Ethics And The Conduct Of Business, 7th Edition Test Bank

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Test BankforBoatrightEthics and the Conduct ofBusinessSeventh Edition

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ContentsChapter 1Ethics in the World of Business1Chapter 2Ethical Decision Making4Chapter 3Ethical Theories7Chapter 4Whistle-Blowing10Chapter 5Trade Secrets and Conflict of Interest13Chapter 6Privacy17Chapter 7Discrimination and Affirmative Action20Chapter 8Employment Rights23Chapter 9Occupational Health and Safety26Chapter 10Marketing, Advertising, and Product Safety30Chapter 11Ethics in Finance33Chapter 12Corporate Social Responsibility37Chapter 13Corporate Governance and Accountability40Chapter 14International Business Ethics43iii

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1Chapter 1Ethics in the World of BusinessCHAPTER SUMMARYBusiness ethics is concerned with identifying and understanding the ethical issues that arisein business and with developing the knowledge and skills needed by a practicing manager toaddress these issues and to make sound business decisions—that is, decisions that aresound from both an ethical and a business perspective. Ethical issues are an inevitableelement of business decision making and are deeply intertwined with managerial practiceand economic activity generally. Business ethics is important for managers because manybusiness decisions upon which the success of individual managers, business organizations,and,indeed,thewholeeconomicsystemdepend,areinvolvedinethicalissues.Botheconomics and law are important guides for business decision making, but they are notcomplete. Nor is business ethics understood merely as the treatment of ethical issues froma philosophical perspective. As the work of psychologists and sociologists on organizationalmisconduct show, it is not enough merely to determine a right course of action. Misconductin organizations is also the result of flaws in individual and organizational decision makingthat can be corrected only by changes in decision-making processes. Practicing managersmust also address the larger challenge of preventing misconduct within organizations.CHAPTER OBJECTIVES•Explain how business decision-making can run afoul of ethical concerns.•Describethekindsofdecisionsthatarecharacteristicofthevariouslevelsofbusiness organization.•Describe the relationship between ethics and the law.SUGGESTED DISCUSSION PROMPTS1.What types of ethical concerns do decision-makers at the management level need totake into account?2.What types of ethical concerns do decision-makers at lower organizational levelsneed to take into account?3.How would you respond to someone who says that a business should always dowhatever is in its economic interests?4.What is wrong with the thought that abiding by the law is all the ethics that abusinessperson needs to worry about?5.How does specialized knowledge come into play in the management of ethics?

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2ASSESSMENT FOR IN-CLASS USEThefollowingassessmenthasbeencreatedforin-classuse.Thisassessmentmaybeavailable through Pearson’s MyTest website—allowing for easy access for creating your owntests. This assessmentmayalso be offered in a Blackboard/Angel/D2L/WebCT package.Please contact your local Pearson sales representative to learn about the options available.Visit,http://www.pearsonhighered.com/replocator.Multiple Choice QuestionsChoose theBESTpossible answer for each of the following.1.In many cases, rules of business ethics can be determined by.A.applicable lawsB.company guidelinesC.economic requirementsD.rules of conduct that apply in everyday lifeAnswer: D2.The economic character of business can be seen in its.A.trading characteristicsB.ethical dimensionsC.personal aspectsD.legal guidelinesAnswer: A3.Organization in business is characterized mainly by its.A.rulesB.hierarchyC.profitsD.productsAnswer: B4.Decision making in business occurs at various distinctive.A.placesB.levelsC.objectivesD.profitsAnswer: B5.It is possible for there to be unethical actions that are not.A.illegalB.wrongC.avoidableD.harmfulAnswer: A

