Business Ethics Concepts and Cases, 8th Edition Manuel G. Velasquez Test Bank

Type:

Test Bank

Resource:

Business Ethics Concepts and Cases

Edition:

8th Edition

Author(s):

Manuel G. Velasquez

Chapter 1 Velasquez Test Bank MULTIPLE CHOICE 1. Which of the following is one of the advantages of ethical decision-making as a long-term business strategy? a. Ethical behavior will increase short-term profits. b. Ethical behavior will provide positive press opportunities. c. Ethical behavior can ensure positive employee relationships. d. Ethical behavior can provide significant competitive advantage.

Answer: D Topic: The Nature of Business Ethics Learning Objective: 1.1: Analyze the basic nature of business ethics Skill Level: Understand the concepts Difficulty Level: Moderate 2. Which of the following is defined as standards of what a group or individual feels is right or wrong, or good or evil? a. Morality b. Ethics c. Standards d. Values Answer: A Topic: Moral Reasoning and Moral Decision Making Learning Objective: 1.2: Emphasize the importance of moral reasoning and moral decisionmaking in business ethics Skill Level: Understand the concepts Difficulty Level: Difficult 3. Which of the following best describes the criteria by which we judge manners and rules of behavior? a. Ethical norms b. Moral norms c. Nonmoral standards d. Standard values Answer: C Topic: Moral Reasoning and Moral Decision Making Learning Objective: 1.2: Emphasize the importance of moral reasoning and moral decisionmaking in business ethics

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Skill Level: Understand the concepts Difficulty Level: Moderate 4. a. b. c. d.

Which of the following can be described as an example of a moral standard?

Do not be late for a meeting.

Do not harm others.

Do not use a work computer for personal use.

Do not discuss pay issues with others.

Answer: B Topic: Moral Reasoning and Moral Decision Making Learning Objective: 1.2: Emphasize the importance of moral reasoning and moral decisionmaking in business ethics Skill Level: Apply what you know Difficulty Level: Moderate 5. a. b. c. d.

Which of the following best describes the basis for moral standards?

Moral standards are based on authority.

Moral standards deal with serious issues.

Moral standards are based on personal experiences.

Moral standards are based on personal beliefs.

Answer: B Topic: Moral Reasoning and Moral Decision Making Learning Objective: 1.2: Emphasize the importance of moral reasoning and moral decisionmaking in business ethics Skill Level: Understand the concepts Difficulty Level: Moderate 6. a. b. c. d.

Which of the following best describes ethical standards?

Norms of behavior in a society Laws that govern acceptable behavior How reasonable moral standards are when applied to your life Universal standards based on impartial rules

Answer: C Topic: Moral Reasoning and Moral Decision Making Learning Objective: 1.2: Emphasize the importance of moral reasoning and moral decisionmaking in business ethics Skill Level: Analyze it Difficulty Level: Moderate 7. Ethical issues about the economic, political, or legal aspects that a business operates under are referred to as _____ issues. a. corporate b. individual

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c. governmental d. systemic Answer: D Topic: Moral Reasoning and Moral Decision Making Learning Objective: 1.2: Emphasize the importance of moral reasoning and moral decisionmaking in business ethics Skill Level: Apply what you know Difficulty Level: Moderate 8. Because companies intentionally engage in actions such as production and sales, some people believe they should be held morally responsible for their decisions and actions. This view considers companies as having to act as a. moral agents. b. machines. c. individuals. d. regulators.

Answer: A Topic: Moral Reasoning and Moral Decision Making Learning Objective: 1.2: Emphasize the importance of moral reasoning and moral decisionmaking in business ethics Skill Level: Analyze it Difficulty Level: Easy 9. There have been several arguments against business ethics. Which argument best supports the idea that when an organization makes money, it improves society, so business ethics are not needed? a. If it’s legal, it is ethical. b. Profits benefit all. c. The Loyal Agent states it. d. Conflict is not unusual.

Answer: B Topic: Moral Reasoning and Moral Decision Making Learning Objective: 1.2: Emphasize the importance of moral reasoning and moral decisionmaking in business ethics Skill Level: Analyze it Difficulty Level: Easy 10. Which of the following best describes an organization’s obligations toward society? a. Ethics b. Morals c. Values d. Corporate social responsibility

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Answer: D Topic: Moral Reasoning and Moral Decision Making Learning Objective: 1.2: Emphasize the importance of moral reasoning and moral decisionmaking in business ethics Skill Level: Understand the concepts Difficulty Level: Moderate 11. Which theory of corporate social responsibility says that an organization should be run with the best interests of anyone who can benefit from the organization in mind? a. Shareholder theory b. Normative theory c. Stakeholder theory d. Law of Agency theory Answer: C Topic: Moral Reasoning and Moral Decision Making Learning Objective: 1.2: Emphasize the importance of moral reasoning and moral decisionmaking in business ethics Skill Level: Understand the concepts Difficulty Level: Moderate 12. With which area are many of the ethical issues related to information technology concerned? a. Privacy b. Costs c. Accessibility d. Biology Answer: A Topic: Ethical Issues in International Business Learning Objective: 1.3: Examine ethical issues arising from globalization and international business connections and practices Skill Level: Analyze it Difficulty Level: Moderate 13. Technology now allows for the altering of cells in plants, humans, and animals in a process called a. genetic engineering. b. nanotechnology. c. biotechnology. d. information engineering.

Answer: A Topic: Ethical Issues in International Business Learning Objective: 1.3: Examine ethical issues arising from globalization and international business connections and practices Skill Level: Apply what you know

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Difficulty Level: Moderate 14. The process of sharing goods, services, knowledge, and cultures across national borders is referred to as a. multinationalism. b. relativism. c. hypernorms d. globalization.

Answer: D Topic: Ethical Issues in International Business Learning Objective: 1.3: Examine ethical issues arising from globalization and international business connections and practices Skill Level: Understand the concepts Difficulty Level: Moderate 15. According to World Bank reports, which of the following is a disadvantage of globalization? a. Business operations can move to countries with lower labor costs. b. Inequalities increase between and within nations. c. Consumers have access to lower priced goods. d. Developed nations only grew at about 2 percent per capita.

Answer: B Topic: Ethical Issues in International Business Learning Objective: 1.3: Examine ethical issues arising from globalization and international business connections and practices Skill Level: Analyze it Difficulty Level: Moderate 16. Which of the following best describes the idea that ethical standards are true based on a particular culture or society, and will change based on the society in which we find ourselves working? a. Traditionalism b. Globalization c. Relativism d. Microsocial norms Answer: C Topic: Ethical Issues in International Business Learning Objective: 1.3: Examine ethical issues arising from globalization and international business connections and practices Skill Level: Analyze it Difficulty Level: Moderate 17. Which of the following best describes hypernorms as moral standards? a. Norms that differ from one community to the next

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b. Norms that can only be applied if the community accepts those norms c. Norms that a community accepts because it follows rules of microsocial norms d. Moral standards that should be applied to all people in all societies Answer: D Topic: Ethical Issues in International Business Learning Objective: 1.3: Examine ethical issues arising from globalization and international business connections and practices Skill Level: Analyze it Difficulty Level: Moderate 18. According to Kohlberg, during which stage of moral development will a child behave in a specific way in the hopes that others will behave the same way toward him or her? a. Interpersonal concordance orientation b. Social contract orientation c. Instrumental and relative orientation d. Punishment and obedience orientation Answer: C Topic: Foundations of Moral Reasoning Learning Objective: 1.4: Explain the deep foundations and structure of moral reasoning Skill Level: Analyze it Difficulty Level: Moderate 19. According to Kohlberg, during which stage of moral development does one realize there are conflicting moral views and believes there is a fair way to reach consensus about them? a. Social contract orientation b. Universal moral principles orientation c. Law and order orientation d. Interpersonal concordance orientation Answer: A Topic: Foundations of Moral Reasoning Learning Objective: 1.4: Explain the deep foundations and structure of moral reasoning Skill Level: Analyze it Difficulty Level: Moderate 20. Which of the following component of moral reasoning is based on an individual’s conclusions about people, policies, institutions, or behaviors? a. Factual information b. Facility for moral judgment c. Ability for emotional reasoning d. Understanding of moral standards Answer: B Topic: Foundations of Moral Reasoning

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Learning Objective: 1.4: Explain the deep foundations and structure of moral reasoning Skill Level: Analyze it Difficulty Level: Difficult 21. Which criteria are used to evaluate moral reasoning? a. Standards universal to all cultures b. Factual evidence limited only to that which supports the conclusion c. Logic and evidence d. Clearly defined choices Answer: C Topic: Foundations of Moral Reasoning Learning Objective: 1.4: Explain the deep foundations and structure of moral reasoning Skill Level: Understand the concepts Difficulty Level: Moderate 22. What condition of moral responsibility has been met when a person fails to prevent an injury or wrong when he or she knew there was a potential for injury? a. Causality b. Duty c. Obligation d. Freedom Answer: A Topic: Moral Responsibility and Blame Learning Objective: 1.5: Assess the factors that define and refine the concept of moral responsibility Skill Level: Understand the concepts Difficulty Level: Moderate 23. Which of the following is used to reduce, but not eliminate, responsibility for a wrong? a. Causality b. Freedom of choice c. Mitigating factors d. Knowledge Answer: C Topic: Moral Responsibility and Blame Learning Objective: 1.5: Assess the factors that define and refine the concept of moral responsibility Skill Level: Apply what you know Difficulty Level: Moderate 24. A person might find it difficult to avoid a wrong because of coercion or a threat. What type of moral defense could be used to reduce responsibility? a. Level of contribution

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b. Ignorance c. Differing moral standards d. Mitigating factors Answer: D Topic: Moral Responsibility and Blame Learning Objective: 1.5: Assess the factors that define and refine the concept of moral responsibility Skill Level: Analyze it Difficulty Level: Moderate 25. Which of the following describes the level of moral responsibility when there is an absence of causality, knowledge, or freedom? a. The individual is morally responsible. b. Moral responsibility is mitigated. c. The organization is morally responsible. d. Moral responsibility is completely eliminated.

