Business Ethics Exam 1

Law professor Christopher Stone has argued that the "let-government-do-it" argument is implausible due to limits to what the law can accomplish. Which of the following is one of Stone's points regarding the law's limitations?

Formulating appropriate laws is a difficult task, made more problematic due to the effect of corporate lobbying.

________ rights are considered to be self-evident and universal.

Human

The authors suggest that ethical relativism has certain unsatisfactory implications. Which of the following are included in this category?

If relativism is correct, then there is no such thing as ethical progress.

In the Six Pillars of Character Model, ____________________ is defined as consistency between our stated values and behavior; demonstrating the courage to do the right thing regardless of the costs (a.k.a. moral courage).

Integrity

What did the U.S. Supreme Court decision, First National Bank of Boston v. Bellotti, accomplish?

It defined the free speech right of corporations for the first time.

Which of the following is a common criticism of egoism?

Morality serves to restrain our purely self-interested desires, so egoism could not really be a moral principle.

________ rights reflect the vital interests that human beings have in being free from outside interference.

Negative

(T/F) Externalities are the unintended negative (or in some cases positive) consequences that an economic transaction between two parties can have on some third party.

True

(T/F) In ethics, normative theories propose some principle or principles for distinguishing right actions from wrong actions.

True

(T/F) In theory and practice, law codifies customs, ideals, beliefs, and a society's moral values.

True

(T/F) Justice is frequently held to require that our treatment of people reflect their fundamental moral equality.

True

(T/F) Libertarians would find it immoral and unjust to coerce people to give food or money to the starving.

True

(T/F) Moral standards concern behavior that can be of serious consequence to human welfare.

True

(T/F) Most business observers agree with Berle and Means that, because stock ownership in large corporations is so dispersed, actual control of the corporation has passed to management.

True

(T/F) Our conscience evolved as we internalized the moral instructions of the parents or other authority figures who raised us as children.

True

(T/F) The connection between rights and duties is that, generally speaking, if you have a right to do something, then someone else has a correlative duty to act in a certain way.

True

(T/F) Utilitarian's are likely to be sympathetic to the argument that steps should be taken to reduce the great disparities of income that characterize our society.

True

(T/F) When a utilitarian like Jeremy Bentham advocates "the greatest happiness for the greatest number," we must consider unhappiness or pain as well as happiness.

True

The phrase "the declining marginal utility of money" means that successive additions to one's income produce, on average, less happiness or welfare than did earlier additions.

True

When we find ourselves in an emergency situation and let others around us dictate our response, such behavior is described as:

bystander apathy.

The massive body of judge-made legal principles that accumulated over the years is collectively referred to as:

common law.

Normative theories can be divided into two broad categories of:

consequentialist and nonconsequentialist.

For Rawls, justice must be associated with fairness and the moral equality of persons. His conception of justice is thoroughly social and he conceives of society as a:

cooperative venture among its members.

A(n) ________ action is one which it would be good to do, but not immoral not to do.

supererogatory

For Nozick, social justice is primarily focused on transactions between individuals. What does Rawls believe is the proper focus of social justice?

the basic structure of society

Kant's belief that we should always act in such as a way as to will the maxim of our action to become a universal law is:

the categorical imperative

The CID structure, like an individual person, collects data about the impact of its actions. It monitors work conditions, employee efficiency and productivity, and environmental impacts. Consequently, some argue that:

the corporation can show rationality and respect for persons and hence it makes sense to speak of corporate moral responsibility.

The principle of ________ states that successive additions to one's income produce, on average, less happiness or welfare than earlier additions.

the declining marginal utility of money

Many theologians reject the view that something is wrong only if God commands that it is wrong. This view is called:

the divine command theory.

Under Rawls's principles of justice, people would agree on two basic governing principles: there would be a guarantee of fundamental liberties to each person, and inequities would only be allowed if they benefit:

the least-advantaged members of society.

Ethical behavior in the business world is often assumed to come at the expense of economic efficiency. On the contrary, the authors claim that:

the most morally responsible companies are consistently among the most profitable companies.

Distributive justice is primarily concerned with:

the proper distribution of social benefits and burdens, particularly economic benefits and burdens.

