Business Ethics and Law Study Guide Questions
Course Introduction
Business Ethics and Law explores the complex intersection of ethical principles and legal frameworks within the business environment. The course examines foundational concepts in moral philosophy, corporate governance, and social responsibility, while systematically analyzing relevant statutes, case law, and regulatory guidelines that shape business decision-making. Students critically evaluate real-world scenarios involving ethical dilemmas, corporate compliance, fiduciary duties, and stakeholder rights, developing practical skills for identifying and resolving ethical and legal challenges in diverse organizational contexts. Through case studies, discussions, and applied assignments, the course prepares students to navigate and uphold ethical standards and legal requirements in their future professional roles.
Recommended Textbook
The Legal Environment of Business 13th Edition by Roger E. Meiners
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Chapter 1: Todays Business Environment: Law and Ethics
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Sample Questions
Q1) Civil law originated in:
A) the Roman Empire
B) the Ottoman Empire
C) ancient China
D) Portugal
E) Britain
Answer: A
Q2) What part of the Constitution provides that all power to make laws for the federal government shall be held by Congress?
A) Article II, Section 3.
B) Article II, Section 1.
C) Article I, Section 2.
D) Article II, Section 2.
E) none of the other choices
Answer: E
Q3) Law operates best without use of force, as members of society regulate themselves.
A)True
B)False
Answer: False
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Page 3
Chapter 2: The Court Systems
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Q1) A case involving in rem jurisdiction means a court has authority to control property such as a house, but does not include intangible property, such as stock in a company.
A)True
B)False
Answer: False
Q2) Congress may change the U.S. Supreme Court's appellate jurisdiction, but it cannot:
A) change the Court's original jurisdiction conferred upon it by the Constitution
B) change the Court's original jurisdiction conferred upon it by the Bill of Rights
C) change the Court's original jurisdiction conferred upon it a writ of certiorari
D) change the Court's final jurisdiction conferred upon it by the Constitution
E) change the Court's ultimate jurisdiction conferred upon it by the Constitution
Answer: A
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Chapter 3: Trials and Resolving Disputes
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Sample Questions
Q1) Nominal damages are damages that are awarded for:
A) a violation that involves no actual damages to a person or property
B) a violation that damages persons or property
C) a violation that causes someone to become very ill
D) a violation that does not break any laws
E) none of the other choices are correct
Answer: A
Q2) One area in which mediation is often used is in labor disputes.
A)True
B)False
Answer: True
Q3) The purpose of the discovery stage before trial is to:
A) retain an element of surprise in the litigation process
B) determine if there is a claim that the law can address
C) encourage pretrial settlements
D) determine who the plaintiff will be
E) none of the other choices
Answer: E
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Chapter 4: The Constitution: Focus on Application to Business
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Sample Questions
Q1) The ____ Amendment to the U.S. Constitution gives the federal government the power to impose income taxes.
A) 14th
B) 15th
C) 17th
D) 20th
E) none of the other choices are correct
Q2) Which of the following types of speech are not protected by the First Amendment?
A) a pamphlet prepared by a gas company in support of the use of natural gas
B) political speech by a person at a public facility such as a train station
C) an advertisement listing the prices charged by a local doctor for her services
D) yelling "Fire" at a crowded basketball game
E) all of the other choices
Q3) States may not adopt regulations that are stricter than regulations adopted by Congress.
A)True
B)False
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Page 6
Chapter 5: Criminal Law and Business
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Sample Questions
Q1) If a person is convicted of a crime, there must be some prison or jail time imposed.
A)True
B)False
Q2) Unlike in the United States, in Britain:
A) private individuals cannot bring criminal charges against others
B) private corporations can bring civil charges against others
C) no one can bring criminal charges against others
D) minors cannot be tried in court
E) none of the other choices are correct
Q3) In a victimless crime:
A) there are no illegal drugs involved
B) only one other party is injured
C) there are no fatalities, but there can be injuries
D) there are no minors involved
E) none of the other specific choices are correct
Q4) Many criminal prosecutions are based on the use of electronic communications as a part of the crime, not for the actual physical crime itself.
