BA 3010 Multiple Choice Exam 2

Like other federal agencies, the Environmental Protection Agency may obtain information concerning activities and organizations that it oversees by issuing a. A complaint b. A rule c. A subpoena d. A judgment

. C. Agencies may obtain information through, subpoenas or searches. A subpoena may compel the appearance of a witness (a subpoena ad testificandum) the provision of certain documents and records (a subpoena duces tecum). In some cases, particularly searches of businesses involved in a highly regulated industry, searches may be conducted without warrants

3. In resolving an ethical problem, in most cases a decision by Oil Production Services, or any business firm, will have a negative effect on a. One group as opposed to another b. The firm's competitors c. The government d. None of these choices

A. A corporation, for example, as an employer, commonly faces ethical problems that involve conflicts among itself, its employees, its customers, its suppliers, its shareholders, its community, or other groups. Increasing wages, for instance, may benefit the employees and the community, but reduce prof its and the ability of the employer to give pay increases in the future, as well as decreasing dividends to shareholders. To be considered socially responsible, when making a decision, a business firm must take into account the interests of all of these groups, as well as society as a whole

High Sierra Lumber Company, a U.S. firm, signs a contract with Iza, Ltd., a Japanese company, to give Izo the right to sell High Sierra's products in Japan. This is a. A distribution agreement b. A joint venture c. Direct exporting d. Licensing

A. A distribution agreement in this context is a contract between a seller and a distributor to dis tribute the seller's products in the distributor's country. Such an agreement sets out the terms and conditions of the distributorship price, currency of payment, availability of supplies, method of payment, and so on.

Paige, a congressperson, believes a new federal agency is needed to oversee the consumer lending industry. Congress has the power to establish an agency with functions that include a. Adjudication b. Prevarication c. Qualification d. Regurgitation

A. Agency powers include functions associated, with the legislature (rulemaking), executive branch (investigation), and courts (adjudication). Under Article I of the U.S. Constitution and the delegation doctrine, Congress has the power to establish administrative agencies and delegate any or all of these powers to those agencies

The First Amendment protects Nancy and others from a. Dissemination of obscene materials and speech that harms their good reputations or violates state criminal laws b. Dissemination of obscene materials only c. Speech that harms their good reputations or violated criminal laws only d. Neither dissemination of obscene materials nor speech that harms their good reputations or violates state criminal laws.

A. Dissemination of obscene materials is a crime. Speech that harms the good reputation of another, or defamatory speech, is not protected under the First Amendment. "Fighting words," which are words that are likely to incite others to respond with violence, are not constitutionally protected.

A Harbor City ordinance restricts most vendors from doing business in a heavily trafficked area. This might be upheld under constitutional provisions covering a. Equal protection b. Procedural due process c. Substantive due process d. The right to privacy

A. Equal protection means that the government must treat similarly situated individuals in a similar manner. The equal protection clause of the Fourteenth Amendment applies to state and local governments, and the due process clause of the Fifth Amendment guarantees equal protection by the federal government. Generally, a law regulating an economic matter is considered valid if there is a "rational basis" on which the law related to a legitimate government interest.

United Oil, Inc., is a U.S. firm, doing business in the United States and in other nations, including Venezuela. Venezuela seizes the property of United Oil, without paying just compensation. This is a. Confiscation b. Dumping c. Licensing d. An expropriation

A. Generally observed legal principles of international law are violated by a confiscation. Expropriation, which is a taking of property for a proper I public purpose and with the payment of just compensation, does not violate these principles.

Reba, an employee of Sterling Credit Bank, takes an outcome-base approach to ethics. With this approach, Reba believes that she must a. Achieve the greatest good for the most people b. Avoid unethical behavior regardless of the consequences c. Conform to society's standards d. Place Sterling Credit's interests first

A. In contrast to duty-based ethics, outcome based ethics (utilitarianism) involves a consideration of the consequences of an action. Utilitarianism is premised on acting so as to do the greatest good for the greatest number of people

5. Stefanie, the president of Thruway Trucking, Inc., tries to ensure that Thruway's actions are legal and ethical. To ensure this result, the best course of Stefanie and Thruway is to act in a. Good faith b. Ignorance of the law c. Regard for the firm's shareholders only d. Their own self interest

A. In part because it is impossible to be entirely aware of what the law requires and prohibits, the best course for a business firm is to act responsibly and in good faith. This course may provide the best defense if a transgression is discovered. Striking a balance between what is profitable and what is legal and ethical can be difficult, however. A failure to act legally or ethically can result in a reduction in prof its, but a failure to act in the profitable interest of ' the firm can also Cause profits to suffer. Optimum profits are the maximum profits that a firm can realize while staying within legal and ethical limits.

