Business Ethics and Legal Environment Exam Bank
Course Introduction
Business Ethics and Legal Environment explores the fundamental principles of ethical decision-making and the legal frameworks that influence business practices. The course examines key ethical theories, concepts of corporate social responsibility, and contemporary ethical dilemmas faced by organizations. It also introduces students to essential areas of business law, including contracts, employment law, intellectual property, and regulatory compliance. Through case studies and real-world examples, students learn to analyze and navigate the complex interplay between ethical obligations and legal requirements in a variety of business contexts.
Recommended Textbook Law Business and Society 11th Edition by Tony McAdams
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Page 2
Chapter 1: Capitalism and the Role of Government
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Q1) Democratic capitalism and state capitalism trade with each other for mutual advantage but are economic and political rivals.
A)True
B)False
Answer: True
Q2) In the context of economic systems,the "Third Way" refers to _____.
A)totalitarianism
B)market socialism
C)capitalism
D)communism
Answer: B
Q3) How do privatization supporters envision major changes to daily life?
A)By promising economic justice for all
B)By promoting religiosity and building peace
C)By citing free market efficiency and personal freedom while challenging moral conventions
D)By encouraging economic cooperation and varying degrees of centralized control
Answer: C
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Chapter 2: Business Ethics
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Q1) Wright Corp.,an American firm,is establishing an office in Africa with Mary as the manager.After two months of endless efforts,Mary is informed that in order to get utilities for its African branch,she must give some money to the government-based electric company agent as an "encouragement," just as all the other businesses have done.Under the Foreign Corrupt Practices Act,which of the following statements about the payment is true?
A)The payment is illegal since it is a bribe to a foreign government official.
B)The payment is legal as long as all other businesses do the same thing.
C)The payment is legal since that is the only way she can get utilities.
D)The payment is legal since it is merely "grease" money to expedite routine action.
Answer: D
Q2) In the context of federal sentencing guidelines for corporate or white-collar crime,companies involved in crimes do not receive reduced penalties even if they have effective compliance programs in place.
A)True
B)False
Answer: False
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Page 4
Chapter 3: The Corporation and Public Policy: Expanding Responsibilities
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Q1) Which of the following statements is true about advertising in schools?
A)It is likely to discourage critical thinking.
B)It is likely to discourage materialism.
C)It is likely to celebrate reliable values.
D)It is likely to advocate criminal behavior.
Answer: A
Q2) Triple bottom-line advocates call for managerial practices that respect and measure a firm's social and environmental performance just as the firm's financial performance is respected and measured.
A)True
B)False
Answer: True
Q3) "The power of the business community has become so encompassing that virtually all dimensions of American life have absorbed elements of the business ethic." Explain.
Answer: Values commonly associated with businesspeople-competition,profit-seeking,reliance on technology,faith in growth-have overwhelmed traditional humanist values-cooperation,individual dignity,human rights,meaningful service to society.In the name of wealth,efficiency,and productivity,the warmth,decency,and value of life have been debased.
Page 5
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Chapter 4: The American Legal System
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Q1) How can a student use case briefs to master the law? Explain.
Q2) In a jury trial,the jurors in a panel are questioned by the judge or by the attorneys to determine if any individual is prejudiced about the case such that he or she could not reach an objective decision on the merits.This questioning process is called _____.
A)interrogatory
B)mens rea
C)voir dire
D)mini-trial
Q3) Statutes are the supreme expressions of law at both the federal and state levels of government.
A)True
B)False
Q4) In a civil trial process,a civil action begins when a plaintiff files his or her first pleading,which is labeled a _____.
A)motion to dismiss
B)motion for summary judgment
C)demurrer
D)complaint
Q5) Distinguish between civil law and criminal law.
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Chapter 5: Constitutional Law and the Bill of Rights
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Q1) Which of the following is true of the Warrant Clause of the Fourth Amendment?
A)It protects commercial buildings as well as private homes from unauthorized searches.
B)It prohibits the taking of private property for public use without "just compensation" for the owner.
C)It protects the right of the people to keep and bear arms.
D)It forbids the government to deprive citizens of life,liberty,or property without due process of law.
Q2) Addressing two long-standing sources of constitutional ferment,three-judge panels of the Ninth U.S.Circuit Court of Appeals in 2010 ruled that the use of the words "Under God" in the Pledge of Allegiance and "In God We Trust" on U.S.currency do not violate the separation of church and state principles of the _____.
A)First Amendment
B)Second Amendment
C)Fourth Amendment
D)Eighth Amendment
Q3) Discuss the differences between substantive due process and procedural due process.
Q4) Explain the purposes of the U.S.Constitution.
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Chapter 6: Contracts
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Q1) The point of nominal damages is to illustrate the wrongfulness of a breach.
A)True
B)False
Q2) _____ are agreements that are so thoroughly one-sided that fairness precludes enforcing them.