A)True
B)False
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Chapter 6: Elements of Torts
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Sample Questions
Q1) If a person is being threatened with an attack, another person has the privilege to:
A) defend the victim by shooting the attacker
B) defend the victim by using reasonable force
C) defend the victim by arresting the attacker
D) all of the specific choices
E) none of the specific choices
Q2) Refer to Fact Pattern 6-1. If Elmo had entered Jo's office and threatened to hit her, but never did, Elmo might face a charge of:
A) negligence
B) invasion of privacy
C) assault
D) private nuisance
E) disparagement
Q3) Infliction of emotional distress is involuntary conduct by a person that causes an outrageous effect on another.
A)True
B)False
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Chapter 7: Business Torts and Product Liability
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Sample Questions
Q1) Strict liability for ultrahazardous activities is an old concept going back more than a century.
A)True
B)False
Q2) The rule concerning ultrahazardous activities has been applied to:
A) crop dusting
B) restaurant food
C) airline crashes
D) all of the other specific choices
E) none of the other choices
Q3) Most tort suits are filed in:
A) municipal courts
B) federal courts
C) appellate courts
D) small claims courts
E) none of the other choices are correct
Q4) The tort system in the U.S. is estimated to cost right about $40 billion per year.
A)True
B)False
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Chapter 8: Real and Personal Property
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Sample Questions
Q1) Title insurance may not protect against:
A) claims against the property that were not known in the public records at the time the title search was done
B) claims against the property that were known in the public records at the time the title search was done
C) claims against the property that were not known in the public records until the title search was done
D) claims against the property made by a third party
E) none of the other choices are correct
Q2) An unauthorized intrusion by a person or a thing on land belonging to another is:
A) legal in some states
B) an easement
C) the tort of conversion
D) the tort of battery
E) none of the other choices are correct
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Chapter 9: Intellectual Property
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Sample Questions
Q1) "Union Made in the USA" is a Cooperative Mark protected by the Lanham Act.
A)True
B)False
Q2) Service marks do not apply to goods.
A)True
B)False
Q3) Unlike in the United States, in Europe patents for surgery methods:
A) expire in 10 years
B) are very common
C) can be obtained only after a 5 year waiting period
D) cost more than other types of patents
E) none of the other choices are correct
Q4) The Copyright Act allows fair use of copyrighted material in which of the following:
A) to produce a news report about the material
B) to criticize the material
C) to use the material in a research report
D) a and c
E) a, b and c
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Chapter 10: Contracts
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Sample Questions
Q1) Expectancy damages are the damages you expect the court to award you in case the other party to a contract breached the contract.
A)True
B)False
Q2) A transfer of contract rights to a third party is an assignment.
A)True
B)False
Q3) "Bozo, if you wash my car I will pay you $10." Bozo says nothing but washes the car later that day. There is what may be called:
A) a voidable contract
B) an unenforceable contract
C) an executory contract
D) no contract at all
E) none of the other choices
Q4) In unilateral contracts, performance is acceptance of an offer. A)True
B)False
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Chapter 11: Domestic and International Sales
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Sample Questions
Q1) Under UCC Article 2, when there is a failure to respond to a writing signed by the other party:
A) the contract will not be binding
B) there cannot be a good contract
C) there cannot be a good contract, but under the common law there could be
D) the court may require the other party to respond in writing to make the contract legal
E) none of the other choices are correct
Q2) Ordan's agreed to sell olives to Vic's. The goods were shipped Monday for Friday delivery. On Wednesday, while the goods were in transit, Vic's canceled the contract. Ordan's may:
A) minimize losses by reselling the goods to another buyer
B) refuse to resell the goods to another buyer
C) force Vic's to accept the goods
D) sue for punitive damages only
E) none of the other choices
Q3) Article 2 of the UCC applies to all sales agreements, except those between merchants.
A)True
B)False
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Page 13
Chapter 12: Business Organizations
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Sample Questions
Q1) A general partnership is a business organization made up of four or more persons called limited partners.