Answer: D Topic: Moral Responsibility and Blame Learning Objective: 1.5: Assess the factors that define and refine the concept of moral responsibility Skill Level: Analyze it Difficulty Level: Moderate SHORT ANSWER 26. Discuss reasons why ethics are an important part of an organization.

Sample Answer: Ethical behavior can be good for a business in that it can promote trust, provide safeguards, and improve profit. Business interactions with employees and customers are ongoing. Ethical behavior can encourage mutually beneficial interactions with others.

Additionally, unethical behaviors tend to generate harmful reprisals instead of cooperative behavior. Second, ethical behaviors on the part of an organization can help the organization avoid reprisals, improve work relationships, and encourage people to reward the organization with loyalty and commitment. Third, ethical behaviors increase the chances of success for an organization. A majority of studies have found there is a positive relationship between socially responsible acts and profitability. Businesses cannot survive without ethics and ethics are consistent with profit seeking. This is because employees, customers, and people in general care about ethics.

Topic: Moral Reasoning and Moral Decision Making Learning Objective: 1.2: Emphasize the importance of moral reasoning and moral decisionmaking in business ethics 27. Discuss the concept of organizations acting as moral agents and being held responsible for moral decisions.

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Sample Answer: There are two views on the idea that organizations can be held responsible for moral decisions. One view is that when an organization acts intentionally, then it is a moral agent. The organization is an agent with moral rights and obligations, and it is responsible for its actions, just like humans. The other view is that companies act as machines and should not be considered to have moral duties. This argument claims businesses are like machines where members blindly conform to formal rules that may or may not have to do with morality. Just as a machine cannot be faulted for failing to act morally, neither can an organization when it is considered to be a machine.

Topic: Moral Reasoning and Moral Decision Making Learning Objective: 1.2: Emphasize the importance of moral reasoning and moral decisionmaking in business ethics 28. Compare the shareholder view of corporate social responsibility to the stakeholder view of corporate social responsibility.

Sample Answer: According to Milton Friedman, shareholders own the company in which they have shares. These owners “hire” executives to run the organization in the best interest of the shareholders, with the goal of increasing profits and returns for the shareholders. Therefore, under the shareholder view of CSR, the company should not use resources to benefit society; those resources belong to the shareholders. However, by maximizing profits for stockholders, the companies will end up benefiting society.

According to Freeman and Reed, a stakeholder is any group or individual who can help the organization achieve its objectives or who are affected by the achievements of the organization.

This means that a stakeholder can harm, benefit, or influence. Therefore, anyone can be a stakeholder in an organization. Under this theory, the organization should be run for the benefit of all stakeholders.

Topic: Moral Reasoning and Moral Decision Making Learning Objective: 1.2: Emphasize the importance of moral reasoning and moral decisionmaking in business ethics 29. Discuss the ethical concerns that have surfaced regarding information technology and property rights.

Sample Answer: Property rights include information such as software, code, and digitized data such as a text, pictures, and sounds. Digitized information can be copied many times without changing the original. The issue or property rights of the original creator come into question along with comparing those rights to the person who owns one of the copies. Another issue is if it is wrong to make a copy without the permission of the original creator. Does it create harm to society or will individuals suffer because of these copies? Are there property rights for things created on the computer? The nature of technology is that we can gather, use, or generate information from a variety of sources very quickly and on a massive scale. Computers collect data on users, and they sort, analyze and retrieve this information rapidly. Some argue this is a violation of people’s right to privacy because other people may know things about us that are private.

Topic: Ethical Issues in International Business Learning Objective: 1.3: Examine ethical issues arising from globalization and international business connections and practices

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30. As a senior manager operating in another country, how should you enforce U.S. ethical standards in a culture that has different standards?

Sample Answer: Some scholars have suggested that senior managers who operate in a less welldeveloped country should follow the higher ethical standards that are typically used in their home country. However, those ethical standards must be used with care as they can sometimes create more harm than good in the host nation. Social norms and expectations must also be carefully considered. Therefore, each case must be judged individually, instead of attempting to apply one rule or level of standards to all issues. When determining how ethical a decision is in a host country, several things must be considered including the nature of the country’s laws, how corrupt a government is, the level of technological, social, and economic development, and cultural acceptance.

Topic: Ethical Issues in International Business Learning Objective: 1.3: Examine ethical issues arising from globalization and international business connections and practices 31. Discuss the ways emotions and moral reasoning work together.

Sample Answer: Ethics include logic, reasoning, and cognition, and our emotions, and feelings play a central role in moral decision-making. Moral thinking is aided by emotions. The link between moral reasoning and emotions is supported by studies of the brain that show activity when we engage in moral reasoning. Emotions can make us realize that a situation raises ethical issues for us, and motivate us to try and understand and reason about what is happening. The emotional response can motivate us to act. Reasoning about ethics is important, but without emotions, we would be unable to become focused on and concerned about ethics, and no longer be moved to engage in moral reasoning.

Topic: Foundations of Moral Reasoning Learning Objective: 1.4: Explain the deep foundations and structure of moral reasoning 32. Identify and explain the three components of moral reasoning.

Sample Answer: One component of moral reasoning includes an understanding of our moral standards and what they require, prohibit, value, or condemn. The second component includes evidence or information about whether a person, policy, institution, or behavior has features that moral standards require, value, or condemn. The third component of moral reasoning is a conclusion or moral judgement about a person, policy, institution, or behavior that might be prohibited or required, right or wrong, or just or unjust.

Topic: Foundations of Moral Reasoning Learning Objective: 1.4: Explain the deep foundations and structure of moral reasoning 33. Why is it important that companies have a good understanding of the relationship between blame and moral responsibility?

Sample Answer: Moral reasoning is sometimes directed at determining whether a person is morally responsible for an injury or for a wrong. A judgement about a person’s moral responsibility for wrongdoing is a judgement as to whether that the person acted intentionally and should be blamed or punished, and pay restitution. Companies have the same moral responsibility as individuals, and they can be held accountable for decisions. Companies can be held morally responsible for a wrong and be required to correct the situation. It also helps ensure

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that we do not mistakenly punish, penalize, or blame innocent persons. Determining moral responsibility can alleviate shame or guilt when a person is not morally responsible. When an organization knows and practices moral responsibility, it may refrain from trying to rationalize conduct and accept responsibility for what was done. It helps the company avoid blaming an individual and using rationalization and self-deception for poor business actions.

Topic: Moral Responsibility and Blame Learning Objective: 1.5: Assess the factors that define and refine the concept of moral responsibility

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Chapter 2 Velasquez Test Bank MULTIPLE CHOICE 1. Which of the following describes judgments based on ethical principles that deal with fairness of the distribution of benefits and burdens in society? a. Rights b. Virtue c. Utilitarianism d. Justice Answer: D Topic: 2.1: Approaches to Moral Decision-Making Learning Objective 2.1: Examine the foundations of moral decision-making in business Skill Level: Understand the concepts Difficulty Level: Moderate 2. The ethical principles that advocate respect for the well-being and freedom of others are referred to as a. virtues. b. rights. c. fairness. d. justice.

Answer: B Topic: Approaches to Moral Decision-Making Learning Objective 2.1: Examine the foundations of moral decision-making in business Skill Level: Understand the concepts Difficulty Level: Moderate 3. Which of the following approaches to ethical decision-making is based on the idea that a course of action produces the most benefits over costs for everyone affected? a. Utilitarianism b. Fairness c. Virtue d. Justice Answer: A Topic: Approaches to Moral Decision-Making Learning Objective 2.1: Examine the foundations of moral decision-making in business Skill Level: Understand the concepts Difficulty Level: Moderate

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4. Many business analysts feel the best way to evaluate the ethics of a business decision is to analyze social costs and compare them to a. those affected by the decision. b. the cost of consequences. c. social benefits. d. the greatest net benefits.

Answer: C Topic: Utilitarianism: Weighing Social Costs and Benefits Learning Objective 2.2: Detail the concept of utilitarianism and how it is applied to business decisions Skill Level: Apply what you know Difficulty Level: Moderate 5. a. b. c. d.

Which of the following best describes the utility of a course of action by a business?

The most objective benefits of an action The level of acceptability of an action by society The amount of compromise needed to produce an action The combination of benefits and costs of an action

Answer: D Topic: Utilitarianism: Weighing Social Costs and Benefits Learning Objective 2.2: Detail the concept of utilitarianism and how it is applied to business decisions Skill Level: Analyze it Difficulty Level: Moderate 6. a. b. c. d.

Which of the following is considered to be a primary benefit of utilitarianism?

It advocates policies that create the biggest financial reward.

It produces the greatest benefits for society at a reasonable cost.

It allows governments to clearly define what is ethically right or wrong.

It impartially considers everyone’s interests.

