be:

A) absolutely immune from any liability to the shareholders.

B) absolutely liable to the shareholders.

C) liable to the shareholders, unless they can prove their decision not to outsource was made with the shareholders' profits interest above all other interests.

D) criminally liable, unless granted immunity by a federal prosecutor.

Difficulty: 3 Hard

Topic: Social Responsibility in the Corporate Sector

Learning Objective: 01-08 Explore the need for ethical responsibility in business.

Bloom's: Analyze

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

46) Some argue that ________ is actually in the long-term best interests of the corporation. This argument, referred to as ________, is based on the notion that socially responsible corporations benefit by creating ________ for themselves, thus motivating consumers to purchase their products, investors to buy their stock, and lawmakers to grant them further legal advantages.

A) profit maximization; social responsibility; goodwill

B) social responsibility; enlightened corporate self-interest; goodwill

C) profit maximization; enlightened corporate self-interest; goodwill

D) social responsibility; profit maximization; goodwill

Difficulty: 3 Hard

Topic: Social Responsibility in the Corporate Sector

Learning Objective: 01-08 Explore the need for ethical responsibility in business.

Bloom's: Analyze

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

47) Julia decides not to dump her used motor oil in the creek that runs behind her garage since that would damage individuals who live downstream and upset the peace and harmony in which she has lived with these neighbors. Name and explain the ethical system Julia has used to make this decision.

Difficulty: 3 Hard

Topic: Ethical Theories

Learning Objective: 01-04 Describe social contract ethics.

Bloom's: Evaluate

AACSB: Ethics

Accessibility: Keyboard Navigation

48) Lisa realizes that her colleagues and her boss judge her based on the way she speaks. Lisa is French and does not speak fluent English. Discuss the situation.

Difficulty: 3 Hard

Topic: Ethical Theories

Learning Objective: 01-04 Describe social contract ethics.

Bloom's: Evaluate

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

49) Rachel found a bag of money that fell out of an armored car. She decided to keep the money since she did not have full-time employment and was studying to be a nurse. Name and explain the ethical system that Rachel used to make her decision.

Difficulty: 3 Hard

Topic: Ethical Theories

Learning Objective: 01-05 Outline the steps in applying utilitarianism.

Bloom's: Analyze

AACSB: Ethics

Accessibility: Keyboard Navigation

50) Justin learns that the air bags that his employer, Excel Auto Corporation, installs in its new cars can kill or seriously injure young children when the bags deploy in an auto accident. When he reports this to responsible Excel officials, they redesign and recall the old airbags at considerable expense since "it is the best thing to do for the driving public." Name and explain the ethical system Excel used to make this decision.

Difficulty: 3 Hard

Topic: Ethical Theories

Learning Objective: 01-05 Outline the steps in applying utilitarianism.

Bloom's: Analyze

AACSB: Ethics

Accessibility: Keyboard Navigation

51) William develops a new design for a gasoline engine that will increase fuel economy by 30%. He decides not to patent this design because it will be good for the environment and the entire world. Name and explain the ethical system William has used to make this decision.

Difficulty: 3 Hard

Topic: Ethical Theories

Learning Objective: 01-05 Outline the steps in applying utilitarianism.

Bloom's: Analyze

AACSB: Ethics

Accessibility: Keyboard Navigation

52) Jason decides not to cheat on an exam since he considers himself a morally reasonable person and the action of cheating on exams will undermine the value of degrees issued by his educational institution. Name and explain the ethical system Jason has used to make this decision.

Difficulty: 3 Hard

Topic: Ethical Theories

Learning Objective: 01-06 Define rational ethics.

Bloom's: Evaluate

AACSB: Ethics

Accessibility: Keyboard Navigation

53) Michael is the corporate manager at Hatch & Jake Pvt. Ltd. He is asked to always consider if the benefits to the shareholders outweigh the costs to the corporation. Michael takes the action only if the shareholders' benefits offset corporate costs. Discuss.

Difficulty: 3 Hard

Topic: Social Responsibility in the Corporate Sector

Learning Objective: 01-07 Explain the dyadic nature of ethics in government.

Bloom's: Analyze

AACSB: Ethics

Accessibility: Keyboard Navigation

54) Amanda Hutchins sued her managers for making merger decisions that caused shareholders to lose money. The managers argued that they made decisions based on the long-term benefits of the merger to everyone involved, including the local community and the state. Hutchins argued that the shareholders' profits should be the managers' first priority. Analyze the case and the possible ruling of the court.

Difficulty: 3 Hard

Topic: Social Responsibility in the Corporate Sector

Learning Objective: 01-07 Explain the dyadic nature of ethics in government.

Bloom's: Evaluate

AACSB: Ethics

Accessibility: Keyboard Navigation

55) Amalgamated Enterprises is considering closing its plant in a small U.S. town where its average wages are $10 per hour, and moving production to a foreign country where average wages for the same work will be $2 per hour. Amalgamated is the largest employer in the community. What theories of social responsibility may Amalgamated's management consider in making a final decision about the plant?

Difficulty: 3 Hard

Topic: Social Responsibility in the Corporate Sector

Learning Objective: 01-07 Explain the dyadic nature of ethics in government.

Bloom's: Evaluate

AACSB: Ethics

Accessibility: Keyboard Navigation