A)True
B)False
Q2) Legally, shareholders of a corporation must:
A) manage the corporation
B) delegate responsibility for management to hired managers
C) elect all vice presidents of the corporation
D) issue the employment rules of a corporation
E) none of the other choices
Q3) A close corporation is one:
A) with a pending application for incorporation
B) with stock that can only be traded with other corporations
C) that is in the process of dissolution
D) that has a small number of stockholders
E) that issues only preferred stock
Q4) The FTC Franchise Rule prohibits states from having additional regulations on franchises that go beyond the federal rules.
A)True
B)False
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Chapter 13: Negotiable Instruments, Credit, and Bankruptcy
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Sample Questions
Q1) When a note is to be paid in regular payments but also includes a final payment more than double the regular payments, the note is called:
A) an installment note
B) a collateral note
C) a payee note
D) a maker note
E) a balloon note
Q2) The creditor on a mortgage is known as:
A) the bank
B) the debtee
C) the mortgagor
D) the mortgagee
E) none of the other choices
Q3) If the principal does not pay the creditor, and the surety has to satisfy the debt, the principal:
A) is obligated to repay the surety
B) is not obligated to repay the surety
C) is only obligated to repay the surety in some states
D) is only obligated to repay the surety 50% of the debt
E) is only obligated to repay the surety 25% of the debt
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Chapter 14: Agency and the Employment Relationship
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Sample Questions
Q1) If a contractor does not have authority to enter into contracts for the principal then:
A) he is not an agent
B) he is also an agent
C) he is also an agent if he thinks he has the authority to enter into contracts
D) he is still considered an agent in most, but not all, states
E) none of the other choices are correct
Q2) A principal held responsible for the torts of an agent is said to have vicarious liability.
A)True
B)False
Q3) An agency through operation of law is established:
A) by a written contractual agreement of the parties
B) by ratification of the agent's activities by the principal
C) by the application of the doctrine of estoppel
D) when an emergency exists and the "agent's" actions are in the public interest
E) none of the other choices
Q4) An employer could be liable for acts of an employee based on negligent hiring.
A)True
B)False
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Page 16
Chapter 15: Employment and Labor Regulations
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Sample Questions
Q1) An at-will employee legally may be fired for filing for bankruptcy if the employer believes it is an indication that the employee may not be trustworthy.
A)True
B)False
Q2) Under the Family and Medical Leave Act, employers must provide workers with up to twelve weeks of unpaid leave after childbirth or adoption.
A)True
B)False
Q3) One of the problems of workers' compensation is that the premiums are the same for all employees regardless of the dangers of the job.
A)True
B)False
Q4) A contract signed by a worker agreeing not to join a union is called a(n):
A) exclusive employment agreement
B) primary boycott
C) right-to-work agreement
D) agency shop contract
E) none of the other choices
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Page 17
Chapter 16: Employment Discrimination
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Sample
Questions
Q1) Employment practices that discriminate against some employees must ____ to be legal.
A) meet the business necessity test
B) meet the impartiality test
C) meet the anti-discrimination test
D) meet the equality of gender test
E) none of the other choices are correct
Q2) Seniority can legally be used to determine which of the following:
A) eligibility for pension plans
B) length of vacations
C) security from layoffs
D) amount of sick leave
E) all of the other specific choices are correct
Q3) All employers are subject to Title VII rules regarding discrimination in employment.
A)True
B)False
Q4) Under Title VII, recognized races include white and black.
A)True
B)False
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Chapter 17: The Regulatory Process
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Sample Questions
Q1) Among the formal procedures used by most regulatory agencies are quasi-judicial powers, especially:
A) commissioner's hearings
B) Congressional reviews
C) rulemaking hearings
D) adjudicatory hearings
E) none of the other choices
Q2) Which classification of administrative laws results in a rule being a federal law:
A) procedural rules
B) enforcement rules
C) observational rules
D) interpretive rules
E) none of the other choices
Q3) Adjudicatory hearings are initiated by:
A) a business filing a complaint
B) the Supreme Court filing a complaint
C) an agency issuing sanctions against a business
D) a business refusing to respond to a complaint
E) none of the other choices are correct
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Page 19
Chapter 18: Securities Regulation
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Sample Questions
Q1) Securities issued by well-known seasoned issuers can use a free-writing prospectus that can be continuously updated on the Web.