Eminent domain, the right which government reserves to appropriate private property for public use, is morally justified under the utilitarian principle that:

the public interest may be best served by some private expense.

The soundness of moral standards depends on:

the quality of the arguments that support them.

Locke writes, "In the beginning ... men had a right to appropriate, by their labour, each one of himself, as much of the things of nature, as he could use." What did he call this time prior to the formation of government?

the state of nature

(T/F) "Etiquette" designates a special realm of morality.

False

(T/F) A hypothetical imperative tells us to act as we would want everyone to act in that situation.

False

(T/F) A supererogatory act is an act that would be good not to do to, but doing it is not absolutely wrong.

False

(T/F) According to Immanuel Kant, moral reasoning is based on factual knowledge.

False

(T/F) According to Kenneth Arrow, trust and confidence are highly overrated in business.

False

(T/F) An argument is valid only if all its premises are true.

False

(T/F) Ethical egoism says that human beings are, as a matter of fact, so constructed that they must behave selfishly.

False

(T/F) For utilitarian's, justice is an independent moral standard distinct from their general principle.

False

(T/F) If you do the right thing only because you think it will pay off, then you are truly motivated by moral concerns.

False

(T/F) If your conduct is legal, it will also be moral.

False

(T/F) In a broad sense morality is the moral code of an individual or of a society (insofar as the moral codes of the individuals making up that society overlap).

False

(T/F) In his essay "Social Responsibility and Economic Efficiency," Kenneth Arrow has argued that ethical behavior in the business world comes only at the expense of economic efficiency.

False

(T/F) Legally a corporation is a thing that can endure beyond the natural lives of its members and that has incorporators who may sue and be sued as a unit and who are able to consign part of their property to the corporation for ventures of limited liability.

False

(T/F) Organizational norms always and inevitably lead to groupthink.

False

(T/F) Rawls's theory of distributive justice is a form of utilitarianism.

False

(T/F) Richard Brandt defends a form of act utilitarianism.

False

(T/F) Robert Nozick uses the Wilt Chamberlain story to show the importance of economic re-distribution.

False

(T/F) Rules of etiquette are always moral rules.

False

(T/F) The business-cannot-handle-it argument is an argument in favor of a broad view of corporate responsibility.

False

(T/F) The case of First National Bank of Boston v. Bellotti sharpened the legal distinction between corporations and individuals.

False

(T/F) The idea that corporations will impose their values on us supports one of the arguments for the narrow view of corporate social responsibility.

False

(T/F) The invisible-hand argument against broadening corporate responsibility says that business's appetite for profit should be controlled by the hand of the government.

False

(T/F) What society finds to be useful and desirable always brings profitability to companies.

False

(T/F)Enron executives acted wrongly simply because they broke the law.

False

In the 1960s, Kitty Genovese, a young woman, was stabbed to death. Even though this occurred at 3:00 AM, 38 of her neighbors heard what was going on, came to their windows and remained there for 30 or more minutes while she was brutalized, and failed to intervene or call the police. Based on these facts, which of the following statements is true?

According to your authors, this is an example of both the phenomenon called bystander apathy and the concept of diffusion of responsibility.

The argument that the greater good of society would be served if business is allowed to pursue its self-interest was put forth by:

Adam Smith

Which of the following is the correct relation between legal and moral standards?

An action may be legal and morally wrong, or illegal and morally right.

Philosophers who argue that the moral rightness of an action is determined solely by its results are called:

Consequentialists.

The structure used by corporations to accomplish specific goals is called the:

Corporate Internal Decision (CID) structure.

________ is the view that liberty is the prime value and justice consists in permitting each person to live as he or she pleases.

Libertarianism

In the Six Pillars of Character Model, ____________________ is defined as a special moral responsibility to promote and protect the interests of certain people, organizations, etc.

Loyalty

Which of the following is a feature that distinguishes corporations from partnerships?

The members of the corporation are financially liable for the debts of the organization only up to the extent of their investments.

Libertarians tend to support the free market. What reason best explains this support?

This commitment reflects the priority of liberty over other values.

