Anderson's Business Law And The Legal Environment 21st Edition by David P. Twomey - Test Bank

Chapter 1—THE NATURE AND SOURCES OF LAW TRUE/FALSE 1. The pattern of rules that society uses to control the conduct of individuals in their relationships is called law. ANS: T MSC: AACSBAnalytic 2. The law works to cause our society to operate in an inefficient manner. ANS: F MSC: AACSBAnalytic 3. Law is often defined as the body of principles that courts will enforce. ANS: T MSC: AACSBAnalytic 4. Jane asserts she has a legal right. Jane is really saying she has an obligation to perform or refrain from performing an act. ANS: F TOP: MSC: AACSBAnalytic 5. Rights always stand alone, without any duties. ANS: F MSC: AACSBAnalytic 6. Rights guaranteed in the United States Constitution are not accompanied by duties. ANS: F MSC: AACSBAnalytic 7. Court decisions and statutes can take away rights created by the United States Constitution. ANS: F MSC: AACSBAnalytic 8. One of our most important rights is the right of privacy. ANS: T MSC: AACSBAnalytic 9. The right to be secure against unreasonable searches and seizures conducted by the police is guaranteed by state statute. ANS: F MSC: AACSBAnalytic 10. The United States Constitution provides that we have a right to be free from intrusions by others. ANS: T MSC: AACSBAnalytic 11. The private life of a nonpublic citizen is subject to public scrutiny. ANS: F MSC: AACSBAnalytic 12. One advantage of our current legal system is that the growth of technology has not created many new laws. ANS: F MSC: AACSBAnalytic 13. The right of privacy does not apply to intrusions into our privacy by means of new technology. ANS: F MSC: AACSBAnalytic 14. Several layers of law are enacted at different levels of government to provide the framework for business and personal rights and duties. At the base of this framework of laws is constitutional law. ANS: T MSC: AACSBAnalytic 15. A constitution is a body of principles that establishes the structure of a government and the relationship of that government to the people who are governed. ANS: T MSC: AACSBAnalytic 16. Statutes are the only source of law. ANS: F MSC: AACSBAnalytic 17. Within each state in the United States, only one constitution is in force. ANS: F MSC: AACSBAnalytic 18. In addition to state legislatures and the United States Congress, all cities, counties, and other governmental subdivisions have some power to adopt ordinances within their sphere of operation. ANS: T MSC: AACSBAnalytic 19. State legislatures, not Congress, enact statutory law. ANS: F MSC: AACSBAnalytic 20. Administrative regulations are a type of law. ANS: T MSC: AACSBAnalytic 21. Administrative regulations generally do not have the force of a statute. ANS: F MSC: AACSBAnalytic 22. Courts can create law. ANS: T MSC: AACSBAnalytic 23. When a court decides a new question or problem, the decision is called a precedent. ANS: T MSC: AACSBAnalytic 24. The group of time-honored rules that courts have used to solve similar problems for decades is called stare decisis. ANS: T MSC: AACSBAnalytic 25. Treaties made by the United States are not deemed part of the law. ANS: F MSC: AACSBAnalytic 26. Uniform State Law generally is not applicable to business. ANS: F MSC: AACSBAnalytic 27. Those uniform state laws that have been adopted by individual states were first written by Congress. ANS: F MSC: AACSBAnalytic 28. Substantive law creates rights and duties. ANS: T MSC: AACSBAnalytic 29. Law may be classified in terms of principles of law and principles of equity. ANS: T MSC: AACSBAnalytic 30. In the United States today, we generally have one law court and one equity court. ANS: F MSC: AACSBAnalytic MULTIPLE CHOICE 1. Law is: a. a body of religious principles held by all members of society. b. a body of principles that society establishes to keep things running smoothly. c. always the result of case-law decisions. 2. 3. 4. 5. 6. 