A)Yellow dog contracts
B)Quasi-contracts
C)Voidable contracts
D)Unconscionable contracts
Q3) Which of the following statements is true of the Uniform Commercial Code (UCC)?
A)It governs contracts for services.
B)It covers cars,clothing,and appliances.
C)It regulates transactions not involving the sale of goods.
D)It covers real estate,stocks,and bonds.
Q4) A court order that may either require or forbid a party to perform a specified act is a(n) _____.
A)rescission
B)reformation
C)injunction
D)quasi-contract
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Chapter 7: Business Torts and Product Liability
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Q1) A full warranty requires free repair of any defect.
A)True
B)False
Q2) Torts are civil wrongs that arise from contracts.
A)True
B)False
Q3) Jude purchases a vacuum cleaner that is advertised as having certain distinctive cleaning properties.However,at the first use he realizes that the vacuum cleaner fails to function as promoted.In the context of warranty,which of the following statements is true?
A)There is a breach of implied warranty of fitness for a particular purpose.
B)There is a breach of implied warranty of merchantability.
C)There is a breach of express warranty.
D)There is a no breach of warranty as it is a case of puffing.
Q4) List and describe the three defenses to negligence and their results if successful.
Q5) Puffing creates an express warranty.
A)True
B)False
Q6) What are the four forms of invasion of privacy?
Page 9
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Chapter 8: Government Regulation of Business
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Q1) Adjudication ordinarily involves standards to be applied to the future conduct of a class of unspecified parties.
A)True
B)False
Q2) Police power refers to the right of the state governments to promote the public health,safety,morals,and general welfare.
A)True
B)False
Q3) Congress controls agency budgets and thus can encourage or discourage particular agency action.
A)True
B)False
Q4) The Supremacy Clause of the U.S.Constitution broadly specifies the power accorded to the federal government to regulate business activity.
A)True
B)False
Q5) States cannot regulate insurance as this is solely a federal responsibility. A)True B)False
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Chapter 9: Business Organizations and Securities Regulation
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Q1) Under the 1933 Act,a draft prospectus is included with the filed registration statement.This is known as a _____ prospectus.
A)greenmail
B)red herring
C)crown jewel
D)blue sky
Q2) A shareholder derivative suit is brought by a minority shareholder,but any recovery inures to the corporation.
A)True
B)False
Q3) According to the 1933 Act,during the _____ period,no sales are permitted but a limited amount of solicitation is allowed.
A)shelf registration
B)waiting
C)prefiling
D)posteffective
Q4) Explain illegal insider trading.
Q5) Describe Section 11 of the 1933 Securities Act and explain the defense against it.
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Chapter 10: Antitrust Law-Restraints of Trade
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Q1) Define resale price maintenance.
Q2) When competitors collude,conspire,or agree among themselves,they are engaging in _____.
A)horizontal restraints of trade
B)resale price maintenance
C)free riding
D)tying arrangements
Q3) Vertical territorial and customer restraints are to be resolved under the rule of reason.
A)True
B)False
Q4) When competitors collude,conspire,or agree among themselves,they are engaging in vertical restraints of trade.
A)True
B)False
Q5) As a result of the existence of an exclusive deal,competitors are denied a source of supply or a market for sale.
A)True
B)False
Q6) How does the law address patent/antitrust conflicts?
Page 12
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Chapter 11: Antitrust Law-Monopolies and Mergers
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Q1) Private parties commonly use the antitrust laws to sue for treble damages when they believe a merger has harmed them unlawfully.
A)True
B)False
Q2) An athletic footwear manufacturing company acquiring a mineral water manufacturing company would be an example of a _____ merger.
A)congeneric
B)vertical
C)horizontal
D)conglomerate
Q3) A _____ merger involves two or more firms at different levels of the same channel of distribution.
A)horizontal
B)vertical
C)conglomerate
D)congeneric
Q4) A monopoly may be earned or thrust upon a monopolist.
A)True
B)False
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Chapter 12: Employment Law I: Employee Rights
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Q1) Which of the following is an objective of the Fair Labor Standards Act?
A)The establishment of a maximum wage
B)Higher pay for female workers
C)Child labor protection
D)The establishment of a standard number of working hours per week
Q2) Cheryl,a human resource manager at a multinational corporation,finds that one of the employees in the firm had misstated his education credentials.Cheryl can sue the employee for _____.
A)résumé fraud
B)defamation
C)invasion of privacy
D)negligence
Q3) Employers who have contracts of $100,000 or more with the federal government or receive aid from the government must provide drug-free awareness programs for their employees.
A)True
B)False
Q4) State the common law doctrine of "employment at will" and explain the limitations that have eroded its influence.
Q5) Explain in general what state workers' compensation laws do.
Page 14
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Chapter 13: Employment Law II: Discrimination
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Q1) Most federal courts to date have ruled that victims of sexual harassment seeking recovery under _____ cannot sue the person who actually committed the harassment.