Based on the following argument, which of the following statements is true? Argument: If a person is a mother, the person is a female. Fran is a two-year-old. Therefore, Fran is a mother.

This is an invalid argument only.

Based on the following argument, which of the following statements is true? Argument: If a person is a mother, the person is a female .Fran is a mother. Therefore, Fran is a female.

This is both a valid argument and a sound argument.

(T/F) "Limited liability" means that members of a corporation are financially liable for corporate debts only up to the extent of their investments.

True

(T/F) A prima facie obligation is an obligation that can be overridden by a more important obligation.

True

(T/F) According to Jeremy Bentham and John Stuart Mill, pleasure is the one thing that is intrinsically good or worthwhile.

True

(T/F) According to John Kenneth Galbraith, business's social role is purely economic and corporations should not be considered moral responsible entities.

True

(T/F) According to John Rawls, people in the original position do not know what social position or status they hold in society.

True

(T/F) According to Melvin Anshen, the case for a broad view of corporate responsibility can be defended on the basis of there always being a kind of social contract existing between business and society.

True

(T/F) According to Milton Friedman, business has no social responsibilities other than to maximize profits.

True

(T/F) According to divine command theory, if something is wrong, then the only reason it is wrong is that God commands us not to do it.

True

(T/F) According to the "maximin" rule, you should select the alternative under which the worst that could happen to you is better than the worst that could happen to you under any other alternative.

True

(T/F) Adherents of the broad view of corporate responsibility claim that modern business is intimately integrated with the rest of society and that, as a result, although society expects business to pursue its economic interests, business has other responsibilities as well.

True

(T/F) An argument is a group of statements, one of which is claimed to follow from the others.

True

(T/F) Companies should look at a code of ethics as more than just window dressing with more than just a vagueness that is so general it lacks substance.

True

(T/F) Distributive justice concerns the morally proper distribution of social benefits and burdens.

True

(T/F) Ethical relativism is the theory that what is right is determined by what a culture or society says is right.

True

Which of the following is a feature of utilitarianism?

When deciding which action will produce the greatest happiness, we must consider unhappiness as well.

With regard to making a distinction between moral and non-moral categories of questions, your ability to download music from the Web is:

a factual question.

According to Mill, injustice differs from other types of wrongful behavior because it involves ________ of some identifiable person.

a violation of rights

Psychological egoism asserts that truly unselfish acts are impossible because:

all actions are in fact self-motivated.

Rawls claims that in the original position, people would follow the maximin rule. This means that one should select the:

alternative in which the worst outcome is better than the worst outcome under any other alternative.

According to Milton Friedman, "The whole justification for permitting corporate executives to be selected by shareholders is that the executive is ________."

an agent serving the interests of his/her principal (the stockholders)

For our purposes, the word "business" means:

any organization whose objective is to provide goods or services for profit.

Rawls supposes that when we imagine people choosing the basic principles of justice in the original position, we should suppose that they do not know their personal fortunes, talents or characteristics. In this sense, the principles are chosen:

behind the veil of ignorance.

W. Brooke Tunstall, an assistant vice president of AT&T, describes ________ as "a general constellation of beliefs, mores, customs, value systems and behavioral norms, and ways of doing business that are unique to each corporation, that set a pattern for corporate activities and actions, and that describe the implicit and emergent patterns of behavior and emotions characterizing life in the organization."

corporate culture

According to the business-cannot-handle-it argument:

corporations lack the necessary expertise for addressing society's well-being and they inevitably impose their own materialistic values on the rest of society.

The phenomenon that sometimes occurs when, within a group, no single individual feels responsible for what happens, is:

diffusion of responsibility.

Albert Carr suggests that, in business, it is sometimes morally permissible to misstate or conceal facts in negotiations and employment applications. Carr's defense of business "bluffing" is an example of:

ethical relativism.

The doctrine that maintains that right and wrong are only a function of what a particular society considers to be right and wrong, is called:

ethical relativism.

Which of the following standards concern special codes of social behavior or courtesy?

etiquette

Assuming that a moral argument is logically valid, one should evaluate the premises as well. This process typically includes:

evaluating the factual claims and challenging the moral standard.

