TEST BANK FOR LEGAL AND REGULATO
RY ENVIRONMENT OF BUSINESS 18TH
EDITION PAGNATTAR CHAPTER 2 LATES
T UPDATE |GRADED A+| |2025|
The Legal and Regulatory Environment of Business, 18e (Pagnattaro)
Chapter 2 The Role of Ethics in Decision Making
1) Federal sentencing guidelines reduce criminal fines for legal violations in companies that have
taken specific steps to self-police ethical/legal conduct.
Answer: TRUE
Explanation: Federal sentencing guidelines reduce criminal fines for legal violations in
companies that have taken specific steps to self-police ethical/legal conduct. Federal law
encourages self-regulation.
Difficulty: 1 Easy
Topic: Contemporary Business Ethics
Learning Objective: 02-01 To compare the connection between law and ethical principles.
Bloom's: Remember
AACSB: Analytical Thinking
2) In society, the sharing of morals promotes social cooperation and is a means of social control.
Answer: TRUE
Explanation: In society at large, the sharing of moral values promotes social cooperation and is
a significant means of social control. Shared moral values lead one to accept and trust others.
Difficulty: 1 Easy
Topic: The Nature of Ethics
Learning Objective: 02-01 To compare the connection between law and ethical principles.
Bloom's: Remember
AACSB: Analytical Thinking; Ethics
3) With greater diversity comes greater concern over ethical values.
Answer: TRUE
Explanation: Diversity fosters concern over values, and as America becomes increasingly
diverse, changes in traditional norms create challenges in establishing shared ethical values.
Difficulty: 1 Easy
Topic: The Nature of Ethics
,Learning Objective: 02-01 To compare the connection between law and ethical principles.
Bloom's: Remember
AACSB: Analytical Thinking; Ethics
,4) Increasing economic interdependence prevents executives and managers at a firm from
manipulating corporate actions for their own benefit.
Answer: FALSE
Explanation: A serious ethical problem arises from economic interdependence and the modern
corporation, which is the structure of most large businesses in this country. The problem is that
the corporate leaders are not the real owners of corporations. The stockholders are, and although
corporate executives and managers may own some stock, they seldom own significant
percentages of very large companies. The ethical problem that can arise is that the executives and
managers who control what the stockholders own are sometimes able to manipulate corporate
actions for their own benefit, actions that have unacceptable risks to the owners and others.
Increasing economic interdependence promotes concerns about business ethics.
Difficulty: 1 Easy
Topic: The Nature of Ethics
Learning Objective: 02-01 To compare the connection between law and ethical principles.
Bloom's: Remember
AACSB: Analytical Thinking; Ethics
5) Increasing coverage of business decisions by the news media and the Internet has made it
harder for large organizations to hide their questionable behavior.
Answer: TRUE
Explanation: The news media and the Internet have made it harder for large organizations to
hide their questionable behavior. Extensive media and Internet coverage of business decisions
and their effect on society makes us more aware than ever of failures of business ethics.
Difficulty: 1 Easy
Topic: The Nature of Ethics
Learning Objective: 02-01 To compare the connection between law and ethical principles.
Bloom's: Remember
AACSB: Analytical Thinking
6) According to Adam Smith, leading a good life means being solely concerned about the
fortunes of oneself.
Answer: FALSE
Explanation: The end result of ethical examination is what philosophers call the good. The
concept of the good is central to the study of morality. The good may be defined as those moral
goals and objectives one chooses to pursue. Thus, leading a good life means more than having
the good life. It means more than material possessions and luxury. It means pursuing intangibles,
being concerned, as Adam Smith put it, about the fortunes of others.
Difficulty: 1 Easy
Topic: The Nature of Ethics
Learning Objective: 02-01 To compare the connection between law and ethical principles.
Bloom's: Remember
AACSB: Analytical Thinking
, 7) Adam Smith, the author of The Wealth of Nations, denied the existence of any moral element
in human nature that goes beyond self-interest.
Answer: FALSE
Explanation: Adam Smith wrote, "However selfish man believes himself to be, there is no
doubt that there are some elements in his nature which lead him to concern himself about the
fortune of others, in such a way that their happiness is necessary for him, although he obtains
nothing from it except the pleasure of seeing it." With this statement, the author of The Wealth of
Nations, perhaps the most famous book on economic theory ever written, recognized a moral
element in human nature that goes beyond self-interest.
Difficulty: 1 Easy
Topic: The Nature of Ethics
Learning Objective: 02-01 To compare the connection between law and ethical principles.
Bloom's: Remember
AACSB: Analytical Thinking; Ethics
8) To have success in international operations, businesses must ignore dissimilarities in moral
values.
Answer: FALSE
Explanation: To succeed in international operations, businesses must be sensitive to
dissimilarities in moral values. Internationally, businesses often face problems when they do
business with nations with different moral values.
Difficulty: 1 Easy
Topic: The Nature of Ethics
Learning Objective: 02-01 To compare the connection between law and ethical principles.
Bloom's: Remember
AACSB: Analytical Thinking; Ethics
9) Ultimately, the commitment to ethical values is superior to mere observance of the law in
ensuring responsible business behavior.
Answer: TRUE
Explanation: Ultimately, the commitment to ethical values is superior to mere observance of the
law in ensuring responsible business behavior. Legal rules can never be specific enough to
regulate all business actions that may have socially undesirable or even dangerous consequences.
Difficulty: 1 Easy
Topic: The Nature of Ethics
Learning Objective: 02-01 To compare the connection between law and ethical principles.