Answer: D Topic: Utilitarianism: Weighing Social Costs and Benefits Learning Objective 2.2: Detail the concept of utilitarianism and how it is applied to business decisions Skill Level: Analyze it Difficulty Level: Moderate 7. Which of the following is based on the moral norms and principles that say all human beings are empowered to do something or have something done for them? a. Human rights b. Legal rights c. Constitutional rights

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d. Jurisdictional rights Answer: A Topic: Rights and Duties Learning Objective 2.3: Examine a rights-based approach to business ethics Skill Level: Apply what you know Difficulty Level: Moderate 8. Which of the following describes the duties others have to not interfere in certain activities of another person who is exercising a given right? a. Contractual rights b. Obligations c. Negative rights d. Duties Answer: C Topic: Rights and Duties Learning Objective 2.3: Examine a rights-based approach to business ethics Skill Level: Apply what you know Difficulty Level: Moderate 9. a. b. c. d.

Which type of rights are outcomes of a specific transaction between particular individuals?

Positive Contractual Moral Utility

Answer: B Topic: Rights and Duties Learning Objective 2.3: Examine a rights-based approach to business ethics Skill Level: Analyze it Difficulty Level: Easy 10. Which of the following best explains the idea of distributive justice? a. Punishments and penalties should be given to all those who do wrong. b. The larger the injustice, the more compensation an injured party should receive. c. Equals should be treated as equals; those who are not equal should be treated differently. d. Punishment should be greater for those who intentionally do wrong.

Answer: C Topic: Justice and Fairness Learning Objective 2.4: Explain justice and fairness as key ethical principles Skill Level: Understand the concepts Difficulty Level: Difficult 11. Which of the following statements support the views of egalitarians in terms of equality?

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a. b. c. d.

All humans are equal and goods should be allocated in equal portions.

There are differences among people that justify unequal treatment.

If all cannot be served equally, those who are first, or senior, should be served first.

Goods should be allocated based on need, ability, and effort.

Answer: A Topic: Justice and Fairness Learning Objective 2.4: Explain justice and fairness as key ethical principles Skill Level: Understand the concepts Difficulty Level: Moderate 12. The idea that benefits should be distributed based on the value of contribution is a principle of which concept? a. Socialism b. Work ethic c. Egalitarianism d. Justice Answer: D Topic: Justice and Fairness Learning Objective 2.4: Explain justice and fairness as key ethical principles Skill Level: Apply what you know Difficulty Level: Moderate 13. An ethic based on the fundamental value that relationships should be preserved and maintained is a _____ ethic. a. socialist b. retributive c. compensatory d. communitarian Answer: D Topic: An Ethic of Care Learning Objective 2.5: Analyze an ethic of care as applied to business decisions and practices Skill Level: Analyze it Difficulty Level: Moderate 14. Which of the following is a moral demand in an ethic of care? a. We should respond in a way that provides the most benefit to ourselves. b. We should respond positively to the needs and well-being of those who support our goals. c. We should respond in a way that furthers the goals of the majority. d. We should respond positively to the needs, values, and well-being of others.

Answer: D Topic: An Ethic of Care Learning Objective 2.5: Analyze an ethic of care as applied to business decisions and practices

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Skill Level: Analyze it Difficulty Level: Moderate 15. Which form of caring requires us to respond to a person’s needs while remaining objective and distant from that person? a. Caring after someone b. Caring about something c. Caring after ourselves d. Caring for someone Answer: A Topic: An Ethic of Care Learning Objective 2.5: Analyze an ethic of care as applied to business decisions and practices Skill Level: Analyze it Difficulty Level: Moderate 16. Generally speaking, which ethical guidelines have greater weight in the decision-making process? a. Moral rights b. Utilitarian standards c. Standards of justice d. Individual rights Answer: A Topic: Integrating Utility, Rights, Justice, and Caring Learning Objective 2.6: Evaluate an approach to business ethics that combines four main moral standards Skill Level: Analyze it Difficulty Level: Difficult 17. When considering moral standards, a large injustice or violation of rights would cause ____ to have more weight in the decision-making process. a. demands of impartiality b. demands of caring c. principles of impartiality d. utilitarian standards Answer: A Topic: Integrating Utility, Rights, Justice, and Caring Learning Objective 2.6: Evaluate an approach to business ethics that combines four main moral standards Skill Level: Analyze it Difficulty Level: Moderate 18. Which of the following should be the basis for moral judgment? a. Limiting the moral rights of individuals in the workplace

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b. Ensuring that distribution of benefits and burdens is based on status c. Limiting the influence of relationships d. Maximizing the net utility of actions Answer: D Topic: Integrating Utility, Rights, Justice, and Caring Learning Objective 2.6: Evaluate an approach to business ethics that combines four main moral standards Skill Level: Understand the concepts Difficulty Level: Moderate 19. Virtue ethics that consider a person’s moral character are referred to as _____ by many ethicists. a. action-based b. judgment-based c. agent-based d. standards-based Answer: C Topic: An Alternative to Moral Principles: Virtue Ethics Learning Objective 2.7: Relate virtue ethics to moral decision-making in business Skill Level: Understand the concepts Difficulty Level: Moderate 20. Which of the following best describes a valued disposition of a good human being, exhibited in the person’s habitual behavior? a. Moral virtue b. Vice c. Action-based focus d. Utilitarianism Answer: A Topic: An Alternative to Moral Principles: Virtue Ethics Learning Objective 2.7: Relate virtue ethics to moral decision-making in business Skill Level: Apply what you know Difficulty Level: Difficult 21. A theory of _____ judges an action based on the moral life and what morality obliges us do in certain situations. a. an ethic of virtues b. an ethic of principles c. moral principles d. moral justice Answer: B Topic: An Alternative to Moral Principles: Virtue Ethics

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Learning Objective 2.7: Relate virtue ethics to moral decision-making in business Skill Level: Understand the concepts Difficulty Level: Moderate 22. The majority of moral decisions are made without thinking through the consequences; these decisions are made through the _____ processes. a. conscious b. ethical reasoning c. unconscious d. logical reasoning Answer: C Topic: Unconscious and Conscious Moral Decisions Learning Objective 2.8: Differentiate unconscious and conscious moral decision-making processes and implications Skill Level: Apply what you know Difficulty Level: Easy 23. According to psychologist Scott Reynolds, when we find ourselves in new situations that require a reasoning process, the _____ takes over conscious reasoning. a. casuistry b. action principle c. ethics of virtue d. C-system Answer: D Topic: Unconscious and Conscious Moral Decisions Learning Objective 2.8: Differentiate unconscious and conscious moral decision-making processes and implications Skill Level: Apply what you know Difficulty Level: Moderate 24. Which of the following types of moral decision-making relies on past situations where there was a clear ethical response based on sound ethical reasoning? a. Cultural b. Casuistry c. Intention d. X-system Answer: B Topic: Unconscious and Conscious Moral Decisions Learning Objective 2.8: Differentiate unconscious and conscious moral decision-making processes and implications Skill Level: Understand the concept Difficulty Level: Moderate

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25. According to social psychologist Marc Hauser, when someone purposely harms another person, it is morally worse than the same level of harm created as a side effect of a positive goal.

Which of the principles for guiding moral judgment is being applied? a. The contact principle b. The paradigm principle c. The intention principle d. The action principle Answer: C Topic: Unconscious and Conscious Moral Decisions Learning Objective 2.8: Differentiate unconscious and conscious moral decision-making processes and implications Skill Level: Analyze it Difficulty Level: Moderate SHORT ANSWER 26. Explain the moral difference between rights and justice.

Sample Answer: Rights are based on the ethical principles that advocate respect for people’s freedom and well-being. Justice is based on ethical principles that identify just and unjust ways of distributing benefits and burdens among members of societies.

Topic: Approaches to Moral Decision Making Learning Objective 2.1: Examine the foundations of moral decision-making in business 27. Describe three issues that make determining utilitarianism difficult.

Sample Answer: The first utility is subjective and comparisons are difficult. Because there is no exact definition of benefits or cost as they relate to ethics, utility is subjective and it is difficult to establish comparisons. Utilities will have different actions for different people because each person has a different basis for making a judgment. The second issue is that some benefits and costs seem impossible to measure. Things like the value of personal and subjective things cannot be measured, nor can we predict all the future benefits and costs of a decision. The third issue is that it can be difficult to determine or understand exactly what the benefit and costs are. There are opposing opinions on what is ultimately good or beneficial. Bentham says that utility should be considered as property in any object that produces benefit, advantage, pleasure, good, or happiness or prevents mischief, pain, evil, or unhappiness to the party whose interest is being considered.

Topic: Utilitarianism: Weighing Social Costs and Benefits Learning Objective 2.2: Detail the concept of utilitarianism and how it is applied to business decisions 28. Discuss the three features of moral rights that establish enabling and protective functions.

Sample Answer: One feature of moral rights is that they are correlated closely with duties. One person’s moral right can be defined in terms of the moral duties others have toward that person.

Moral rights impose correlative duties on others to create positive performance. The second feature of moral rights is that they provide autonomy and equality in the pursuit of interests.

People must be free to pursue, or not pursue, activities. The gain of others should not justify

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interference with the ability to pursue areas of interest. This results in each of us being autonomous equals in our pursuits. The third area of moral rights provides a basis for justifying actions and seeking protection or aid from others. A moral right to do something means there is moral justification for doing it. If one has a right to do something, then there should be no interference. Others may prevent the exercising of the rights or have a duty to aid in exercising the right. An example of this would be a stronger person helping to defend the rights of a weaker person.