7. d. derived solely from the United States Constitution. ANS: B MSC: AACSBAnalytic Law consists of: a. principles that govern conduct. b. mere guidelines. c. arbitrary rules. d. none of the above. ANS: A TOP: MSC: AACSBAnalytic The law could best be described as: a. only statutory in nature. b. only the creation of our courts. c. a multitude of rights and corresponding duties. d. none of the above. ANS: C Our rights flow from: a. the Constitution. b. federal statutes. c. city ordinances. d. all of the above. ANS: D MSC: AACSBAnalytic MSC: AACSBAnalytic A right can exist: a. by itself. b. only if created by a court. c. only if there is a corresponding duty. d. only under local law. ANS: C MSC: AACSBAnalytic A right is defined as: a. an obligation. b. a legal capacity to require another party to perform. c. any written promise. d. none of the above. ANS: B MSC: AACSBAnalytic Individual rights guaranteed in the United States Constitution: a. have no accompanying duties. b. apply only to a small number of individuals. c. are subject to state legislative laws. d. generally have accompanying duties. 8. 9. 10. 11. 12. 13. Rights guaranteed in the United States Constitution: a. cannot be taken away by statutes or court decisions. b. can be taken away by statutes. c. can be taken away by court decisions. d. can be taken away by local ordinances. ANS: A MSC: AACSBAnalytic The right of privacy consists of: a. the right to be secure against unreasonable searches by the government only. b. the right to protection against intrusions by others only. c. both the right to be secure against unreasonable searches by the government and the right to protection against intrusions by others. d. none of the above. ANS: C MSC: AACSBAnalytic Sheriff Jane desires to search your home. What law requires that the sheriff obtain a search warrant? a. the Fourth Amendment of the United States Constitution b. the Equal Protection Clause c. state statute d. local uniform police ordinances ANS: A MSC: AACSBAnalytic The right to privacy applies to protect you from unreasonable searches: a. to you personally. b. to your home. c. to your business. d. all of the above. ANS: D MSC: AACSBAnalytic Your private life is protected from intrusions by other people by: a. the Fourth Amendment of the United States Constitution. b. the Equal Protection Clause. c. court decisions of the United States Supreme Court. d. local ordinance. ANS: C MSC: AACSBAnalytic Interpretations of aspects of the right to privacy are often found in: a. statutes. b. customs. c. societal guidelines. d. none of the above. ANS: D MSC: AACSBAnalytic 14. 15. 16. 17. 18. 19. Technology: a. has not created situations that require the application of new rules of law. b. has indeed created situations that require the application of new rules of law. c. has done away with the right of privacy. d. has made it easier to identify when one's privacy has been invaded. ANS: B MSC: AACSBAnalytic Several layers of law are enacted at different levels of government to provide the framework for business and personal rights and duties. At the base of this framework of laws is/are: a. statutory law. b. case law. c. constitutional law. d. all of the above. ANS: C MSC: AACSBAnalytic Sources of American law include: a. state constitutions. b. statutes enacted by state legislatures. c. court decisions. d. all of the above. ANS: D MSC: AACSBAnalytic ____ is a body of principles that establishes the structure of a government and the relationship of that government to the people. a. A constitution b. State statute c. Stare decisis d. The common law ANS: A MSC: AACSBAnalytic Statutory law is created by: a. Congress. b. state legislatures. c. local governments. d. all of the above. ANS: D MSC: AACSBAnalytic Administrative regulations: a. are essentially industry advisories. b. are case-law precedents. c. have the force of statute. ANS: A MSC: AACSBAnalytic 20. 21. 22. 23. 24. d. are Constitutional principles. ANS: C MSC: AACSBAnalytic Legal principles expressed for the first time in court decisions are called: a. statutory law. b. stare decisis. c. common law. d. precedent. ANS: D MSC: AACSBAnalytic Statutes which are drafted from Uniform State Laws are often used to regulate: a. business. b. foreign countries. c. criminal behavior. d. none of the above. ANS: A MSC: AACSBAnalytic Uniform State Laws are used as a basis for laws by which of the following entities? a. Congress b. international trade associations c. state legislatures d. local governmental entities ANS: C MSC: AACSBAnalytic Substantive law: a. specifies the steps to follow to enforce legal rights. b. concerns equitable relief only. c. creates, defines, and regulates rights and duties. d. draws