Southeast Shipping Company challenges an Alabama statute, claiming that it unlawfully interferes with interstate commerce. A court will likely a. Balance Alabama's interest in regulating the matter against the burden on interstate commerce b. Balance the burden on Alabama against the merit and purpose of interstate commerce c. Strike the statute d. Uphold the statute

A. State statutes that impinge on interstate commerce are not always struct; down, nor are they always upheld. A court will balance a state's interest in regulating a certain matter against the burden that the statute places on interstate commerce. If the statute does not substantially interfere, it will not be held in violation of the commerce clause

A Nevada statute bans business entities from making political contributions that individuals can make. A court would likely hold the statute to be a. An unconstitutional restriction of speech b. Constitutional under the First Amendment c. Justified by the need to protect individuals' rights d. Necessary to protect state interests

A. The First Amendment provides corporations and other business entities with significant protection of their political speech. As another example, a law that forbids a corporation from using inserts in its bills to its customers to express its views on controversial issues would also violate the First Amendment.

7. Treasure Trove, Inc., a U.S. corporation, makes a side payment to the minister of commerce of Tuvalu (an island country in the Pacific Ocean) for a favorable business contract. In the United States, this payment would be considered a. Illegal and unethical b. Illegal only c. Neither illegal nor unethical d. Unethical only

A. The Foreign Corrupt Practices Act prohibits any U.S. firm from bribing foreign officials to influence official acts to provide the firm with business opportunities; Such payments are allowed, however, if they would be lawful in the foreign country. Thus, to avoid violating the law, the firm in this problem should determine whether such payments are legal in the minister's country

The Federal Trade Commission (FTC) issues an order relating to the advertising of Discount Mart, Inc. Discount appeals to order to a court. The court may review whether the FTC's action is a. Arbitrary, capricious, or an abuse of discretion b. Discourteous, disrespectful, or dissatisfying to one or more parties c. Flippant, wanton, or in disregard of social norms d. Impious, non-utilitarian, or in violation of ethical precepts

A. This is the "arbitrary and capricious" test under which acts committed willfully, unreasonable; and without considering the facts can be over turned. (The other choices are not legitimate grounds for judicial review.) A court may also consider whether the agency has- exceeded its authority or violated any constitutional provisions., Depending ' on the circumstances, when a court reviews an act of an administrative agency, the court may also determine whether the agency has properly interpreted laws applicable to the action under review, acted in accord with procedural requirements, or reached conclusions that are not supported by substantial evidence

Mikayla, the CFO of Napoli Pasta Company, adopts religious ethical standards. These involve an element of e. Compassion a. Cost-benefit analysis b. Discretion c. Utilitarianism

A. Under religious ethical standards, it is the nature of an act that determines how ethical the act is, not its consequences. This is considered an ab solute standard. But this, standard is tempered by an element of compassion (the "Golden Rule").

To obtain new computers, Liberia accepts bids from U.S. firms, including Macro Corporation and Micro, Inc. Macro wins the contact. Alleging impropriety in the awarding of the contract, Micro files a suit against Liberia and Macro. The court may decline to hear the suit under a. The act of state doctrine b. The doctrine of sovereign immunity c. The Export Administration Act d. The World Trade Organization

A. Under the act of state doctrine, the judicial branch of one country will not examine the validity of public acts committed by a recognized foreign government within its own territory. The awarding of a government contract under the circumstances described in the problem meets this criterion.