Topic: Rights and Duties Learning Objective 2.3: Examine a rights-based approach to business ethics 29. Describe how socialism supports justice based on needs and abilities of people.

Sample Answer: The socialist principle is based on the idea that all members of the community live up to their full potential by using their abilities in productive work. Work should be distributed according to ability, and the benefits produced by this work provide for the basic needs of the workers, including happiness and well-being. The socialist view uses the model of a family supporting each family member, where everyone contributes willingly to provide benefits and share burdens. Needs and abilities are taken into account when determining how to distribute the burdens and the benefits.

Topic: Justice and Fairness Learning Objective 2.4: Explain justice and fairness as key ethical principles 30. There are several criticisms of the ethic of care. Discuss two of those criticisms and create responses to address them.

Sample Answer: One criticism of an ethic of care is that there would be unjust favoritism toward those who share characteristics with us. One response to this criticism is to realize this is true of all approaches to ethics. Utilitarian ethics can conflict with ideas of justice, for example. The best counter to this argument is to balance the relative importance of caring versus justice in each specific situation. A second criticism of an ethic of care is the risk of burnout. When people are ethically responsible for all members of their community, there could be a demand that calls people to sacrifice their well-being to care for the well-being of others. The response to that criticism should include the idea that caring for the family or community includes caring for oneself. The need to care for self must be balanced with the need to care for others.

Topic: An Ethic of Care Learning Objective 2.5: Analyze an ethic of care as applied to business decisions and practices 31. Discuss the four standards used as the basis of moral judgments.

Sample Answer: The standards of utility use decisions that will use resources in the most beneficial way. This standard relies on measurements, estimates, and comparisons of relevant benefits as costs. These tools provide information on which the utilitarian moral judgment is based.

The standards of rights of individuals consider how individuals should be treated or respected.

These standards are used when actions are likely to affect people’s rights. The standards of rights of individuals considers if actions treat everyone involved, what will happened to them, and what legitimate expectations they may have of us.

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The standards of justice indicate how benefits and burdens should be distributed to members of a group. These standards must be used when evaluating actions that could have different distributive effects. These standards consider whether the behavior shares the benefits and burdens equally or based on needs, abilities, contributions and free choices of people.

The standards of caring indicate the kind of care that is owed to those we have relationships with, especially when there is dependency involved. These standards incorporate information about individual characteristics and needs of people, our relationship with those people, and the types and levels of caring expected in those relationships that will allow those relationships to continue.

Topic: Integrating Utility, Rights, Justice, and Caring Learning Objective 2.6: Evaluate an approach to business ethics that combines four main moral standards 32. Describe how an ethic of virtue can enhance the principles of utilitarianism, rights, justice, and caring.

Sample Answer: An ethic of virtue is not a fifth kind of moral principle but supports the principles of utilitarianism, rights, justice, and caring. An ethic of virtue adds to these principles by looking at the character people are required to have. An ethic of virtue will look at the other virtues people need to have in order to adhere to their moral principles when feelings or desires tempt them to make less ethical decisions. An ethic of virtue addresses issues related to motivation and feelings that have traditionally been ignored by ethics of principles.

Topic: An Alternative to Moral Principles: Virtue Ethics Learning Objective 2.7: Relate virtue ethics to moral decision-making in business 33. Discuss how the unconscious process uses past experiences to effect the moral decisionmaking process.

Sample Answer: We often do things that are morally right without thinking about the action. We make these ethical decisions throughout the day without a conscious and deliberate process of moral reasoning. Psychological studies suggest we have two ways of making moral decision, through conscious reasoning and through unconscious mental processes. Our brain takes in information and makes the decision automatically. This applies to the majority of our decisions.

According to psychologist Scott Reynolds, general memories of our experiences are stored in the brain as prototypes. The brain tries to match a new situation to experiences stored in the brain. If the experience matches the stored prototype, a decision is made without conscious thought.

Prototypes can change over time based on new experiences.

Topic: Unconscious and Conscious Moral Decisions Learning Objective 2.8: Differentiate unconscious and conscious moral decision-making processes and implications

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Chapter 3 Velasquez Test Bank MULTIPLE CHOICE 1. Distributing goods and services, and determining which members of society will receive what, is one of the tasks that must be achieved to have a. a utilitarian economy. b. an economic system. c. free trade. d. globalization.

Answer: B Topic: Globalization and the Business System Learning Objective: 3.1: Explain the impact of globalization on the business system Skill Level: Understand the Concepts Difficulty Level: Moderate

2.

Which of the following best describes how contemporary societies carry out the production of goods and services, and the distribution of these goods in society? a. Commands b. Debate c. Free trade d. Traditions Answer: A Topic: Globalization and the Business System Learning Objective: 3.1: Explain the impact of globalization on the business system Skill Level: Understand the Concepts Difficulty Level: Moderate

3. A system of normative beliefs that are shared by members of a social group are referred to as a. free markets. b. perfect freedom. c. globalization. d. ideology.

Answer: D Topic: Globalization and the Business System Learning Objective: 3.1: Explain the impact of globalization on the business system Skill Level: Apply what you know Difficulty Level: Easy Copyright © 2017, 2011, 2005 Pearson Education, Inc. All Rights Reserved

4. John Locke’s argument for free markets is based on which theory? a. Utilitarian b. Human nature c. Moral rights d. Values Answer: C Topic: Globalization and the Business System Learning Objective: 3.1: Explain the impact of globalization on the business system Skill Level: Apply what you know Difficulty Level: Moderate

5. According to John Locke, if there were no governments, what civil liberties would human beings have? a. Aggregate demand b. Invisible hand welfare c. Natural rights d. Market resource allocation Answer: C Topic: Free Markets and Rights: John Locke Learning Objective: 3.2: Analyze John Locke’s theory of natural rights as it relates to free markets Skill Level: Apply what you know Difficulty Level: Moderate

6. According to John Locke, ________ is the right to depose of possessions and persons as one sees fit. a. a negative right b. a state of perfect freedom c. a community right d. the invisible hand of market competition Answer: B Topic: Free Markets and Rights: John Locke Learning Objective: 3.2: Analyze John Locke’s theory of natural rights as it relates to free markets Skill Level: Analyze it Difficulty Level: Moderate

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7. There are several views on property rights, but those different views all have the same assumption, that private property is a. best controlled by the government. b. a positive right. c. best controlled by international rules. d. a bundle of rights.

Answer: D Topic: Free Markets and Rights: John Locke Learning Objective: 3.2: Analyze John Locke’s theory of natural rights as it relates to free markets Skill Level: Apply what you know Difficulty Level: Moderate 8. Which of the following is considered to be a weakness of Locke’s views on rights? a. Locke’s belief that natural rights are negative rights and they do not conflict with positive rights b. Locke’s belief that human beings are atomistic c. Locke’s belief that markets should be free because free markets reduce injustice and inequality d. Locke’s belief that governments should control the rights to life, liberty, and property Answer: A Topic: Free Markets and Rights: John Locke Learning Objective: 3.2: Analyze John Locke’s theory of natural rights as it relates to free markets Skill Level: Understand the concepts Difficulty Level: Difficult

9. Who of the following believed that free markets and private property produce greater benefits than government interference could? a. John Locke b. Adam Smith c. David Ricardo d. Karl Marx Answer: B Topic: Free Markets and Utility: Adam Smith Learning Objective: 3.3: Assess key arguments associated with Adam Smith’s utilitarian view of free markets Skill Level: Apply what you know Difficulty Level: Moderate

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10. According to Adam Smith’s view of the supply and demand process, how do consumers affect the price of a commodity? a. When there is not enough supply, consumers will bid the price of an item above the natural price. b. Producers reap greater profits when the price of the commodity is set below the natural price. c. When there is a shortage of a commodity, the price will sink to its natural level. d. Producers strive to achieve a natural pricing level in order to promote social utility.

Answer: A Topic: Free Markets and Utility: Adam Smith Learning Objective: 3.3: Assess key arguments associated with Adam Smith’s utilitarian view of free markets Skill Level: Analyze it Difficulty Level: Moderate 11. Which of the following best represents Adam Smith’s view of government intervention in advancing public welfare? a. Governments are responsible for intervening when it benefits the middle class. b. Governments should let individuals pursue their own self-interests, and buy and sell whatever they wish. c. Humans do not behave like rational economic creatures and must be forced into such behaviors. d. Governments can influence a consumer’s desire to save, thereby lowering aggregate demand.

Answer: B Topic: Free Markets and Utility: Adam Smith Learning Objective: 3.3: Assess key arguments associated with Adam Smith’s utilitarian view of free markets Skill Level: Apply what you know Difficulty Level: Moderate

12. Which of the following is a key assumption made by Adam Smith? a. Private property is unnecessary to human life. b. Private property encourages societies to look after each other. c. Private property is naturally produced. d. Private property must exist.

Answer: D Topic: Free Markets and Utility: Adam Smith Learning Objective: 3.3: Assess key arguments associated with Adam Smith’s utilitarian view of free markets Skill Level: Understand the concepts Copyright © 2017, 2011, 2005 Pearson Education, Inc. All Rights Reserved

Difficulty Level: Moderate

13. John Maynard Keynes argued that the total demand for goods and services is a combination of three economic sectors. Which of the following represent those three economic sectors? a. Income, interest rates, and economic depressions b. Goods, services, and ideas c. Households, businesses, and governments d. Unemployment, spending, and inflation Answer: C Topic: Free Markets and Utility: Adam Smith Learning Objective: 3.3: Assess key arguments associated with Adam Smith’s utilitarian view of free markets Skill Level: Analyze it Difficulty Level: Moderate

14. Economist David Ricardo developed one of the most important concepts in international trade theory used today. Ricardo’s idea that globalization and free trade boost economic output is based on a. comparative advantage. b. injustice. c. capitalist economics. d. materialism.