A)True
B)False
Q2) Under Regulation D and Rule 504, Small Corporate Offering Registrations can be used for stock issues sold without full registration if the money being raised:
A) is no more than $1 million
B) is no more than $10 million
C) is more than $100 million
D) will come only from corporations with net asset values under $10 million E) none of the other choices
Q3) Accredited investors often buy private placement securities through Regulation D offerings. They receive a private-placement memorandum, which is similar to a prospectus, even though the security is not registered.
A)True
B)False
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Chapter 19: Consumer Protection
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Sample Questions
Q1) Which of the following health claims may NOT be made on food labels without sufficient documentation by the seller:
A) the connection between calcium and the prevention of osteoporosis
B) the connection between fat and heart disease
C) the connection between fiber and reduced risk of heart disease
D) the connection between fat and cancer
E) all of the other specific choices may be mentioned on food labels without any extra documentation
Q2) "Buffo will cure your headache" the ad reads. Buffo, like other pain relievers, helps most people feel better, but it does not cure headaches, it just helps hide the pain, and it does not prevent future headaches. Under the FTC deceptive advertising standard, this ad is:
A) not deceptive because most people understand how medicine like Buffo works
B) not deceptive only if the company can document that Buffo in fact does cure headaches
C) deceptive because products involving medicines must have very accurate ads
D) deceptive because it will mislead reasonable consumers as to the true nature of the product
E) none of the other choices
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Page 21
Chapter 20: Antitrust Law
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Sample Questions
Q1) One of the reasons for passing the Sherman Act was to respond to the political unpopularity of big business.
A)True
B)False
Q2) Refer to Fact Pattern 20-2. If the decision in Leegin Leather were applied to the agreement between Vysion and its New York retailers, the agreement would be:
A) a legal means of product distribution to enhance interbrand competition
B) a legal means of product distribution to enhance intrabrand competition
C) a legal horizontal restraint of trade
D) an illegal vertical restraint of trade
E) an illegal horizontal restraint of trade
Q3) Market power is defined as:
A) the ability of one or more firms profitably to maintain prices above competitive levels for a significant period of time
B) the ability of one or more firms to make a profit for a significant period of time
C) the ability of one or more firms to evade taxes
D) the ability of one or more firms to join together in a co-op
E) the ability of one or more firms to consistently produce a superior product
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Chapter 21: Environmental Law
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Sample Questions
Q1) In pollution cases involving strict liability for abnormally dangerous activities, courts have found which of the following activities to be abnormally dangerous:
A) emitting of noxious gases by factories
B) using wasteful amounts of water in product production
C) storing of flammable liquids in quantity in an unpopulated area
D) emitting of steam by factories
E) all of the other specific choices are correct
Q2) Under ____ people who live along rivers and other bodies of water have the right to use the water in reasonable amounts but must allow the water to flow downstream in usable form.
A) western water law
B) free flowing water law
C) federal water law
D) clean water law
E) none of the other choices are correct
Q3) In Babbitt v. Sweet Home, the Supreme Court held that "habitat" protection is a key goal of the Endangered Species Act.
A)True
B)False
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Chapter 22: The International Legal Environment of Business
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Sample Questions
Q1) In order to better manage exchange risk, companies might:
A) specify in advance payment in a stable currency
B) specify in advance the choice of language
C) choose to arbitrate disputes
D) follow the rules of the International Convention on the Sale of Goods
E) forget it; exchange risk cannot be managed
Q2) Which of the following is a risk that international businesses face:
A) political risks
B) financial risks
C) regulatory risks
D) all of the other specific choices are correct
E) none of the other specific choices are correct
Q3) International law prohibits countries from refusing to allow repatriation of funds earned by foreigners.
A)True
B)False
Q4) A tariff is a duty or tax most commonly imposed by a government on exported goods.
A)True
B)False
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