Tristate Business Corporation markets its products in three states. Under the commerce clause, Congress can regulate a. Any commercial activity in the United States b. Only commercial activities that are in interstate commerce c. Only commercial activities that are local d. Only activities that have nothing to do with commerce

A. Under the commerce clause, Congress has the power to regulate every commercial enterprise in the United States.

The U.S. has a common law legal system. Common law systems are based on a. Administrative rules and regulations b. Case law c. Codified law d. Executive pronouncements

B. Although increasingly influenced by codified (statutory) law and in some observers' opinions overwhelmed with administrative rules and regulations, common law legal systems are based on judicial decisions and precedent. Despite this general frame of reference, common law courts in different nations have developed different principles.

The Federal Communications Commission (FCC) publishes a notice of a proposed rule. When comments are received about the rule, the FCC must respond to a. All of the comments b. Any significant comments that bear directly on the proposed rule c. Only comments by businesses engaged in interstate commerce d. Only comments by businesses that will be affected by the rule

B. After an agency publishes notice of a proposed rule, any interested parties can express their views in writing, or orally if a hearing is held. The agency must respond to all significant comments by modifying the final rule or explaining, in the statement accompanying the final rule, why it did not modify the rule in response to the comments

Sol is an administrative law judge (ALJ) for the National Labor Relations Board. In hearing a case, Sol has the authority to make a. Decisions binding on the federal courts b. Determinations of fact c. New laws d. New rules

B. An administrative law judge (ALJ) presides over hearings when cases are brought to the agency. Like other judges, an ALJ has the power to administer baths, take testimony, rule on questions of evidence, and make determinations of fact. It is important to note that an ALJ works for the agency but must not be biased in the agency's favor. There are provisions in the Administrative Procedure Act to prevent the bias, and to otherwise promote the fairness, of the ALJs, for example by prohibiting ex parte comments to the ALJ from any party to the proceeding.

Procedures used in Oklahoma and other states in making decisions to take life, liberty, or property are the focus of constitutional provisions covering a. Equal protection b. Procedural due process c. Substantive due process d. The right to privacy

B. Aspects of the Fifth and Fourteenth Amendments that cover procedural due process concern the procedures used to make any government decision to take life, liberty, or property. These procedures must be fair, which generally mean that they "give an opportunity to object.

An Ohio statute bans certain advertising to prevent consumers from being misled. A court would likely hold this statute to be a. An unconstitutional restriction of speech b. Constitutional under the First Amendment c. Justified by the need to protect individuals' rights d. Necessary to protect state interests

B. Commercial speech does not have as much protection under the First Amendment as noncommercial speech. Commercial speech that is misleading may be restricted, however, if the restriction (1) seeks to advance a substantial government interest, (2) directly advances that interest, and (3) goes no further than necessary.

4. Ethical standards would most likely be considered violated if Light & Sound Services, Inc., represents to Studio Film Production Company that certain services will be performed for a stated fee, but it is apparent at the time of the representation that a. Light & Sound cannot perform the services alone b. The actual charge will be substantially higher c. The actual charge will be substantially lower d. The fee is a competitive bid

B. Striking a balance between what is profit able and what is legal and ethical can be difficult. A failure to act legally or ethically can result in a re duction in profits, but a failure to act in the profitable interest of the firm can also cause profits to suffer. In any profession, however, there is a responsibility, both legal and ethical, not to misrepresent material facts, even at the expense of some profits. This is a clear ethical standard in the legal profession and in the accounting profession.

Global Construction, Inc., is a U.S. firm. Helen, a U.S. citizen, works for Global in a country outside the U.S. Inez, a citizen of a foreign country, also works for Global outside the U.S. Helen and Inez believe they are being harassed on the job, in violation of U.S. law. This law protects a. Helen and Inez b. Helen only c. Inez only d. Neither Helen nor Inez

B. The Civil Rights Act of 1964, and other U.S. ' discrimination laws, apply to U.S. firms employing U.S. citizens outside (and inside) the United States. U.S. employers everywhere must abide by U.S. employment discrimination laws, so long as those laws do not violate the laws of the countries in which their workplaces are located. But those laws protect only U.S. citizens, not citizens of foreign countries

The Federal Energy Regulatory Commission (FERC) wants to close a series of its meetings to the public. To open the meetings, Jennifer or any citizen could sue the FERC under a. The Freedom of Information Act b. The Government-in-the-Sunshine Act c. The Regulatory Flexibility Act d. No federal or state law

