LES 305 Exam 1 Prep UPDATED Exam
Questions and CORRECT Answers
Compliance with the law meets all ethical standards. (T/F) - CORRECT ANSWER - False
I was just following orders" is a defense in law and a test for ethical behavior (T/F) - CORRECT
ANSWER - False
Many companies that had been headquartered in the United States have decided to conduct
corporate inversions, in which they sell their assets to a foreign corporation so they can claim a
new residence in that country for corporate tax purposes and avoid paying corporate taxes in the
United States. This action is permissible under which school of social responsibility? -
CORRECT ANSWER - inherence school
Many companies that had been headquartered in the United States have decided to conduct
corporate inversions, in which they sell their assets to a foreign corporation so they can claim a
new residence in that country for corporate tax purposes and avoid paying corporate taxes in the
United States. With respect to the corporate inversions described above, they are permissible
under which ethical theory? - CORRECT ANSWER - ethical egoism
Which question is missing from this model of the steps for analyzing ethical dilemmas in your
book?
i.Gather the facts
.ii.List missing information and your assumptions
.iii.Generate list of alternatives and apply ethical decision-making models
.iv.Evaluate resolutions for cost, legality and impact.
v.Recommend and take action. - CORRECT ANSWER - List each stakeholder's interests
(concerns) in the dilemma
Is there an ethical issue when restaurants and shops give customers discounts, free meals and
other kickbacks in exchange for good reviews on Yelp and other social media websites?a. No.
,Everyone else is doing it, so there is no problem. - CORRECT ANSWER - Yes. This
creates a conflict of interest on behalf of the reviewer customers
When you are in a situation like the one described in the question above and you believe that you
won't be influenced by any type of reward because you are more ethical than most people, you
are being influenced by which of the following? - CORRECT ANSWER - Overconfidence
bias
When you are in a situation like the one described in the question above and you don't want to
have to forfeit this incentive, you are being influenced by which of the following? - CORRECT
ANSWER - Loss aversion
Lawyers will often complain that their clients tend to describe their behavior in a way that is very
favorable to themselves, rather than telling the entire truth about a situation in an objective
manner. This distortion of the truth can be influenced by which of the following? - CORRECT
ANSWER - Self-serving bias
When large hedge funds look at the issue with Robinhood and GameStop as a "business
problem" rather than an "ethical problem", they are demonstrating which of the following? -
CORRECT ANSWER - Framing
You are waiting by the trolley tracks in your neighborhood when you notice that a runaway
trolley car is racing toward five people who don't see it. They will very likely die if no one stops
the trolley. You are standing by a lever and you can see that if you pull the lever, the trolley will
be diverted to a different track, saving the five people. However, there is one person on that
trolley track who will likely be killed if you divert the trolley. You are acting ethically under
which theory? - CORRECT ANSWER - Utilitarianism
Committing acts of personal decadence, like driving home drunk after an office holiday party has
no relevance to business ethics (T/F) - CORRECT ANSWER - False
Tolerating someone else's unethical actions is not an ethical dilemma since you did not actually
commit any act that is unethical. (T/F) - CORRECT ANSWER - False
,The Ice-T case illustrates what can happen when managers don't take shareholders interests into
account when making business decisions (T/F) - CORRECT ANSWER - True
Cheating on exams is acceptable because
a. "It is not illegal."
b. "It doesn't really hurt anyone."
c. "The system is unfair."
d. None of the above because all are rationalizations. - CORRECT ANSWER - d. None of
the above because all are rationalizations.
Which of the categories of ethical dilemmas should you be concerned about when you have an
arbitration clause in your employment contract and your employer is the one paying the
arbitration fees? - CORRECT ANSWER - Engaging in a conflict of interest
Which of the following is not among the categories of ethical dilemmas according to your
textbook?
a. taking things that do not belong to you
b. giving or allowing false impressions
c. perpetrating interpersonal abuse
d. All of the above are ethical breaches.* - CORRECT ANSWER - d. All of the above are
ethical breaches.*
The "front page of the newspaper test": - CORRECT ANSWER - uses the perspective of a
reporter who is reporting impartially
Laura Nash would ask
a. "How would I view the problem if I sat on the other side of the fence? "
b. "How did the situation arise in the first place?"
c. "Who does the action or decision injure?"
d. "Will I feel as comfortable over the long term as I do today?"
, e. All of the above - CORRECT ANSWER - e. All of the above
Enron Corporation filed for bankruptcy following a number of revelations about its accounting
procedures. Enron used a complex structure of corporations and off-the-books debt to mask its
true financial picture from the markets. When asked about the propriety of Enron's reporting
methods, many analysts have responded, "They simply did what most corporations do." Their
comments: - CORRECT ANSWER - reflect rationalization
Please refer to the question above. Enron's failure to disclose its off-the-book debts was legal in
many instances. Which of the following ethical categories do you think apply to that type of
financial reporting?
a. balancing ethical dilemmas
b. giving or allowing a false impression
c. taking unfair advantage
d. both b and c
e. none of the above - CORRECT ANSWER - d. both b and c
Which of the following is not a potential consequence of poor ethical choices by company?
a. loss of reputation
b. loss of earning power
c. additional regulation
d. All of the above are potential consequences of poor ethical choices. - CORRECT
ANSWER - d. All of the above are potential consequences of poor ethical choices.
Which of the following statements is true about an ethical business? - CORRECT
ANSWER - It will avoid the consequences of unethical behavior
Which of the following is a question in Laura Nash's test for ethical behavior?
a. "Does it violate the company's code of conduct?"
b. "Are others in my industry doing the same thing?"