solely on English legal principles. ANS: C MSC: AACSBAnalytic Laws can be classified in terms of: a. Roman and English law. b. substantive and procedural law. c. law and equity. d. all of the above. ANS: D MSC: AACSBAnalytic CASE 1. Jacob just won the state lottery. Discuss his right to privacy. ANS: Within the context of the Fourth Amendment, Jacob continues to be protected to the same extent he was prior to winning. Regarding his right to be protected from intrusions by others, however, he most likely will have to give up some privacy rights because of his good fortune; that is, although he remains a private citizen, he will not have quite the same degree of privacy protection in this arena as he had before winning the lottery. MSC: AACSBReflectiveThinking|AACSBAnalytic 2. A new state law mandates that all employers must prohibit smoking on employer premises. The law further provides that any employer who allows an employee or a client/ customer to smoke on its premises is subject to a court order requiring the employer to enforce the law. Describe this statute in terms of all possible classification methods. ANS: The law is substantive because it defines rights and liabilities of business owners. The law is also equitable, based on the remedy of specific performance, since it subjects the employer to a court order requiring the employer to actually do something; i.e., forbid smoking on its premises. MSC: AACSBReflectiveThinking|AACSBAnalytic Chapter 2—THE COURT SYSTEM AND DISPUTE RESOLUTION TRUE/FALSE 1. The power of a court to decide certain types of cases is called jurisdiction. ANS: T MSC: AACSBAnalytic 2. All courts have original jurisdiction. ANS: F MSC: AACSBAnalytic 3. A court with limited jurisdiction can only hear certain types of cases. ANS: T MSC: AACSBAnalytic 4. Reversible errors are commonly made by supreme courts. ANS: F MSC: AACSBAnalytic 5. The federal court system consists of three levels. ANS: T MSC: AACSBAnalytic 6. All federal courts are expressly created by the United States Constitution. ANS: F MSC: AACSBAnalytic 7. The United States Supreme Court can never function as a court of original jurisdiction. ANS: F MSC: AACSBAnalytic 8. A probate court is an example of a general trial court. ANS: F MSC: AACSBAnalytic 9. A family law court is an example of a specialty court. ANS: T MSC: AACSBAnalytic 10. State supreme courts generally hear all cases appealed to them. ANS: F MSC: AACSBAnalytic 11. The defendant in a civil case is the party who is suing. ANS: F MSC: AACSBAnalytic 12. To begin a lawsuit, both parties must appear in person and state their claims and defenses in court. ANS: F MSC: AACSBAnalytic 13. If questions of fact are involved, the court will decide the case based on the pleadings alone. ANS: F MSC: AACSBAnalytic 14. Documents filed by both parties at the beginning of a lawsuit are called the pleadings. ANS: T MSC: AACSBAnalytic 15. Depositions are usually taken in the courtroom. ANS: F MSC: AACSBAnalytic 16. A peremptory challenge to a prospective juror generally can be exercised without giving a reason. ANS: T MSC: AACSBAnalytic 17. A motion for a directed verdict occurs immediately after the last pleading is filed. ANS: F MSC: AACSBAnalytic 18. Once a lawsuit is commenced, the case must go to the jury. ANS: F MSC: AACSBAnalytic 19. Generally, the prevailing party in a lawsuit will be awarded the costs of the action, including witness fees and jury fees. ANS: T MSC: AACSBAnalytic 20. Garnishment is a procedure accomplished only by attorneys. ANS: F MSC: AACSBAnalytic 21. Mediation is a generally accepted method of resolving disputes. ANS: T MSC: AACSBAnalytic 22. Arbitration procedures occur in a court of law. ANS: F MSC: AACSBAnalytic 23. The Uniform Arbitration Act requires a written agreement to arbitrate an issue. ANS: T MSC: AACSBAnalytic 24. When arbitration is mandatory under a statute, the losing party generally can appeal from such arbitration to a court. ANS: T MSC: AACSBAnalytic 25. A mediator has the power to actually make a decision in a dispute. ANS: F MSC: AACSBAnalytic 26. Mediation tends to keep discussions between parties proceeding. ANS: T MSC: AACSBAnalytic 27. If there is a reference to a third party to determine a dispute, most often the loser is not allowed to appeal the third party's decision. ANS: T MSC: AACSBAnalytic 28. A "rent-a-judge" serves as a referee. ANS: T MSC: AACSBAnalytic 29. A person who hears summary jury trials is called an ombudsman. ANS: F MSC: AACSBAnalytic 30. The Seventh Amendment to the United States Constitution provides for a federal ombudsman. ANS: F MSC: AACSBAnalytic MULTIPLE CHOICE 1. 