B. The Government-in-the-Sunshine Act requires "every portion of every meeting of an agency" that is headed by a "collegial body" to be open to "public observation." The Freedom of Information Act requires the federal government to disclose certain records to persons on request, with some exceptions. The Regulatory Flexibility Act requires, among other things, analyses of new regulations in certain circumstances. The Small Business Regulatory Enforcement Fairness Act covers several matters important to businesses, including the federal courts' authority to enforce the Regulatory Flexibility Act, but it does not cover the opening of agency meetings to the public

Darby, an employee of Equipment Sales, Inc., takes a duty-based approach to ethics. Under this standard, Darby believes that she must a. Achieve the greatest good for the most people b. Avoid unethical behavior regardless of consequences c. Conform to society's standards d. Place Equipment Sales' interests first

B. Traditionally, ethical reasoning relating to business has been characterized by two fundamental approaches duty-based ethics and utilitarianism, or outcome-based ethics. Duty based ethics derives from religious sources or philosophical principles. These standards may be absolute, which means that an act may not be undertaken, whatever the consequences.

A Vermont statute that limits the liberty of all persons to engage in a certain activity may violate constitutional provisions covering a. Equal protection b. Procedural due process c. Substantive due process d. The right to privacy

C, Substantive due process focuses on the content (substance) of a law under the Fifth and Fourteenth Amendments. Depending on which rights a law regulates, it must either promote a compelling or overriding government interest or be rationally related to a legitimate governmental end.

The Occupational Safety and Health Administration (OSHA) issues a subpoena for Precision Systems Corporation to hand over its files. Precision's possible defenses against the subpoena include a. OSHA cannot issue a subpoena b. OSHA is a federal agency, but Precision only does business locally c. OSHA's request is not specific enough d. OSHA's request violated Precision's right to privacy

C. An agency has the authority to issue subpoenas. There are limits on agency demands for information, however. An investigation must have a legitimate purpose. The information that is sought must be relevant. The party from whom the information is sought must not be unduly burdened by the request. And the demand must be specific.

Trent is marketing executive for Unique Appliance Company. Compared to Trent's personal choices, his actions in the business world require the application of a. More complex ethical standards b. Simpler ethical standard c. The same ethical standards d. No ethical standards

C. Business ethics focus on the application of moral principles in a business context. Different standards are not required. Business ethics is a subset of ethics, that relates specifically to what constitutes right and wrong in situations that arise in business.

France has a civil legal system. Civil law systems are based on a. Administrative rules and regulations b. Case law c. Codified law d. Executive pronouncements

C. Civil law systems are based on codified (statutory) law. Administrative rules and regulations and judicial decisions are, of course, part of the operation of a civil law system. In a civil law system, courts are permitted to interpret the statutes that make up the code and to apply the rules, but unlike a common law system, in which judicial precedent plays a significant role, the courts in a civil law system are not expected to develop their own body of law.

The U.S. Fish and Wildlife Service orders Elin to stop using a certain type of fishing net from her boat. To appeal this order to a court, Elin must a. Appeal simultaneously to the agency and the court b. Bypass all administrative remedies and appeal directly to the court c. Exhaust all administrative remedies d. Ignore the agency and continue using the net

C. The Administrative Procedure Act provides for court review of most agency actions, but first a party must exhaust all other means of resolving a controversy with an agency. (Also, under the ripeness doctrine, the agency action must be ripe for review: the action must be reviewable —which agency actions presumably are —the party must have standing and an actual controversy must be at issue.)

Lightspeed, Inc., makes supercomputers that feature advanced technology. To inhibit Lightspeed's export of its products to other countries, Congress can a. Confiscate all profits on exported supercomputers b. Expropriate all profits on exported supercomputers c. Set quotas on exported supercomputers d. Tax exported supercomputers

C. The U.S. Congress cannot tax exports, but it may establish export quotas. In particular, under the Export Administration Act of 1979, restrictions can be imposed on the export of technologically advanced products.

An Australian seller and a U.S. buyer forma contract that the buyer breaches. The seller sues in an Australian court and wins damages, but the buyer's assets are in the United States. If a U.S. court enforces the judgment, it will be because of a. The act of state doctrine b. The doctrine of sovereign immunity c. The principle of comity d. The World Trade Organization

C. U.S. courts give effect to the judicial decrees of another country under the principle of comity, if those decrees are consistent with the laws and public policies of the United States.