Some philosophers and economists maintain that until corporations identify and assess the cost of possible deleterious side effects of their business activity, the cost of their products will not reflect their true social cost. Those unintended consequences are:

externalities.

According to both the broader and narrow views of corporate responsibility, the managers of a corporation have a(n) ________ to look after the interests of shareholders.

fiduciary responsibility

The paradox of hedonism maintains that people who are exclusively concerned with their own interests are:

generally less happy than those whose desires extend beyond themselves.

A(n) ________ is some morally important goal, virtue or notion of excellence worth striving for.

ideal

According to the invisible-hand argument:

if businesses are permitted to seek self-interest, their activities will inevitably yield the greatest good for society as a whole.

An argument whose premises do not entail its conclusion is:

invalid.

Adam Smith and Alexander Hamilton believed that business people should be encouraged to explore their own avenue of enterprise. By doing so, their activities would aim toward a socially beneficial direction because of the:

invisible hand of the market place.

Under the entitlement theory put forth by Nozick, one can only acquire property justly if it is acquired in accordance with a principle of justice or if:

it is transferred justly by someone who is entitled to it.

In the example given in the text, Frank Furillo's decision to put the criminal at the mercy of an unforgiving public would be deemed morally acceptable according to the standard of act utilitarianism, which maintains that an action is morally acceptable if:

its consequences bring more total good than those of any other alternative course of action.

Corporations have some of the same rights and responsibilities as citizens, including the ability to enter contracts, own property, sue and be sued. In this respect, they are:

legal agents.

Milton Friedman, a proponent of the narrow view of social responsibility, argued that if executives "impose taxes on stockholders and spend the proceeds on social purposes", they are acting:

like civil servants.

The subjective principle of action is called the:

maxim.

John Locke maintained that property is a moral right because individuals are entitled to the product of their labor when they:

mix their labor with the natural world.

The Continental Oil Company (Conoco) booklet that referred to the company as a living corporation, and the Colonial Pipeline apology published in several newspapers, are both statements that support the view of corporations as:

moral agents.

The process of moral reasoning or argument moves from a:

moral standard through factual judgments to a moral judgment.

Milton Friedman is skeptical of corporate activities that he believes are disguised as socially responsible acts. For him, the only responsibility of business is to maximize profits. His view of corporate responsibility is described as the:

narrow view.

Libertarians believe that:

one is entitled to whatever he receives in a free market.

The moral beliefs that we hold after we have made a conscientious effort to think coolly, clearly, rationally, and impartially about moral issues are described as:

our considered beliefs.

Nozick's entitlement theory maintains that:

people are entitled to their holdings as long as they have acquired them fairly.

A(n) ________ obligation is one which can be overridden by a more important obligation.

prima facie

According to utilitarianism, a just economic distribution:

promotes social well-being or happiness.

For a utilitarian, ________ are certain moral rules, the observance of which is of the utmost importance for the long-run, overall maximization of happiness.

rights

Rawls's strategy for seeking justice is to determine the fundamental principles that would govern society if we were to meet in what he calls the original position. His theory is a modern variant of:

social contract theory.

Advocates of the broader view of corporate social responsibility maintain that businesses have an obligation to society because:

social responsibility arises from their social power.

The let-government-do-it argument rejects the broader view of corporate responsibility:

suggesting instead that the strong hand of government, through a system of laws and incentives, can and should bring corporations to heel.

When a conflict exists between principles of justice, John Stuart Mill maintained that the ultimate court of appeal should be:

the utilitarian standard

Good Samaritan Laws are designed to give legal protection to those who provide emergency aid to others out of a purely humanitarian impulse. For Kant, such acts of good will only have moral worth if:

they spring from a recognition of duty and a choice to discharge it.

The first corporations were:

towns, universities and ecclesiastical orders.

The moral doctrine that we should always act to produce the greatest possible balance of good over bad for everyone affected by our actions is:

utilitarianism

The term "property rights" according to Libertarians refers to the principle that:

what you have legitimately acquired is yours to do with as you will.

The primary feature that distinguishes egoism from utilitarianism is:

whether one considers the consequences only for oneself or for everyone affected.