Bloom's: Remember
AACSB: Analytical Thinking; Ethics
RY ENVIRONMENT OF BUSINESS 18TH
EDITION PAGNATTAR CHAPTER 2 LATES
T UPDATE |GRADED A+| |2025|
The Legal and Regulatory Environment of Business, 18e (Pagnattaro)
Chapter 2 The Role of Ethics in Decision Making
1) Federal sentencing guidelines reduce criminal fines for legal violations in companies that have
taken specific steps to self-police ethical/legal conduct.
Answer: TRUE
Explanation: Federal sentencing guidelines reduce criminal fines for legal violations in
companies that have taken specific steps to self-police ethical/legal conduct. Federal law
encourages self-regulation.
Difficulty: 1 Easy
Topic: Contemporary Business Ethics
Learning Objective: 02-01 To compare the connection between law and ethical principles.
Bloom's: Remember
AACSB: Analytical Thinking
2) In society, the sharing of morals promotes social cooperation and is a means of social control.
Answer: TRUE
Explanation: In society at large, the sharing of moral values promotes social cooperation and is
a significant means of social control. Shared moral values lead one to accept and trust others.
Difficulty: 1 Easy
Topic: The Nature of Ethics
Learning Objective: 02-01 To compare the connection between law and ethical principles.
Bloom's: Remember
AACSB: Analytical Thinking; Ethics
3) With greater diversity comes greater concern over ethical values.
Answer: TRUE
Explanation: Diversity fosters concern over values, and as America becomes increasingly
diverse, changes in traditional norms create challenges in establishing shared ethical values.
Difficulty: 1 Easy
Topic: The Nature of Ethics
,Learning Objective: 02-01 To compare the connection between law and ethical principles.
Bloom's: Remember
AACSB: Analytical Thinking; Ethics
,4) Increasing economic interdependence prevents executives and managers at a firm from
manipulating corporate actions for their own benefit.
Answer: FALSE
Explanation: A serious ethical problem arises from economic interdependence and the modern
corporation, which is the structure of most large businesses in this country. The problem is that
the corporate leaders are not the real owners of corporations. The stockholders are, and although
corporate executives and managers may own some stock, they seldom own significant
percentages of very large companies. The ethical problem that can arise is that the executives and
managers who control what the stockholders own are sometimes able to manipulate corporate
actions for their own benefit, actions that have unacceptable risks to the owners and others.
Increasing economic interdependence promotes concerns about business ethics.
Difficulty: 1 Easy
Topic: The Nature of Ethics
Learning Objective: 02-01 To compare the connection between law and ethical principles.
Bloom's: Remember
AACSB: Analytical Thinking; Ethics
5) Increasing coverage of business decisions by the news media and the Internet has made it
harder for large organizations to hide their questionable behavior.
Answer: TRUE
Explanation: The news media and the Internet have made it harder for large organizations to
hide their questionable behavior. Extensive media and Internet coverage of business decisions
and their effect on society makes us more aware than ever of failures of business ethics.
Difficulty: 1 Easy
Topic: The Nature of Ethics
Learning Objective: 02-01 To compare the connection between law and ethical principles.
Bloom's: Remember
AACSB: Analytical Thinking
6) According to Adam Smith, leading a good life means being solely concerned about the
fortunes of oneself.
Answer: FALSE
Explanation: The end result of ethical examination is what philosophers call the good. The
concept of the good is central to the study of morality. The good may be defined as those moral
goals and objectives one chooses to pursue. Thus, leading a good life means more than having
the good life. It means more than material possessions and luxury. It means pursuing intangibles,
being concerned, as Adam Smith put it, about the fortunes of others.
Difficulty: 1 Easy
Topic: The Nature of Ethics
Learning Objective: 02-01 To compare the connection between law and ethical principles.
Bloom's: Remember
AACSB: Analytical Thinking
, 7) Adam Smith, the author of The Wealth of Nations, denied the existence of any moral element
in human nature that goes beyond self-interest.
Answer: FALSE
Explanation: Adam Smith wrote, "However selfish man believes himself to be, there is no
doubt that there are some elements in his nature which lead him to concern himself about the
fortune of others, in such a way that their happiness is necessary for him, although he obtains
nothing from it except the pleasure of seeing it." With this statement, the author of The Wealth of
Nations, perhaps the most famous book on economic theory ever written, recognized a moral
element in human nature that goes beyond self-interest.
Difficulty: 1 Easy
Topic: The Nature of Ethics
Learning Objective: 02-01 To compare the connection between law and ethical principles.
Bloom's: Remember
AACSB: Analytical Thinking; Ethics
8) To have success in international operations, businesses must ignore dissimilarities in moral
values.
Answer: FALSE
Explanation: To succeed in international operations, businesses must be sensitive to
dissimilarities in moral values. Internationally, businesses often face problems when they do
business with nations with different moral values.
Difficulty: 1 Easy
Topic: The Nature of Ethics
Learning Objective: 02-01 To compare the connection between law and ethical principles.
Bloom's: Remember
AACSB: Analytical Thinking; Ethics
9) Ultimately, the commitment to ethical values is superior to mere observance of the law in
ensuring responsible business behavior.
Answer: TRUE
Explanation: Ultimately, the commitment to ethical values is superior to mere observance of the
law in ensuring responsible business behavior. Legal rules can never be specific enough to
regulate all business actions that may have socially undesirable or even dangerous consequences.
Difficulty: 1 Easy
Topic: The Nature of Ethics
Learning Objective: 02-01 To compare the connection between law and ethical principles.
Bloom's: Remember
AACSB: Analytical Thinking; Ethics