Kenya issues bonds to finance the construction of an international airport. Kenya sells some of the bonds in the United States to Lacy. A terrorist group destroys the airport, and Kenya refuses to pay interest or principal on the bonds. Lacy files suit in a U.S. court. The court will hear the suit a. If Kenya's act constitutes a confiscation b. If Kenya's act constitutes an expropriation c. If Kenya's selling bonds is a "commercial activity" d. Under no circumstances

C. Under certain conditions, the doctrine of sovereign immunity prohibits U.S. courts from exercising jurisdiction over foreign nations. Under the Foreign Sovereign Immunities Act, a foreign state is not immune when the action is based on a commercial activity carried on in the United States by the foreign state.

2. Don is a manager with Engineering Aviation Systems. At a company ethics meeting, Don's most effective argument against utilitarianism is that it a. Gives profits priority over costs b. Ignores the practical costs of a given set of circumstances c. Justifies human costs that many persons find unacceptable d. Requires complex cost-benefit analyses of simple situations

C. Utilitarianism requires determining who will be affected by an action, assessing the positive and negatives effects of alternatives, and choosing the alternative that will provide the greatest benefit for the most people. This approach has been criticized as tending to reduce the welfare of human beings to plus and minus signs on. a cost-benefit work sheet

If South Carolina enacts a statute that directly conflicts with a federal law a. Both laws are invalid b. Both laws govern concurrently c. South Carolina's statute takes precedence d. The federal law takes precedence

D. A federal law takes precedence over a state law on the same subject. Also under the supremacy clause, if Congress chooses to act exclusively in an area in which the states have concurrent power, Congress is said to preempt the area.

In making rules, the procedures of the Equal Employment Opportunity Commission, and other federal agencies normally includes a period during which a. Judges are asked about a proposed rule b. Probable violators of a proposed rule are notified and publicized c. The administrators "notice" a problem and "comment" on it d. The public is asked to comment on a proposed rule

D. Procedures vary widely among, agencies, even within agencies. But under the Administrative Procedure Act, rulemaking typically includes these steps: notice, opportunity for comment, and publication in the Federal Register of a final draft of the rule. The notice-and-comment period opens a proposed rule to public comment. The period must be at least thirty days, and its often longer

The National Oceanic and Atmospheric Administration (NOAA) is a federal agency. To limit the authority of NOAA, the president can a. Abolish NOAA b. Take away NOAA's power c. Refuse to appropriate funds to NOAA d. Veto legislative modifications to NOAA's authority

D. The president's veto is a method by which the authority of an agency can be checked or cur tailed. The limits listed in the other responses in this question are choices available to Congress to limit the authority of administrative agencies.

6. Pew, an executive with Black Spot Corporation, follows the "principle of rights" theory, under which an action may be ethical depending on how it affects a. The right determination under a cost-benefit analysis b. The right of Pew to maintain his dignity c. The right of Black Spot to make a profit d. The rights of others

D. The principle of rights theory of ethics follows the belief that persons have fundamental rights. This belief is implied by duty-based ethical standards and Kantian ethics. The rights are implied by the duty that forms the basis for the standard (for example, the duty not to kill implies that persons have a right to live), or by the personal dignity implicit in the Kantian belief about the fundamental nature of human beings. Not to respect these rights would, under the principle of rights theory, be morally wrong.

Of the three branches of federal government provided by the Constitution, the branch that makes the laws is a. The administrative branch b. The executive branch c. The judicial branch d. The legislative branch

D. Under Articles I, II, and III of the U.S. Constitution, the legislative branch makes the law, the judicial branch interprets the law, and the executive branch enforces the law. There is no separate "administrative branch."

General Auto Corporation makes cars in the United States. To boost the sales of General Auto and other domestic automakers, Congress can a. Neither set quotas nor tax imports b. Only set quotas on imports c. Only tax imports d. Set quotas and tax imports

D. Unlike exports, imports can be taxed, A tax on an import is a tariff (generally set as a percent of the value). Imports can also be subject to quotas, which limit how much can be imported.