A)a tort claim
B)a state statute
C)Title VII of the Civil Rights Act of 1964
D)Section 2-306 of the Uniform Commercial Code
Q2) Discrimination against transsexuals based on sex stereotyping is prohibited under _____.
A)the Americans with Disabilities Act
B)Section 2-306 of the Uniform Commercial Code
C)the Genetic Information Nondiscrimination Act
D)Title VII of the Civil Rights Act of 1964
Q3) The Americans with Disabilities Act (ADA) amended Title VII of the Civil Rights Act of 1964,requiring pregnant employees to be treated the same as all other employees with temporary disabilities.
A)True
B)False
Q4) Contrast disparate treatment with disparate or adverse impact.
Q5) Briefly discuss the Civil Rights Act of 1866.
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Chapter 14: Employment Law III: Labor-Management Relations
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Q1) What are the differences between legal picketing and illegal picketing under the National Labor Relations Act (NLRA)?
Q2) Which of the following statements is true of the Knights of Labor,the first major labor organization in the United States?
A)It restricted its membership to male workers.
B)It included only bankers and stockbrokers.
C)It dedicated itself to principles of social reform.
D)It competed with the American Federation of Labor (AFL).
Q3) Which of the following statements about lockouts is true?
A)The National Labor Relations Board (NLRB) prohibits lockouts as defensive acts to protect businesses against sudden strikes.
B)Some court decisions have expanded lawful lockouts to include those of an offensive nature designed to improve management's bargaining position.
C)Lockouts are clearly lawful even if they are designed to interfere with union members' bargaining rights and other legitimate union activity.
D)The courts consider lockouts to be unfair labor practices,even if they are initiated to prevent sabotage or violence.
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Page 16
Chapter 15: Consumer Protection
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Q1) Describe the requirements to prove that a vehicle is a "lemon" and the remedies generally provided under lemon laws.
Q2) Which of the following credit reporting protections is offered by the federal Fair Credit Reporting Act?
A)In all cases,negative information more than seven years old must be reported in a consumer's credit report.
B)All inaccurate information must be corrected or removed from a consumer's credit file,usually within 30 days.
C)Consumers cannot sue a credit reporting agency or a bank for damages even if their rights under the act have been violated.
D)Anyone using information from a credit reporting agency to deny a consumer credit cannot reveal the source of information to the consumer.
Q3) The federal Fair Debt Collection Practices Act (FDCPA) extends to creditors who are themselves trying to recover money owed to them.
A)True
B)False
Q4) Explain the purpose of the Electronic Fund Transfer Act (EFTA).
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Chapter 16: International Ethics and Law
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Q1) A Canadian court may not declare invalid the acts of the Chinese government taken within China's own jurisdiction because it is presumed that the foreign country,China,acted legally within its own territory.This is an example of which of the following doctrines?
A)The act of state doctrine
B)The doctrine of sovereign immunity
C)The vesting of rights doctrine
D)The governmental interest doctrine
Q2) The General Agreement on Tariffs and Trade is now governed by the World Trade Organization.
A)True
B)False
Q3) The World Trade Organization Dispute Settlement Body (DSB) is a true court.
A)True
B)False
Q4) Describe licensing and franchising.
Q5) Define the concept of "comity" as it is used in international law.
Q6) Arbitration is never used in international trade disputes.
A)True
B)False
Page 18
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Chapter 17: Environmental Protection
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Q1) Which of the following statements is true of the National Environmental Policy Act?
A)Its environmental provisions diminished federal presence in the promotion of a clean and healthy environment.
B)It requires an environmental impact statement for all activities affecting the environment,whether public or private.
C)Its primary influence results from its environmental impact statement (EIS) requirements.
D)It was the first law that required a permit to discharge refuse into navigable waters.
Q2) Recycled hazardous materials are covered by the Resource Conservation and Recovery Act.
A)True
B)False
Q3) Seventy percent of the toxic waste in the landfills comes from _____.
A)food items
B)medicines
C)electronics
D)industrial chemicals
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Chapter 18: Internet Law and Ethics
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Q1) Which of the following is a provision of the Computer Pornography and Child Exploitation Prevention Act of 1999?
A)It prohibits websites from collecting personal information from children under 13,who use computers,without parental permission.
B)It requires that parents be allowed to review and correct any information collected about their children and published.
C)It makes it unlawful for companies manufacturing computers to employ children below the age of 15.
D)It makes it unlawful to use a computer to solicit,lure,or entice a child or otherwise engage in sexual offenses with a child.
Q2) A(n) _____ is any person who takes data that are discrete at the level of an individual and combines it with individual-level data from one or more other sources.
A)aggregator
B)hacker
C)cyber stalker
D)spammer
Q3) Discuss the assignment of Internet domain names.
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