2. A court is a tribunal established by: a. the parties to a lawsuit. b. the government. c. the parties to a contract. d. none of the above. ANS: B MSC: AACSBAnalytic The power given to courts to hear certain types of cases is called: 3. 4. 5. 6. 7. 8. a. jurisdiction. b. mediation. c. arbitration. d. summary judgment. ANS: A MSC: AACSBAnalytic Original jurisdiction courts are generally what type of courts? a. supreme courts b. appellate courts c. trial courts d. limited courts ANS: C MSC: AACSBAnalytic An example of limited or special jurisdiction courts would include: a. probate courts. b. juvenile courts. c. equity courts. d. all of the above. ANS: D MSC: AACSBAnalytic The federal court system consists of ____ level(s) of courts. a. one b. two c. three d. four ANS: C MSC: AACSBAnalytic The types of civil cases that can be brought in federal district courts include: a. the probate of an estate. b. cases between citizens of different states that involve damages of $75,000 or more. c. cases brought by the citizen of one state against the state government of the same state. d. none of the above. ANS: B MSC: AACSBAnalytic The United States Supreme Court was created by: a. Congress. b. the President. c. the Uniform State Law Commission. d. none of the above. ANS: D MSC: AACSBAnalytic State supreme courts primarily have what type of jurisdiction? a. appellate 9. 10. 11. 12. 13. 14. b. limited trial court c. general d. none of the above ANS: A MSC: AACSBAnalytic The person who initiates a lawsuit is called the: a. defendant. b. moving party. c. plaintiff. d. none of the above. ANS: C MSC: AACSBAnalytic "Service of process" refers to: a. a demand letter sent by the plaintiff to the defendant. b. a reply sent to the plaintiff by the defendant. c. giving the defendant proper notice that a legal action is pending. d. a record of the court's preliminary hearing. ANS: C MSC: AACSBAnalytic The answer to the complaint is filed by the: a. defendant. b. moving party. c. plaintiff. d. none of the above. ANS: A MSC: AACSBAnalytic A motion to dismiss a lawsuit on the basis that, even if everything in the complaint were true, the plaintiff would not be entitled to relief is called a motion: a. to compel b. to dismiss c. for summary judgment d. none of the above ANS: B MSC: AACSBAnalytic Who is entitled to file a motion to dismiss? a. defendant only b. plaintiff only c. both plaintiff and defendant d. none of the above ANS: A MSC: AACSBAnalytic A deposition: a. is the testimony of a witness taken under oath. 15. 16. 17. 18. 19. 20. b. is conducted outside of the courtroom. c. can be used to impeach a witness. d. all of the above. ANS: D MSC: AACSBAnalytic Voir dire examination is used in connection with: a. determining whether the pleadings are valid. b. jury selection. c. deciding whether to appeal a trial court decision. d. none of the above. ANS: B MSC: AACSBAnalytic The _____ rule(s) on the admissibility of evidence. a. judge b. jury c. attorneys d. court clerk ANS: A MSC: AACSBAnalytic A motion for a directed verdict is appropriate: a. immediately after the pleadings are filed. b. immediately after discovery is concluded. c. immediately after the presentation of all evidence at trial. d. on appeal. ANS: C MSC: AACSBAnalytic One of the motions that can be made after a verdict has been entered is a motion for a: a. voluntary nonsuit. b. compulsory nonsuit. c. directed verdict. d. judgment notwithstanding the verdict. ANS: D MSC: AACSBAnalytic Costs generally are awarded to the prevailing party in litigation. Those costs usually include: a. filing fees. b. service-of-process fees. c. deposition transcript costs. d. all of the above. ANS: D MSC: AACSBAnalytic Garnishment applies to the judgment debtor’s: a. wages. b. attorney fees. 21. 22. 23. 24. 