Answer: A Topic: Free Trade and Utility: David Ricardo Learning Objective: 3.4: Analyze comparative advantage as a foundation for free trade among nations Skill Level: Analyze it Difficulty Level: Difficult

15. According to Adam Smith, differences in things such as labor costs, skills, climate, and natural resources create a. comparative advantage. b. opportunity costs. c. free trade. d. absolute advantage.

Answer: D Topic: Free Markets and Utility: Adam Smith Learning Objective: 3.3: Assess key arguments associated with Adam Smith’s utilitarian view of free markets Skill Level: Understand the concepts Copyright © 2017, 2011, 2005 Pearson Education, Inc. All Rights Reserved

Difficulty Level: Easy

16. Which of the following is an assumption made by David Ricardo in supporting his claim that comparative advantage creates free trade and supports globalization? a. b. c. d.

The resources used to produce goods can be easily moved from one country to another.

Production costs are constant and do not decline with the acquisition of new technology.

Workers cannot move from one industry to another.

Multinational companies only close when they no longer have comparative advantage.

Answer: B Topic: Free Trade and Utility: David Ricardo Learning Objective: 3.4: Analyze comparative advantage as a foundation for free trade among nations Skill Level: Apply what you know Difficulty Level: Moderate 17. David Ricardo’s theory of comparative advantage generally ignores rules of international trade. Which of the following is the group that sets rules and guidelines for international trade in an effort to minimize disagreements and conflicts? a. World Bank b. U.S. federal government c. World Trade Organization d. International Monetary Fund Answer: C Topic: Free Trade and Utility: David Ricardo Learning Objective: 3.4: Analyze comparative advantage as a foundation for free trade among nations Skill Level: Apply what you know Difficulty Level: Moderate

18. Which of the following did Karl Marx claim created inequality and worker exploitation? a. Capitalism b. Free trade c. Comparative advantage d. Alienation Answer: A Topic: Karl Marx and Justice: A Critique of Free Markets Learning Objective: 3.5: Interpret Marxist views on the impact on workers of free trade and free markets Skill Level: Apply what you know Copyright © 2017, 2011, 2005 Pearson Education, Inc. All Rights Reserved

Difficulty Level: Moderate

19. According to Karl Marx, in a capitalist economy, what type of alienation is a worker experiencing when the worker is forced to work for someone else and makes money for the owner of the workplace? a. Alienating workers from their own productive work b. Alienating workers from themselves c. Alienating workers by denying them control d. Alienating workers from the products of their labor Answer: B Topic: A Critique of Free Markets Learning Objective: 3.5: Interpret Marxist views on the impact on workers of free trade and free markets Skill Level: Analyze it Difficulty Level: Difficult

20. According to Karl Marx, which of the following best describes the way a society organizes itself so that it can produce goods? a. Social superstructures b. Historical materialism c. Principles of justice d. Relations of production Answer: D Topic: A Critique of Free Markets Learning Objective: 3.5: Interpret Marxist views on the impact on workers of free trade and free markets Skill Level: Apply what you know Difficulty Level: Moderate

21. Karl Marx claimed that free markets create inequalities and assume that justice means equality or distribution according to need. What argument do critics of Karl Marx use to dispute his claim? a. True justice requires the presence of free markets. b. Free markets can encourage community instead of creating alienation. c. The principles of justice are difficult to define. d. The benefits of private property are more important than equality.

Answer: B Topic: A Critique of Free Markets Learning Objective: 3.5: Interpret Marxist views on the impact on workers of free trade and free markets Copyright © 2017, 2011, 2005 Pearson Education, Inc. All Rights Reserved

Skill Level: Analyze it Difficulty Level: Difficult

22. Which of the following best describes a combination of government regulation, partially free markets, and limited property rights? a. Capitalism b. Immiseration c. Mixed economy d. Communism Answer: C Topic: The Mixed Economy, New Forms of Property, and the End of Marxism Learning Objective: 3.6: Explain the mixed economy and redefinitions of property that affect the business system Skill Level: Understand the concepts Difficulty Level: Moderate

23. Which of the following best describes property that consists of nonphysical objects, such as music or information? a. Private property b. Copyright c. Patents d. Intellectual property Answer: D Topic: The Mixed Economy, New Forms of Property, and the End of Marxism Learning Objective: 3.6: Explain the mixed economy and redefinitions of property that affect the business system Skill Level: Apply what you know Difficulty Level: Moderate

24. Which of the following best describes a copyright? a. An invention of machines, processes, and products that is private property of the individual or organization b. A nonphysical object such as music or a software program. c. A specific expression of an idea owned by a person or organization d. The use of government policies to remedy differences.

Answer: C Topic: The Mixed Economy, New Forms of Property, and the End of Marxism Learning Objective: 3.6: Explain the mixed economy and redefinitions of property that affect the business system Skill Level: Apply what you know Copyright © 2017, 2011, 2005 Pearson Education, Inc. All Rights Reserved

Difficulty Level: Moderate 25. As traditionally communist countries move from economies based on pure socialism to economies that combine the best of socialism and capitalism, there has been great debate.

Which of the following best represents the beliefs of followers of Smith and Locke toward mixed economies? a. Governments will favor business interests. b. Government intervention tolerated by mixed economies does more harm than good. c. Allowing businesses to operate without government oversight worsens economic problems. d. Mixed economies diminish utilitarian benefits of free markets in terms of human rights.

Answer: B Topic: The Mixed Economy, New Forms of Property, and the End of Marxism Learning Objective: 3.6: Explain the mixed economy and redefinitions of property that affect the business system Skill Level: Apply what you know Difficulty Level: Moderate

SHORT ANSWER 26. Discuss the three types of social devices used to organize activities, motivate people, and determine who owns a society’s resources.

Sample Answer: The three types of social devices used to organize activities, motivate people, and determine who owns resources are traditions, commands, and markets. Primitive societies used economic systems based on tradition. These were small and relied on communal roles and customs to carry out the production and distribution of resources.

Today, large contemporary societies carry out the two main economic tasks based on the way they organize themselves, based on commands and markets. In an economic system based on commands, an authority, such as a government, makes the economic decisions about what is produced, by whom, and who will get it. Resources such as land and factories are almost always controlled by governments and are considered to belong to the people.

Market systems allow decisions about production and who will get what to be made by private companies. Resources are owned and managed by private individuals or private companies, not by the government. Motivation to work is based on the desire to get paid.

Topic: Globalization and the Business System Learning Objective: 3.1: Explain the impact of globalization on the business system 27. Discuss John Locke’s interpretation of natural rights.

Sample Answer: Locke is credited with the idea that human beings have a natural right to liberty and to private property. Locke claims that if there was no government, humans would be in a state of nature where the individual would be the equal of all others. Human beings would dispose of possessions and persons as they see fit within the bounds of the law of nature. Power and jurisdiction would be reciprocal, and no one would have more than Copyright © 2017, 2011, 2005 Pearson Education, Inc. All Rights Reserved

another. The law of nature says that each has a right to liberty and no one should be subjected to political power of another without consent. All people have rights of ownership over their bodies, their labor, and the products they produce.

Topic: Free Markets and Rights: John Locke Learning Objective: 3.2: Analyze John Locke’s theory of natural rights as it relates to free markets 28. Discuss John Locke’s idea that, in a state of nature, everyone would be political equals and free of constraints, and how those rights affect American institutions.

Sample Answer: Locke never used his idea of natural rights to argue for free markets.

However, others have, claiming each person has the right to liberty and property, and that governments must leave individuals free to exchange their labor and their property as they choose. This has a significant influence on American institutions of property. U.S. law holds that individuals have almost absolute rights to do what they want with their property and the government has only a limited right to interfere. This supports the Fifth Amendment rights of U.S. citizens, and is derived from the idea that private property rights are established by nature and property rights are generated through labor and trade.

Topic: Free Markets and Rights: John Locke Learning Objective: 3.2: Analyze John Locke’s theory of natural rights as it relates to free markets

29. According to Adam Smith, how does free market competition provide greater benefits than government interference?

Sample Answer: One point of support for free markets is the utilitarian argument that free markets and private property will produce more benefits than any government interference.

Free market competition will provide these increased benefits by enticing private business to produce and sell what consumers want and to do this at the lowest possible price. Private businesses will do this by trying to cut costs and reduce resources used. The free market, when working with private business, ensures the economy is producing what consumers want at the lowest possible price point. Smith claims that demand drives profit, and supply causes a rebound in price. Resources are allocated to those industries where they are in the most demand. The role of government is to advance the public welfare, and interventions in the market by the government will serve to interrupt the self-regulating effect of competition, thereby creating either surpluses or shortages.

Topic: Free Markets and Utility: Adam Smith Learning Objective: 3.3: Assess key arguments associated with Adam Smith’s utilitarian view of free markets 30. Discuss John Maynard Keynes’s criticism of Smith’s free market assumptions.

Sample Answer: Smith assumed that market forces would ensure full use of all resources, including labor. All available resources are used and demand always expands to absorb supply. However, Keynes argued that without government intervention, the demand for goods will not be high enough to absorb the supply, creating unemployment and economic Copyright © 2017, 2011, 2005 Pearson Education, Inc. All Rights Reserved

depression. The total demand for goods and services is the sum of demand from households, businesses, and government. Aggregate demand could be less than the aggregate production at full employment levels. This happens when households save instead of spend. However, according to Keynes, as spending falls, so does production, which results in less income for the household (because of reduced hours and layoffs). Keynes feels there must be a point of equilibrium where demand equals supply.