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36.Economic reasoning describes how we.A.ought to reasonB.prioritize our desiresC.reason when pursuing our goalsD.would reason if we could have whatever we wantedAnswer: C7.Adam Smith’s economic theory is based on which of the following assumptions?A.People want to promote each others’ interests.B.Morality is not relevant to economic concerns.C.Free markets will fix their own ethical problems.D.People will behave rationally as they pursue their interests.Answer: D8.What fact does the “ultimatum bargaining game” demonstrate?A.It is often rational to price products below their market value.B.Free markets will usually self-regulate.C.Many people do not understand economics.D.Many people would rather not trade than be treated unfairly.Answer: D9.The school of thought that says that law and ethics govern two different realms iswrong because.A.ethics applies to every field of lifeB.anything that is legal is also ethicalC.anything that is illegal is also unethicalD.the law governs every aspect of lifeAnswer: A10.It is not ethically sufficient to obey the law because.A.the law does not apply to business in generalB.ethical constraints sometimes require that the law be ignoredC.ethics goes beyond what can be legally codifiedD.the law itself is stricter than ethicsAnswer: CEssay Questions1.Whatiseconomicefficiency,andinwhatwaysmightthepursuitofeconomicefficiency be unethical?2.Describe and explain an example of a business decision that would be unethical eventhough it is legal.3.In what ways does it benefit businesses to pursue ethical choices beyond what theyare legally required to do?

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4Chapter 2Ethical Decision MakingCHAPTER SUMMARYEthical decision making in business is often difficult and complex. Some situations are easilyhandledbecause whatone oughttodoorwhat is right andwrongare evident.Thosesituationsthatgiveuspauseorproducemoralanguishrequirecarefulthoughtandultimatelyanabilitytoengageinethicalreasoning.Thischaptercontributestoanunderstanding of ethical decision making by offering a division of business ethics into twoparts: an ethics of the market and an ethics of roles and relationships, including firms. Inbusiness, we deal with some parties purely as market actors who are on the other side of amarket transaction or exchange. For such market activity, certain moral rules or standardsapply. Much of business, however, involves roles and relationships and takes place in firmsor organizations. These roles, relationships, and firms arise in a market, but, by mutualagreement in a market, we take ourselves out of the market and govern our actions by adifferent “ethics,” the ethics of these roles and relationships.When we attempt to think through the ethical issues that arise in business, we are engagingin ethical reasoning, which may be conducted on different levels. Ethical theories, which arepresented in the next chapter, can guide ethical reasoning on the highest level by providingthe most comprehensive and fundamental grounds for our moral beliefs and judgments.Fortunately,substantialmoralargumentscanbeconstructedthatdonotrequireanunderstanding of these theories. Most of our everyday ethical reasoning employs familiarethical concepts and principles that can be readily understood and applied. Accordingly, thischapter provides a framework of seven basic ethical principles that are sufficient for mostbusiness decision making. For those who seek more, though, the next chapter provides asurvey of the main philosophical theories of ethics.CHAPTER OBJECTIVES•Identify the ethical duties and obligations of business that arise from the market.•Identify the ethical dutiesandobligations of business that arisefromroles andrelationships.•Describe the philosophical bases of ethical reasoning.•Describe the psychological bases of ethical reasoning.SUGGESTED DISCUSSION PROMPTS1.What is ethically required of participants in a market economic system?2.In what ways do participants in a market system have to depend upon each other?3.In what ways do ethical considerations work against perfect operation of a marketeconomy?4.How does the prisoner’s dilemma reflect the limitations of a free market system?5.What capacities are required of an agent to engage in ethical reasoning?

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5ASSESSMENT FOR IN-CLASS USEThefollowingassessmenthasbeencreatedforin-classuse.Thisassessmentmaybeavailable through Pearson’s MyTest website—allowing for easy access for creating your owntests. This assessmentmayalso be offered in a Blackboard/Angel/D2L/WebCT package.Please contact your local Pearson sales representative to learn about the options available.Visit,http://www.pearsonhighered.com/replocator.Multiple Choice QuestionsChoose theBESTpossible answer for each of the following.1.A market economy is based fundamentally on.A.ethical motivationsB.the profit motiveC.human welfareD.manufacturingAnswer: B2.A market with perfect competition would require.A.agents to not be rationalB.that there be no contractsC.that ethics not be necessaryD.ethical guidelines to be legally codifiedAnswer: C3.Fraud is unethical because.A.all parties must have access to pertinent informationB.no one may be permitted to profit too muchC.market economies require freedom of actionD.the market requires everyone to further their own interestsAnswer: A4.The difference betweenHomo economicusand actual people is that.A.Homo economicusis capable of making any decisionB.Homo economicuspursues many different interestsC.actual people pursue their own self-interestD.actual people are less than perfectly rationalAnswer: D5.A market economy alone cannot sustain public goods because.A.no one would want to take advantage of public goodsB.everyone would be free riders if they could beC.people would try to sell each other public goodsD.participants in a market economy are imperfectly rationalAnswer: B