25. c. land and home. d. cars. ANS: A MSC: AACSBAnalytic Which is not considered an alternate means of dispute resolution? a. civil lawsuit b. arbitration c. association tribunals d. minitrial ANS: A MSC: AACSBAnalytic In mediation, the mediator acts as a: a. judge. b. attorney. c. messenger. d. expert witness. ANS: C MSC: AACSBAnalytic A summary jury trial is: a. binding on the parties. b. a mock trial. c. a full and complete hearing of all evidence pertaining to the case. d. a shortcut to establishing judicial precedent. ANS: B MSC: AACSBAnalytic In a minitrial: a. only three jurors are used. b. the trial addresses only portions of the case or certain issues related to the case. c. the decision is always fully binding on the parties. d. none of the above. ANS: B MSC: AACSBAnalytic An ombudsman: a. is usually a government official. b. is often appointed by a judge. c. receives a large amount of judicial power. d. none of the above. ANS: A MSC: AACSBAnalytic CASE 1. Chandra sues Martin for breach of contract. Both parties have completed discovery. Chandra now wants her attorney to file a motion to have the judge rule in her favor without having to proceed further. Chandra does not know whether the motion to dismiss or the motion for a summary judgment is proper. Which motion is proper and why? ANS: As between the motion to dismiss and the motion for summary judgment, Chandra’s attorney should file a motion for summary judgment, since the parties are beyond the pleadings stage of litigation, and since they have completed discovery. Using evidence gathered during discovery, such as affidavits and/or deposition testimony, Chandra’s attorney could argue that there are no material issues of fact disputed by the parties, and that Chandra is entitled to judgment as a matter of law. MSC: AACSBReflectiveThinking|AACSBAnalytic 2. Billy has a dispute with Sleepdigit Bedspring Company over a number of beds Billy recently purchased from Sleepdigit for use in his hotel. Billy needs to decide whether to pursue litigation or employ an alternative means of dispute resolution. What advantages are most often associated with alternative dispute resolution? Which choice would be most appropriate in this case? ANS: The most frequently cited advantages of alternative dispute resolution, compared to litigation, are a) cost savings and b) time savings. As far as a specific method of alternative dispute resolution, arbitration might be the best approach for Billy in his commercial dispute with Sleepdigit; in addition to the cost-saving and time-saving advantages of alternative dispute resolution, arbitration has a long history of success in the area of commercial contracts. MSC: AACSBReflectiveThinking|AACSBAnalytic Chapter 3—BUSINESS ETHICS, SOCIAL FORCES, AND THE LAW TRUE/FALSE 1. Ethics is a philosophical concept that deals with values related to the nature of human conduct. ANS: T MSC: AACSBAnalytic 2. The field of business ethics recognizes that social values typically must yield to the profitability motive. ANS: F MSC: AACSBAnalytic 3. Moral standards based on positive law may allow businesses to conduct themselves unfairly so long as their actions are not illegal. ANS: T MSC: AACSBAnalytic 4. Civil disobedience is the remedy natural law proponents use to change positive law. ANS: T MSC: AACSBAnalytic 5. Situational ethics is a moral system whose rigidity makes it unnecessary to examine motivation behind conduct in order to label it right or wrong. ANS: F MSC: AACSBAnalytic 6. In applying the stakeholder model of business ethics, only the interests of important constituencies affected by an action need to be satisfied. ANS: F MSC: AACSBAnalytic 7. There is often a conflict between the goal of making money for shareholders and the goal of solving social problems through business. ANS: T MSC: AACSBAnalytic 8. In addition to issues of social responsibility, business values and ethics play an important role in the success or failure of a business. ANS: T MSC: AACSBAnalytic 9. Trust is a fundamental basis of the capitalist system that is central to the expectations of investors, customers, and other firm stakeholders. ANS: T MSC: AACSBAnalytic 10. Ethical conduct is desirable but not necessary; business should be conducted through sole reliance on positive law and its enforcement in the courts. ANS: F MSC: AACSBAnalytic 11. Economic growth tends to be fastest among developing countries where payments to key administrators can increase transaction efficiency. ANS: F MSC: AACSBAnalytic 