Topic: Free Markets and Utility: Adam Smith Learning Objective: 3.3: Assess key arguments associated with Adam Smith’s utilitarian view of free markets 31. Discuss how Ricardo’s theory of comparative advantage supports the ideas of globalization and free trade.

Sample Answer: Comparative advantage is part of the most significant economic arguments for globalization and free trade. According to Ricardo, globalization is good because specialization and free trade boost total economic output, and everyone can share in the increased output.

Ricardo showed that free trade creates prosperity for everyone. If a country specializes in making and exporting goods where opportunity costs are lower than opportunity costs to other nations, the first nation will have comparative advantage.

Topic: Free Trade and Utility: David Ricardo Learning Objective: 3.4: Analyze comparative advantage as a foundation for free trade among nations 32. Discuss Karl Marx’s view on how capitalist economies alienate workers.

Sample Answer: Marx explained that, in capitalism, workers work for someone else. Because the purpose of the work is to make money for the owner, it is not designed to be a fulfilling form of productivity and will not satisfy the workers’ own needs. Workers have no control over the products they make. The employer keeps the finished product and uses it to add to personal profit by selling it. The workers are left with wear and tear the labor inflicts on their body and mind. Workers also have little control over how they must relate to others. Workers must work with whomever the employer tells them to. A worker is forced to compete with other workers for pay and positon. Marx claimed that capitalism convinces workers that fulfillment lies in making more money, and Marx believed money will not satisfy human needs.

Topic: A Critique of Free Markets Learning Objective: 3.5: Interpret Marxist views on the impact on workers of free trade and free markets

33. Discuss how governments control the various aspects of a mixed economy.

Sample Answer: Many economists advocate the retention of market systems and private ownership but suggest modifying them with the use of government regulation to get rid of the most obvious defects. The combination of government regulation, partially free markets, and limited property rights create the mixed economy. The mixed economy retains a market Copyright © 2017, 2011, 2005 Pearson Education, Inc. All Rights Reserved

and private property system but relies on government intervention to remedy deficiencies.

Governments transfer money from the wealthy in the form of taxes and distribute it to the disadvantaged in the form of welfare and social services. Monopolies are regulated, nationalized, or outlawed. Monetary and fiscal policies try to regulate employment levels and regulatory agencies ensure firms do not engage in socially harmful behavior.

Topic: The Mixed Economy, New Forms of Property, and the End of Marxism Learning Objective: 3.6: Explain the mixed economy and redefinitions of property that affect the business system

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Chapter 4 Velasquez Test Bank MULTIPLE CHOICE 1. Which of the following models results in just outcomes, respects moral rights, and satisfies utilitarianism? a. Pure monopoly b. Equilibrium point c. Oligopoly d. Perfect market competition Answer: D Topic: Applying Ethics to Market Competition Learning Objective 4.1: Apply ethics to market competition Skill Level: Understand the Concepts Difficulty Level: Moderate 2. When every seller finds a willing buyer, and every buyer finds a willing seller, what has been achieved? a. Equilibrium b. Utility c. Positive demand d. Marginal utility Answer: A Topic: Perfect Competition Learning Objective 4.2: Outline the conditions that must be present to achieve ethical perfect competition Skill Level: Apply what you know Difficulty Level: Moderate 3. Which of the following indicates a principle that states the more of an item a person consumes, the less satisfying each additional item becomes? a. Imperfect competition b. Increasing marginal costs c. Diminishing marginal utility d. Equilibrium point Answer: C Topic: Perfect Competition Learning Objective 4.2: Outline the conditions that must be present to achieve ethical perfect competition

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Skill Level: Understand the concepts Difficulty Level: Moderate 4. Which of the following is achieved when the supply and demand curves for an item meet and cross? a. Marginal utility b. Equilibrium c. Imperfect competition d. Surplus Answer: B Topic: Perfect Competition Learning Objective 4.2: Outline the conditions that must be present to achieve ethical perfect competition Skill Level: Understand the concepts Difficulty Level: Moderate 5. a. b. c. d.

In a perfectly competitive market, when do prices achieve capitalist justice for the seller?

At the equilibrium point On the demand curve On the supply curve When utility is gained

Answer: C Topic: Perfect Competition Learning Objective 4.2: Outline the conditions that must be present to achieve ethical perfect competition Skill Level: Apply what you know Difficulty Level: Moderate 6. a. b. c. d.

When do prices in a perfectly competitive market motivate a firm to invest in resources?

When demand is low When resources can be used efficiently When consumers move to bundles of goods When demand is high

Answer: D Topic: Perfect Competition Learning Objective 4.2: Outline the conditions that must be present to achieve ethical perfect competition Skill Level: Analyze it Difficulty Level: Easy 7. In a perfectly competitive free market, what is the outcome when benefits and burdens are shared and individuals are paid based on the value of contribution made to the organization? a. Capitalist justice

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b. Marginal utility c. Equilibrium d. Price-fixing Answer: A Topic: Perfect Competition Learning Objective 4.2: Outline the conditions that must be present to achieve ethical perfect competition Skill Level: Analyze it Difficulty Level: Moderate 8. a. b. c. d.

Which of the following is an aspect of a monopoly market?

There are reduced barriers to entry in the market.

The supply and demand curves do not reach equilibrium.

Additional resources are added to the market to counter shortages.

One dominant seller has a substantial market share.

Answer: D Topic: Monopoly Competition Learning Objective 4.3: Evaluate monopoly competition in terms of ethical principles Skill Level: Understand the concepts Difficulty Level: Moderate 9.

Monopolies can charge prices well above the supply curve, and even above equilibrium price. Why don’t other producers enter the market when prices are above equilibrium? a. The price will fall to equilibrium, making profits unattainable. b. The monopolizing company will cut prices to drive out new competition. c. There are barriers to entry that make it virtually impossible to enter the market. d. It will be more difficult to establish a strong customer base.

Answer: C Topic: Monopoly Competition Learning Objective 4.3: Evaluate monopoly competition in terms of ethical principles Skill Level: Analyze it Difficulty Level: Moderate 10. The ability of a monopoly to charge high prices and reap high profits is a violation of a. supply and demand. b. capitalist justice. c. imperfect competition. d. utility.

Answer: B Topic: Monopoly Competition Learning Objective 4.3: Evaluate monopoly competition in terms of ethical principles Skill Level: Understand the concepts

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Difficulty Level: Moderate 11. In a monopoly market, quantities can be set at less than the equilibrium amount, and prices are set a. at equilibrium. b. above equilibrium. c. below equilibrium. d. at rates determined by the government.

Answer: B Topic: Monopoly Competition Learning Objective 4.3: Evaluate monopoly competition in terms of ethical principles Skill Level: Analyze it Difficulty Level: Moderate 12. Which of the following is an outcome of a monopoly market? a. Resources are used in ways that produce shortages, causing prices to be higher. b. Demand increases because of the scarcity of ownership. c. Prices are set below equilibrium and profit is made on volume, not cost levels. d. A perfectly competitive free market is achieved.

Answer: A Topic: Monopoly Competition Learning Objective 4.3: Evaluate monopoly competition in terms of ethical principles Skill Level: Analyze it Difficulty Level: Difficult 13. Keeping resources out of monopoly markets where shortages show more products are needed, and diverting resources to markets without a shortage violates which ethical principle? a. Capital justice b. Negative rights c. Supply and demand d. Utilitarianism Answer: D Topic: Monopoly Competition Learning Objective 4.3: Evaluate monopoly competition in terms of ethical principles Skill Level: Analyze it Difficulty Level: Difficult 14. a. b. c. d.

In an imperfectly competitive market, having a few dominant sellers will create a monopoly. anticompetitive practices. perfect competition. an oligopoly.

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Answer: D Topic: Oligopolistic Competition Learning Objective 4.4: Differentiate the ethical implications of oligopolistic and monopolistic competition Skill Level: Analyze it Difficulty Level: Moderate 15. Which of the following bests describes oligopoly markets? a. They are highly concentrated markets. b. There are very few barriers to entry. c. There is one significant seller supported by less dominant sellers. d. They have little ability to influence the market or prices.

Answer: A Topic: Oligopolistic Competition Learning Objective 4.4: Differentiate the ethical implications of oligopolistic and monopolistic competition Skill Level: Understand the concept Difficulty Level: Moderate 16. Which of the following is the outcome of two or more companies that were competitors joining together to create one company? a. A monopoly b. A horizontal merger c. Less concentration in the market d. Perfectly competitive markets Answer: B Topic: Oligopolistic Competition Learning Objective 4.4: Differentiate the ethical implications of oligopolistic and monopolistic competition Skill Level: Apply what you know Difficulty Level: Moderate 17. When managers of oligopolies work together to limit the quantity of goods available in the market and create a shortage, they can unfairly destroy smaller competitors by a. price-fixing. b. bid rigging. c. manipulating supply. d. exclusive dealing arrangements.