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66.Market outcomes lead to unequal outcomes mainly because.A.it involves random processesB.participants have differing levels of skillC.free markets are inherently unjustD.there is government interferenceAnswer: B7.A fiduciary has the special responsibility to.A.care for another’s financial interestsB.sell goods as efficiently as possibleC.provide as much information as possibleD.take a professional interest in another’s successAnswer: A8.The ethical requirements that are specific to professionals arise in part from.A.their duty not to profit at others’ expenseB.the implicit contract that they have with other professionalsC.the duties they owe to their governing associationD.their specialized knowledge and responsibilitiesAnswer: D9.The internal workings of firms are founded on.A.marketsB.agentsC.rolesD.relationshipsAnswer: D10.The ethical concept of dignity most centrally involves.A.treating all persons equallyB.disclosing all information that is needed by othersC.recognizing the intrinsic value of persons or other entitiesD.behaving with high standards of virtueAnswer: CEssay Questions1.What are the basic components of a market system, and what assumptions are madeabout human behavior?2.What is the difference between a fiduciary and an agent? What special obligationsare characteristic of a fiduciary that is not an agent?3.What are the required components of the moral point of view, and how are theyexercised in a business setting?

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7Chapter 3Ethical TheoriesCHAPTER SUMMARYThis chapter presents the main concepts and theories of ethics that have been developedover centuries by major moral philosophers. The value of any theory for business ethics isits usefulness in evaluating business practices, institutional arrangements, and economicsystems. In general, all of these theories justify most prevailing business practices, theinstitution of the modern corporation, and capitalism or the market system, but they alsoprovide the basis for some criticism and improvement. In the subsequent chapters, thistheoretical foundation is used to explore a wide range of practical business ethics topics.CHAPTER OBJECTIVES•Identify the role that ethical theories play in moral reasoning.•Explain what utilitarianism is and its two types.•Explain the basis and the cardinal rule of Kantian ethics.•Explain the basis of virtue ethics.•Describe various emphases of rights and justice in ethical theory.SUGGESTED DISCUSSION PROMPTS1.What would an act utilitarian and a rule utilitarian say differently when evaluating thesame case?2.What specific problem is posed to utilitarianism by its economic application?3.What is the major contrast between utilitarianism and Kantian ethics?4.Whataretheattractivefeaturesofvirtuetheory?Whatareitslimitationsinapplication to business?5.In what ways is the rights and justice perspective a fitting ethical theory for businessethics?

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8ASSESSMENT FOR IN-CLASS USEThefollowingassessmenthasbeencreatedforin-classuse.Thisassessmentmaybeavailable through Pearson’s MyTest website—allowing for easy access for creating your owntests. This assessmentmayalso be offered in a Blackboard/Angel/D2L/WebCT package.Please contact your local Pearson sales representative to learn about the options available.Visit,http://www.pearsonhighered.com/replocator.Multiple Choice QuestionsChoose theBESTpossible answer for each of the following.1.What does the P&G case show about the applicability of ethics to business?A.When a company makes unethical decisions, it is usually breaking the law.B.Ethics in business applies differently from how it does in the rest of the world.C.A company’s behavior many be unethical even if no harm is done.D.A company’s ethical decisions should always affect its bottom line.Answer: C2.Teleological theories of ethics locate goodness in.A.the outcome of actionsB.the intentions of the agentC.the obligations of people to each otherD.the maximization of economic opportunityAnswer: A3.Rule utilitarianism favors rules that.A.always benefit the most peopleB.everyone agrees withC.utilitarians think are good rulesD.would maximize goodness if everyone followed themAnswer: D4.What is the most fundamental drawback of having cost-benefit analyses serve as thebasis for ethical decisions in business?A.Some things do not really have value.B.A determinate value must be placed on things that have incalculable value.C.Cost-benefit analyses are time-consuming and require specialized skill.D.Cost-benefit analyses require a commitment to consequentialism.Answer: B