12. Unfortunately, there is no evidence that commitment to ethical values is linked with financial performance of business organizations. ANS: F MSC: AACSBAnalytic 13. Evidence suggests that there may be relationships among ethical customer and employee relations and long-term ability to pay dividends. ANS: T MSC: AACSBAnalytic 14. Ethical violations can cause lasting detriment to a company's ability to do business through impacts on the company's reputation. ANS: T MSC: AACSBAnalytic 15. An accumulation of complaints from employees, customers, or investors can lead to imposition of restrictive new regulations and laws. ANS: T MSC: AACSBAnalytic 16. Unwillingness of businesses to voluntarily improve the ethics of their practices has little practical effect on the regulatory environment. ANS: F MSC: AACSBAnalytic 17. Under United States law, the legal owner (titleholder) of property is free to engage in any use of the property that he or she may desire. ANS: F MSC: AACSBAnalytic 18. Both freedom from political domination and freedom from economic domination are personal rights protected under United States law. ANS: T MSC: AACSBAnalytic 19. Individual intentions, as expressed in contracts and wills, will not be given effect in the United States unless expressly authorized by law. ANS: F MSC: AACSBAnalytic 20. Protection against fraud and exploitation are found both in securities laws and Food and Drug Administration regulations. ANS: T MSC: AACSBAnalytic 21. Regulation of the Federal Reserve system, negotiable instruments, and installment credit transactions are designed largely to facilitate trade. ANS: T MSC: AACSBAnalytic 22. The often competing rights of both debtors and creditors are balanced and protected from excesses under United States law. ANS: T MSC: AACSBAnalytic 23. Mortgages, security interests, and surety relationships are legal mechanisms created primarily to promote stability and flexibility in trade. ANS: F MSC: AACSBAnalytic 24. Escape clauses are mechanisms created to promote flexibility in the administration of laws that appear unfair in particular circumstances. ANS: T MSC: AACSBAnalytic 25. A tenant's interest in fundamental fairness might outweigh the landlord's interest in freedom of trade. ANS: T MSC: AACSBAnalytic 26. United States common law requires that case precedents be followed under all circumstances. ANS: F MSC: AACSBAnalytic 27. Despite the importance of ethical behavior for business success, few Fortune 500 companies have codes of ethics to resolve ethical dilemmas. ANS: F MSC: AACSBAnalytic 28. Differences among businesses preclude the development of any universal categories of ethical behavior. ANS: F MSC: AACSBAnalytic 29. Over half of all Fortune 500 firms train their employees to recognize and deal with particular types of behavior that breach their ethical codes. ANS: T MSC: AACSBAnalytic 30. Recognizing that an ethical dilemma exists is usually far more difficult than resolving the dilemma once its existence is recognized. ANS: F MSC: AACSBAnalytic MULTIPLE CHOICE 1. Among the guidelines for balancing the interests of various stakeholders to resolve ethical dilemmas in business are: a. identify potential parties who could be injured by the proposed action. b. define the problem from both the decision maker's and opposing viewpoints. c. ask whether you would be willing to describe a proposed action to your family, the board of directors, a congressional hearing, or other public forum. d. all of the above. ANS: D MSC: AACSBAnalytic The importance of trust as a fundamental principle underlying business transactions is illustrated by expectations that: a. investors will be able to earn a return on their investments. b. employees may be discharged at any time for any reason without notice. c. litigation is inevitable because parties to agreements usually break promises. d. insider trading proves that the economic system underlying business is flawed. ANS: A MSC: AACSBAnalytic Which of the following has been linked with the long-term growth and profitability of business organizations? a. high standards for product quality b. high standards for employee welfare c. high standards for customer service d. all of the above ANS: D MSC: AACSBAnalytic Legislation and government regulations typically are enacted in response to: a. isolated but serious ethical transgressions by businesses. b. ongoing technological changes that make it easier to circumvent old laws. c. widespread abuses of gaps in existing laws that are fundamentally unfair. d. changes in the availability of organizational resources. ANS: C MSC: AACSBAnalytic 2. 