Answer: C Topic: Oligopolistic Competition Learning Objective 4.4: Differentiate the ethical implications of oligopolistic and monopolistic competition

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Skill Level: Analyze it Difficulty Level: Moderate 18. Which of the following occurs when managers in an oligopoly market agree in advance which company will submit a winning proposal for a product or service being offered to a buyer? a. Exclusive dealing arrangements b. Predatory pricing c. Retail maintenance agreements d. Bid rigging Answer: D Topic: Oligopolistic Competition Learning Objective 4.4: Differentiate the ethical implications of oligopolistic and monopolistic competition Skill Level: Analyze it Difficulty Level: Moderate 19. Which of the following occurs when prices are set at an artificial level with a goal of destroying a competitor? a. Predatory price discrimination b. Price discrimination c. Bribery d. Tying arrangements Answer: A Topic: Oligopolistic Competition Learning Objective 4.4: Differentiate the ethical implications of oligopolistic and monopolistic competition Skill Level: Apply what you know Difficulty Level: Moderate 20. Which of the following is considered to be the single most important piece of antitrust legislation in the United States today? a. The Interstate Commerce Act of 1887 b. The Sherman Antitrust Act of 1890 c. The Tobacco Trust Act of 1908 d. The Clayton Act of 1914 Answer: B Topic: Oligopolies and Public Policy Learning Objective 4.5: Interpret how public policy is developed in relation to the effects of oligopoly Skill Level: Understand the concepts Difficulty Level: Easy 21. Which of the following is a key interpretation of Section 2 of the Sherman Antitrust Act?

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a. b. c. d.

All monopolies are illegal and must be broken up.

A monopoly cannot use its power to maintain its monopoly.

A current monopoly can extend its monopoly into other markets.

A company cannot acquire a monopoly by buying another company.

Answer: B Topic: Oligopolies and Public Policy Learning Objective 4.5: Interpret how public policy is developed in relation to the effects of oligopoly Skill Level: Understand the concepts Difficulty Level: Difficult 22. Which of the following prohibits price discrimination, exclusive contracts, tying arrangements, and mergers between companies that may substantially lessen competition? a. The Interstate Commerce Act of 1887 b. The Sherman Antitrust Act of 1890 c. The Tobacco Trust Act of 1908 d. The Clayton Act of 1914 Answer: D Topic: Oligopolies and Public Policy Learning Objective 4.5: Interpret how public policy is developed in relation to the effects of oligopoly Skill Level: Understand the concepts Difficulty Level: Moderate 23. Which of the following is one of the main ideas behind the do-nothing viewpoint of an oligopoly power? a. Economies of scale are good for business. b. Concentration leads to interdependence among companies with little price competition. c. There is a positive correlation between concentration and profitability. d. Regulation should be set up to control the activities of large corporations.

Answer: A Topic: Oligopolies and Public Policy Learning Objective 4.5: Interpret how public policy is developed in relation to the effects of oligopoly Skill Level: Analyze it Difficulty Level: Moderate 24. According to J. Fred Weston, which of the following is a basic assumption of the antitrust view of oligopoly power? a. Concentration leads to less interdependence and price competition among companies. b. Concentration helps to ensure product differentiation leading to less need for advertising. c. There is a negative correlation between concentration and profitability. d. Concentration is due mostly to mergers, and a high degree of concentration is unnecessary.

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Answer: D Topic: Oligopolies and Public Policy Learning Objective 4.5: Interpret how public policy is developed in relation to the effects of oligopoly Skill Level: Analyze it Difficulty Level: Moderate 25. Which of the following views of oligopoly power holds that economies of scale will be lost if firms are broken up or limited in size? a. The regulation view b. The antitrust view c. The do-nothing view d. The trust-buster view Answer: A Topic: Oligopolies and Public Policy Learning Objective 4.5: Interpret how public policy is developed in relation to the effects of oligopoly Skill Level: Analyze it Difficulty Level: Moderate SHORT ANSWER 26. Identify the seven features of perfectly competitive free markets.

Sample Answer: First, there are many buyers and sellers and none of them have a substantial market share. Second, all buyers and sellers can freely enter and leave the market. Third, each buyer and seller has full knowledge about what other buyers and sellers are doing, including price, quantities, and the quality of the goods being bought and sold. Fourth, the goods sold in the market are all so similar that no one cares who buys and who sells. Fifth, the costs and benefits of producing or using the goods exchanged are placed entirely on those buying or selling the goods, not on external parties. Sixth, all buyers and sellers are utility maximizers, that is, each tries to get as much as possible for as little as possible. Finally, there are no external parties, such as governments, trying to regulate things like price, quantity, or quality of any goods being bought or sold.

Topic: Perfect Competition Learning Objective 4.2: Outline the conditions that must be present to achieve ethical perfect competition 27. How do price and quantity move to equilibrium in a perfectly competitive market?

Sample Answer: If prices move above equilibrium, there will be a surplus that drives the price back down to equilibrium. If price falls below equilibrium, then a shortage may occur, which will drive the price back up to equilibrium. When quantity is less than equilibrium, profits will increase and attract new sellers. New sellers will increase the quantity to equilibrium. If there is surplus quantity, prices will fall, driving sellers out. This will lower the quantity back to equilibrium.

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Topic: Perfect Competition Learning Objective 4.2: Outline the conditions that must be present to achieve ethical perfect competition 28. How does a monopoly market limit economic utility?

Sample Answer: A monopoly market does not encourage the monopolist to minimize resources consumed when producing goods. There is little incentive to reduce costs because the profit more than covers all the monopolist’s cost. Similarly, there is little incentive to find better, less costly ways of producing a product. Because monopolies have higher profits, there is little incentive to develop new technology that might increase its competitive edge over other firms, as there are no other competing firms.

Topic: Monopoly Competition Learning Objective 4.3: Evaluate monopoly competition in terms of ethical principles 29. Discuss how a monopoly places restrictions on the negative rights that a perfectly free market respects?

Sample Answer: Monopoly markets are markets that other sellers are not free to enter. Monopoly markets enable the monopoly firm to force buyers to buy goods they may not want in quantities they may not need. Monopoly markets are dominated by a single seller whose decisions determine the prices and quantities of a commodity offered. The monopoly has considerable power over the market. A monopoly market can, and generally will, deviate from the ideals of capital justice, economic utility, and negative rights. Instead of working toward a just equilibrium, a monopoly can impose unjustly high prices on the buyer, and can generate unjustly high profits. Monopoly markets provide an incentive for waste, misallocation of resources, and profit-gouging. Monopoly markets can dictate terms to the consumer.

Topic: Monopoly Competition Learning Objective 4.3: Evaluate monopoly competition in terms of ethical principles 30. Which of the seven features of a purely competitive market are not present in an oligopoly?

Sample Answer: In an oligopoly market, the market is shared by a relatively small number of large firms that can work together to exercise some influence on prices. The second missing feature is that sellers cannot easily enter the market. As with monopoly markets, barriers to entry may be due to the high costs of starting a business in that industry, may be the result of long-term contracts that have committed all buyers to firms already in the industry, or may be due to enduring loyalties created by brand-name advertising.

Topic: Oligopolistic Competition Learning Objective 4.4: Differentiate the ethical implications of oligopolistic and monopolistic competition 31. Discuss the three components of the fraud triangle.

Sample Answer: The first aspect of the fraud triangle has to do with pressures and incentives to commit fraud in order to achieve objectives. This can include pressures from peers, deteriorating business, market conditions, or personal incentives. The second component occurs when a person see an opportunity to engage in the wrongdoing. This occurs when a person has the ability to commit the fraud, when he or she is presented with circumstances that allow for a crime to be committed, and when the risk of detection is low. The last aspect is based on

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rationalization. Rationalization is a way to justify one’s actions. The wrongdoer may claim the action is “what everyone does” or something someone deserves.

Topic: Oligopolistic Competition Learning Objective 4.4: Differentiate the ethical implications of oligopolistic and monopolistic competition 32. Based on the assumptions of J. Fred Weston in his antitrust view of oligopoly power, what are the advantages of breaking up an oligopoly?

Sample Answer: On the basis of J. Fred Weston’s assumptions about oligopolies, proponents of the antitrust view have concluded that by breaking up large corporations into smaller units, higher levels of competition will emerge in those industries that are currently highly concentrated. The result will be a decrease in explicit and tacit collusion, lower prices for consumers, greater innovation, and the increased development of cost-cutting technologies that will benefit all of society.

Topic: Oligopolies and Public Policy Learning Objective 4.5: Interpret how public policy is developed in relation to the effects of oligopoly 33. Discuss the regulation view of oligopoly power.

Sample Answer: Under the regulation view, oligopoly corporations should not be broken up because their large size has beneficial consequences. Mass production and mass distribution of goods can only be carried out when there is a highly centralized accumulation of assets and personnel. Additionally, the concentration of assets allows large firms to take advantage of economies of scale. These savings are then passed on to consumers in the form of inexpensive and plentiful products. However, this viewpoint also holds that while firms should not be broken up, the ability of large firms to engage in price-fixing and other behaviors that may not be in the best interest of the public should be limited. To ensure consumers are not harmed by large firms, regulatory agencies should restrain and control the activities of these large corporations.

Topic: Oligopolies and Public Policy Learning Objective 4.5: Interpret how public policy is developed in relation to the effects of oligopoly

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Chapter 5 Velasquez Test Bank MULTIPLE CHOICE 1. From which external environment does a corporation draw the raw materials needed for a finished product? a. Consumer b. Natural c. Competition d. Social Answer: B Topic: The Dimensions of Pollution and Resource Depletion Learning Objective 5.1: Identify environmental threats related to the production of consumer goods Skill Level: Understand the concept Difficulty Level: Moderate 2. According to Michael Renner from the Worldwatch Institute’s State of the World 2015 report, what is driving most of our environmental problems? a. Economic growth b. Landfill growth c. Income growth d. Technology growth Answer: A Topic: The Dimensions of Pollution and Resource Depletion Learning Objective 5.1: Identify environmental threats related to the production of consumer goods Skill Level: Difficult Difficulty Level: Apply what you know 3.