Questions and CORRECT Answers
Compliance with the law meets all ethical standards. (T/F) - CORRECT ANSWER - False
I was just following orders" is a defense in law and a test for ethical behavior (T/F) - CORRECT
ANSWER - False
Many companies that had been headquartered in the United States have decided to conduct
corporate inversions, in which they sell their assets to a foreign corporation so they can claim a
new residence in that country for corporate tax purposes and avoid paying corporate taxes in the
United States. This action is permissible under which school of social responsibility? -
CORRECT ANSWER - inherence school
Many companies that had been headquartered in the United States have decided to conduct
corporate inversions, in which they sell their assets to a foreign corporation so they can claim a
new residence in that country for corporate tax purposes and avoid paying corporate taxes in the
United States. With respect to the corporate inversions described above, they are permissible
under which ethical theory? - CORRECT ANSWER - ethical egoism
Which question is missing from this model of the steps for analyzing ethical dilemmas in your
book?
i.Gather the facts
.ii.List missing information and your assumptions
.iii.Generate list of alternatives and apply ethical decision-making models
.iv.Evaluate resolutions for cost, legality and impact.
v.Recommend and take action. - CORRECT ANSWER - List each stakeholder's interests
(concerns) in the dilemma
Is there an ethical issue when restaurants and shops give customers discounts, free meals and
other kickbacks in exchange for good reviews on Yelp and other social media websites?a. No.
,Everyone else is doing it, so there is no problem. - CORRECT ANSWER - Yes. This
creates a conflict of interest on behalf of the reviewer customers
When you are in a situation like the one described in the question above and you believe that you
won't be influenced by any type of reward because you are more ethical than most people, you
are being influenced by which of the following? - CORRECT ANSWER - Overconfidence
bias
When you are in a situation like the one described in the question above and you don't want to
have to forfeit this incentive, you are being influenced by which of the following? - CORRECT
ANSWER - Loss aversion
Lawyers will often complain that their clients tend to describe their behavior in a way that is very
favorable to themselves, rather than telling the entire truth about a situation in an objective
manner. This distortion of the truth can be influenced by which of the following? - CORRECT
ANSWER - Self-serving bias
When large hedge funds look at the issue with Robinhood and GameStop as a "business
problem" rather than an "ethical problem", they are demonstrating which of the following? -
CORRECT ANSWER - Framing
You are waiting by the trolley tracks in your neighborhood when you notice that a runaway
trolley car is racing toward five people who don't see it. They will very likely die if no one stops
the trolley. You are standing by a lever and you can see that if you pull the lever, the trolley will
be diverted to a different track, saving the five people. However, there is one person on that
trolley track who will likely be killed if you divert the trolley. You are acting ethically under
which theory? - CORRECT ANSWER - Utilitarianism
Committing acts of personal decadence, like driving home drunk after an office holiday party has
no relevance to business ethics (T/F) - CORRECT ANSWER - False
Tolerating someone else's unethical actions is not an ethical dilemma since you did not actually
commit any act that is unethical. (T/F) - CORRECT ANSWER - False
,The Ice-T case illustrates what can happen when managers don't take shareholders interests into
account when making business decisions (T/F) - CORRECT ANSWER - True
Cheating on exams is acceptable because
a. "It is not illegal."
b. "It doesn't really hurt anyone."
c. "The system is unfair."
d. None of the above because all are rationalizations. - CORRECT ANSWER - d. None of
the above because all are rationalizations.
Which of the categories of ethical dilemmas should you be concerned about when you have an
arbitration clause in your employment contract and your employer is the one paying the
arbitration fees? - CORRECT ANSWER - Engaging in a conflict of interest
Which of the following is not among the categories of ethical dilemmas according to your
textbook?
a. taking things that do not belong to you
b. giving or allowing false impressions
c. perpetrating interpersonal abuse
d. All of the above are ethical breaches.* - CORRECT ANSWER - d. All of the above are
ethical breaches.*
The "front page of the newspaper test": - CORRECT ANSWER - uses the perspective of a
reporter who is reporting impartially
Laura Nash would ask
a. "How would I view the problem if I sat on the other side of the fence? "
b. "How did the situation arise in the first place?"
c. "Who does the action or decision injure?"
d. "Will I feel as comfortable over the long term as I do today?"
, e. All of the above - CORRECT ANSWER - e. All of the above
Enron Corporation filed for bankruptcy following a number of revelations about its accounting
procedures. Enron used a complex structure of corporations and off-the-books debt to mask its
true financial picture from the markets. When asked about the propriety of Enron's reporting
methods, many analysts have responded, "They simply did what most corporations do." Their
comments: - CORRECT ANSWER - reflect rationalization
Please refer to the question above. Enron's failure to disclose its off-the-book debts was legal in
many instances. Which of the following ethical categories do you think apply to that type of
financial reporting?
a. balancing ethical dilemmas
b. giving or allowing a false impression
c. taking unfair advantage
d. both b and c
e. none of the above - CORRECT ANSWER - d. both b and c
Which of the following is not a potential consequence of poor ethical choices by company?
a. loss of reputation
b. loss of earning power
c. additional regulation
d. All of the above are potential consequences of poor ethical choices. - CORRECT
ANSWER - d. All of the above are potential consequences of poor ethical choices.
Which of the following statements is true about an ethical business? - CORRECT
ANSWER - It will avoid the consequences of unethical behavior
Which of the following is a question in Laura Nash's test for ethical behavior?
a. "Does it violate the company's code of conduct?"
b. "Are others in my industry doing the same thing?"