3. 4. 5. 6. 7. 8. 9. 10. Voluntary improvements in the fairness and ethics of business behavior are: a. less effective than those brought about by government regulation. b. less costly and intrusive than those brought about by government regulation. c. virtually nonexistent in corporate America. d. more common in third-world countries than in the United States. ANS: B MSC: AACSBAnalytic Laws such as those authorizing tax collection and draft registration exist primarily: a. because they are morally justified. b. to protect individual health and welfare. c. to protect individual property rights. d. to enable the government to continue to function. ANS: D MSC: AACSBAnalytic Laws that prohibit defamation, invasions of privacy, and discrimination exist primarily: a. for protection of the person. b. for protection of public health, safety, and morals. c. for protection of property. d. for protection of the state. ANS: A MSC: AACSBAnalytic Laws that prohibit mislabeling of food, speeding, and sale of alcohol to minors exist primarily: a. for protection of the person. b. for protection of public health, safety, and morals. c. for protection of property. d. for protection of the state. ANS: B MSC: AACSBAnalytic Laws that prohibit theft, operation of a factory in areas zoned residential, and copyright infringement exist primarily: a. for protection of the person. b. for protection of public health, safety, and morals. c. for protection of property. d. for protection of the state. ANS: C MSC: AACSBAnalytic The owner of a factory that releases toxic chemicals into the air and surrounding waterways may be in violation of: a. environmental regulations. b. zoning regulations. c. antitrust regulations. d. all of the above. 11. 12. 13. 14. 15. 16. The passage of federal securities disclosure laws occurred largely as the result of: a. voluntary self-regulation by ethics experts in the securities industry. b. the stock market crash of 1929. c. changes in the international market for securities and negotiable instruments. d. all of the above. ANS: B MSC: AACSBAnalytic The ethical category of integrity and truthfulness is best expressed as maintaining one’s values and principles: a. so long as profits can be maintained. b. so long as the costs are not great. c. unless deviating will go unnoticed. d. despite the consequences or costs. ANS: D MSC: AACSBAnalytic In attempting to fulfill the ethical category of promise-keeping, it is important to avoid multiple conflicting commitments because: a. it will not always be possible to pay dividends. b. promises to pay taxes can only be subordinated to secured debt. c. repeatedly breaking promises will cost a business its reputation in the long run. d. stakeholders will relax their expectations if they know you are overextended. ANS: C MSC: AACSBAnalytic Which of the following situations reflects a possible conflict of interest? a. You offer a company contract to a friend without checking competing bids. b. You hire a relative for a company position although another candidate is more qualified. c. You buy a piece of realty that would be suitable for a planned company project. d. All of the above. ANS: D MSC: AACSBAnalytic The ethical category of fairness is best expressed as: a. Do unto others as you would have them do unto you. b. Let the buyer beware. c. He who laughs last laughs best. d. No harm, no foul. ANS: A MSC: AACSBAnalytic "Primum non nocere" is Latin for: a. Above all, do no harm. b. Let the buyer beware. c. Hear no evil, see no evil, and speak no evil. d. No news is good news. ANS: A MSC: AACSBAnalytic 17. 18. 