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95.A “maxim,” according to Kant’s terminology, is.A.the outcome of an actionB.the reason that one undertakes an actionC.the moral principle that one has in mindD.that which would make an action moralAnswer: B6.Kant’s rule requiring respect for persons asks that we.A.not use people as means to an endB.view each person as a moral agentC.view each person as an end unto himselfD.only use another person if we have sufficient reason for doing soAnswer: C7.Virtue ethics defines a moral action as that which.A.a wise person would doB.leads to the most virtue overallC.is done with the most virtuous intentionsD.is done according to the proper rulesAnswer: A8.A drawback to theorizing about business ethics in terms of rights is that.A.not everyone has rightsB.people’s rights may conflictC.it is hard to draw the line between different types of rightsD.conceptions of rights differ between culturesAnswer: B9.The notion of justice is most basically concerned with.A.fairnessB.equalityC.rightsD.economicsAnswer: AEssay Questions1.In what ways is the need to calculate utility a problem for utilitarianism?2.What is Kant’s categorical imperative? Explain its two formulations.3.Describe how rights and justice can be explained in terms of one another.

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10Chapter 4Whistle-BlowingCHAPTER SUMMARYWhether or not to blow the whistle on misconduct in an organization is the most difficultdecision that some people ever have to make. The decision is wrenching personally becausethe stakes are so high. Yet many whistle-blowers say that they could not have lived withthemselves if they had stayed silent. The decision is also difficult ethically, because whistle-blowing involves a conflict between two competing duties: to protect the public and to beloyaltoanorganization.Althoughloyaltyisnotalwaysoverriding,astheloyalagentargument holds, neither is it inconsequential. Deciding between these duties often requiresthat an employee exercise very careful judgment.The one certain conclusion of this chapter is that whistle-blowing is ethically permissibleunder certain carefully specified conditions. (Whether it can ever be ethically required is adifferent question that seldom arises. Everyone has an obligation not to be a part of illegaland immoral activity, but exposing it at great risk to oneself is usually regarded as beyondwhat duty requires.) Blowing the whistle is only one response that an employee can maketocorporatemisconduct, however, andtheact of whistle-blowingitself cantakemanydifferent forms. So in addition towhetherto become a whistle-blower, employees are facedwith the further question ofhowto blow the whistle in a justified manner. Finally, it isevidentthatemployeeswhoarejustifiedinblowingthewhistleoughtnottosufferretaliation. What ought to be done to protect whistle-blowers from this fate is less clear. Aplausible case can be made for legislation in this area, but the difficulty is drafting laws thatachieve the desired result without interfering unduly in the legitimate conduct of business.CHAPTER OBJECTIVES•Describe the process of whistle-blowing.•Explain the dilemma between whistle-blowing and loyalty.•Identify appropriate conditions for whistle-blowing.•Identify employer and legal issues relating to whistle-blowing protectionSUGGESTED DISCUSSION PROMPTS1.Why do employees want to blow the whistle?2.Do employers have valid reasons to frown on whistle-blowing?3.What must an employee do in order to ensure that they blow the whistle properly?4.What are the objectives of legal protection for whistle-blowers?5.Why would a company develop a whistle-blowing policy?

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11ASSESSMENT FOR IN-CLASS USEThefollowingassessmenthasbeencreatedforin-classuse.Thisassessmentmaybeavailable through Pearson’s MyTest website—allowing for easy access for creating your owntests. This assessmentmayalso be offered in a Blackboard/Angel/D2L/WebCT package.Please contact your local Pearson sales representative to learn about the options available.Visit,http://www.pearsonhighered.com/replocator.Multiple Choice QuestionsChoose theBESTpossible answer for each of the following.1.A whistle-blower is primarily motivated by.A.retaliationB.ethical concernC.personal gainD.fear of retributionAnswer: B2.Which of the following is necessary for whistle-blowing to occur?A.informationB.legal protectionC.a nondisclosure agreementD.managing authorityAnswer: A3.Some corporations have anombudsman,whose role is to.A.blow the whistleB.release information to the publicC.report on employeesD.hear complaintsAnswer: D4.How does the disloyalty argument against whistleblowing receive support from thelaw?A.Loyalty to a single company is enforced by the law.B.There is little legal precedent for whistleblower protection.C.There are many laws enforcing corporate confidentiality.D.Employees of a corporation are by legal definition agents of that corporation.Answer: D5.The biggest weakness in the disloyalty argument against whistleblowing is that.A.an employee differs in many ways from an agentB.employees do not receive protection when whistleblowingC.employers have no right to expect loyalty from employeesD.it does not apply to at-will employmentAnswer: A

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