19. An ethical duty of confidentiality could be breached where: a. information obtained through research of the employer is disclosed. b. customer lists or leads are disclosed to a competitor. c. proprietary information or technology of a business is disclosed. d. all of the above. ANS: D MSC: AACSBAnalytic The Blanchard and Peale three-part test for resolving ethical dilemmas consists of the following questions: a. Is it legal? Is it ethical? Is it moral? b. Is it legal? Is it balanced? How does it make me feel? c. Is it ethical? Is it right? Does it pass the “front page of the newspaper” test? d. Is it right? Is it balanced? Is it fair? ANS: B MSC: AACSBAnalytic In applying the “front-page-of-the-newspaper” test to a contemplated course of conduct one should ask: a. Would I be found criminally liable if this winds up on the front page of the newspaper? b. Would I be liable for monetary damages if this winds up on the front page of the newspaper? c. Would I be willing to have my spouse, friends, and children read about this if it winds up on the front page of the newspaper? d. Would I be able to explain this to the authorities if it winds up on the front page of the newspaper? ANS: C MSC: AACSBAnalytic Which of the following is not a question business ethicist Laura Nash has developed to help businesspeople reach the right decision in ethical dilemmas? a. Have you defined the problem accurately? b. How would you define the problem if you stood on the other side of the fence? c. How did the situation occur in the first place? d. Does your proposed solution to the problem effectively balance the competing objectives of ethical decision-making and corporate profitability? ANS: D MSC: AACSBAnalytic 20. CASE ANS: A MSC: AACSBAnalytic 1. John Harrington operates a business that almost always hires skilled workers who are college graduates; currently, however, his business does have a part-time opening for an unskilled worker. Harrington is considering hiring an uneducated welfare recipient instead of a student from the local university. Apply the "Guidelines for Analyzing a Contemplated Action" to this problem. ANS: From the decision-maker's point of view, there is greater risk in hiring an uneducated welfare recipient instead of a college student. If an uneducated welfare recipient is hired, there may be disruption in the workplace resulting from skilled, educated employees working with an unfamiliar type of co-worker. The value of hiring an uneducated welfare recipient is twofold: First, there may be a greater likelihood of assisting someone with a family (i.e., more individuals would benefit); and, second, the firm would further the current governmental and societal initiative to move individuals from "Welfare to Work." MSC: AACSBReflectiveThinking|AACSBAnalytic 2. Thomas works for an internationally-renowned computer company. As a condition of his employment, Thomas signed a confidentiality agreement, in which he agreed not to disclose any trade secrets of the firm. The company has been researching a new computer advancement, and is on the brink of introducing this product to the buying public. Before the official product release, Thomas is considering offering information related to this new advancement to one of his company’s competitors for a price. What categories of ethical behavior might be impacted by Thomas’ decision to disclose this information to his employer’s competitor? ANS: All of the categories of ethical behavior would be impacted by Thomas’ decision to sell his employer’s proprietary information to a competitor. The categories of ethical behavior include: 1) Integrity and Truthfulness; 2) Promise-Keeping; 3) Loyalty-Avoiding Conflicts of Interest; 4) Fairness; 5) Doing No Harm; and 6) Maintaining Confidentiality. In terms of the first category of ethical behavior, Thomas would compromise his integrity by disclosing corporate trade secrets, and he would be untruthful in the sense that he would violate the confidentiality agreement with his firm in doing so. Second, his promise related to the confidentiality agreement would be broken. Third, selling such proprietary information would be a classic conflict of interest, in the sense that he would be benefiting himself (financially) to the detriment of his employer. Fourth, disclosure would not be fair, as it would breach the confidentiality agreement with his employer and deprive his employer of its diligently-worked-for competitive advantage. Fifth, disclosure would harm his employer and other stakeholders of the firm, since it would deprive the firm of its competitive advantage and the financial benefits of such an advantage. Finally, confidentiality would be violated. MSC: AACSBReflectiveThinking|AACSBAnalytic