Which of the following describes the undesirable contamination of the environment by human activities? a. Resource depletion b. Greenhouse effect c. Pollution d. Global warming Answer: C Topic: The Dimensions of Pollution and Resource Depletion

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Learning Objective 5.1: Identify environmental threats related to the production of consumer goods Skill Level: Apply what you know Difficulty Level: Moderate 4. Which of the following absorbs and holds heat from the sun, thereby contributing to the heating of the atmosphere? a. Global warming b. Acid rain c. Chlorofluorocarbons d. Greenhouse gases Answer: D Topic: The Dimensions of Pollution and Resource Depletion Learning Objective 5.1: Identify environmental threats related to the production of consumer goods Skill Level: Apply what you know Difficulty Level: Moderate 5. Which of the following is considered to be one of the most prevalent sources of the six most common forms of air pollution, affecting the air we breathe, human health, and the environment, and creating property damage? a. Airborne toxins produced by carcinogens such as cigarette smoke b. Acid rain produced by burning sulfur from resources such as coal c. Chlorofluorocarbons produced by items such as refrigerators and air conditioners d. Gases and particulates produced by automobiles Answer: D Topic: The Dimensions of Pollution and Resource Depletion Learning Objective 5.1: Identify environmental threats related to the production of consumer goods Skill Level: Understand the concept Difficulty Level: Moderate 6. a. b. c. d.

Which of the following is the main source of greenhouse gas emissions?

Power generation Farming Oil drilling and processing Industrial processes

Answer: A Topic: The Dimensions of Pollution and Resource Depletion Learning Objective 5.1: Identify environmental threats related to the production of consumer goods Skill Level: Apply what you know Difficulty Level: Moderate

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7. Which of the following describes the belief that concern for nature should be based on how the environment affects the interests of human beings? a. Ecological ethics b. Utilitarianism c. Teleological center of life d. Anthropocentric views Answer: D Topic: The Ethics of Pollution Control Learning Objective 5.2: Examine the important ethical considerations of pollution control Skill Level: Understand the concept Difficulty Level: Moderate 8. Which of the following describes the view that we have a moral obligation to protect nonhuman parts of the environment simply because they deserve to be protected? a. Anthropocentric values b. Ecological ethics c. Absolute bans d. Teleological ethics Answer: B Topic: The Ethics of Pollution Control Learning Objective 5.2: Examine the important ethical considerations of pollution control Skill Level: Understand the concept Difficulty Level: Moderate 9. Who claimed that a livable environment is not just something we would like to have, rather, it is something others have a duty to allow us to have? a. Paul Taylor b. Albert Schweitzer c. William Blackstone d. Aldo Leopold Answer: C Topic: The Ethics of Pollution Control Learning Objective 5.2: Examine the important ethical considerations of pollution control2 Skill Level: Understand the concept Difficulty Level: Moderate 10. Which of the following describes the external price that must be paid by those in surrounding communities when pollutants are generated? a. Private costs b. Divergent costs c. Market costs d. Social costs

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Answer: D Topic: The Ethics of Pollution Control Learning Objective 5.2: Examine the important ethical considerations of pollution control Skill Level: Understand the concept Difficulty Level: Moderate 11. Which of the following is an ethical deficiency that can occur when a market is no longer allocating resources or distributing commodities in a way that maximizes utility? a. Society will prevent overproduction, thereby limiting resources being consumed. b. Goods become more efficiently distributed to consumers as external costs become differentiated. c. Firms that do not have to pay external costs use up and waste resources being consumed by external costs. d. The overproduction of a commodity results in the production of other commodities, creating greater demand.

Answer: C Topic: The Ethics of Pollution Control Learning Objective 5.2: Examine the important ethical considerations of pollution control Skill Level: Analyze it Difficulty Level: Difficult 12. Which of the following is an ethical market approach to environmental protection? a. Humans have a right to a livable environment. b. Nonhumans have intrinsic value and must be protected. c. There are not remedies for justice when internalizing the cost of environmental protection. d. External costs violate utility, rights, and justice, so they should be internalized.

Answer: D Topic: The Ethics of Pollution Control Learning Objective 5.2: Examine the important ethical considerations of pollution control Skill Level: Analyze it Difficulty Level: Moderate 13. How can producers remedy external costs of production when they internalize the costs of pollution? a. By absorbing the cost when determining the price of its goods b. By imposing the costs to a third-party polluting agent c. By practicing lessons of the precautionary principle d. By maximizing the rule of probability theory Answer: A Topic: Remedies as Duties of the Firm Learning Objective 5.3: Assess the approaches to internalizing the external costs of pollution Skill Level: Apply what you know

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Difficulty Level: Moderate 14. Which of the following is one way producers can internalize the external costs of pollution? a. By determining who is receiving benefits from the pollution and increasing costs to that group b. By using pollution-control devices and stopping pollution at its source c. By incorporating distributive justice and distributing the cost of pollution to all d. By increasing rates for those nearest the source of the pollution Answer: B Topic: Remedies as Duties of the Firm Learning Objective 5.3: Assess the approaches to internalizing the external costs of pollution Skill Level: Analyze it Difficulty Level: Moderate 15. When organizations pollute the local community, _____ occurs as housing values decline, wealthy owners move, and neighborhoods become inhabited by the poor. a. environmental racism b. internalizing external costs c. environmental injustice d. distributive justice Answer: C Topic: Remedies as Duties of the Firm Learning Objective 5.3: Assess the approaches to internalizing the external costs of pollution Skill Level: Understand the concepts Difficulty Level: Moderate 16. Which of the following says that if a practice carries an unknown risk of unknown proportions, the practice should be rejected until the risk is nonexistent or insignificant? a. Informed consent b. Utilitarian approach c. Maximum rule of probability theory d. Precautionary principle Answer: D Topic: Remedies as Duties of the Firm Learning Objective 5.3: Assess the approaches to internalizing the external costs of pollution Skill Level: Understand the concepts Difficulty Level: Moderate 17. Which of the following claims that only when patterns of hierarchy and domination change will we be able to deal with environmental crises? a. Social ecology b. Ecofeminism c. Ethics of caring

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d. Lockean principle Answer: A Topic: Remedies as Duties of the Firm Learning Objective 5.3: Assess the approaches to internalizing the external costs of pollution Skill Level: Analyze it Difficulty Level: Moderate 18. Which of the following supports the idea of replacing the destruction of nature with the idea of nurturing our relationships with nature and all living things? a. Social ecology b. Ecofeminism c. Ethic of caring d. Lockean principle Answer: C Topic: Remedies as Duties of the Firm Learning Objective 5.3: Assess the approaches to internalizing the external costs of pollution Skill Level: Understand the concepts Difficulty Level: Moderate 19. According to the utilitarian approach to pollution removal, how do costs of removal determine the optimal level of removal? a. Costs of removal still allow for satisfactory stakeholder profits. b. Costs of removal equal the benefits received by removal. c. Costs of removal become reduced through the use of technology. d. Costs of removal are lower than the unknown risks of removal.

Answer: B Topic: Remedies as Duties of the Firm Learning Objective: 5.3: Assess the approaches to internalizing the external costs of pollution Skill Level: Analyze it Difficulty Level: Moderate 20. Which of the following refers to saving or rationing natural resources so they can be used at a later date? a. Conservation b. Depletion c. Ecological ethics d. Sustainability Answer: A Topic: The Ethics of Conserving Resources Learning Objective: 5.4: Evaluate the ethics related to the conservation of resources for future generations Skill Level: Apply what you know

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Difficulty Level: Moderate 21. Which of the following best exemplifies the Lockean principle? a. Future generations do not now exist and may never exist. b. The current generation is required to increase sustainability for the next generation. c. Because we do not know the interests of future generations, we cannot say what rights they have. d. Each generation should leave enough and as good for others.

Answer: D Topic: The Ethics of Conserving Resources Learning Objective: 5.4: Evaluate the ethics related to the conservation of resources for future generations Skill Level: Analyze it Difficulty Level: Moderate 22. According to William Shepherd and Clair Wilcox, businesses in markets have developed a view of future scarcity of resources based on the idea that a. businesses consume resources quickly before their competitors have a chance. b. even though businesses cannot predict the future, they should still ensure resources will always be available. c. businesses will consider externalities and will strive to protect resources. d. the only means of conserving for the future appears to be in the hands of stakeholders.

Answer: A Topic: The Ethics of Conserving Resources Learning Objective: 5.4: Evaluate the ethics related to the conservation of resources for future generations Skill Level: Analyze it Difficulty Level: Difficult 23. Which of the following best describes sustainability? a. Giving our immediate successors a world in better condition than it is now b. The present generation’s need to sacrifice for future generations’ rights c. The saving or rationing of natural resources for later us d. The capacity something has to continue to function into the future Answer: D Topic: The Ethics of Conserving Resources Learning Objective: 5.4: Evaluate the ethics related to the conservation of resources for future generations Skill Level: Understand the concepts Difficulty Level: Easy

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24. According to E. F. Schumacher, if we do not preserve enough nonrenewable resources, future generations will have to _____ in order to maintain their quality of life at a level similar to ours. a. switch from using capital-intensive technologies to more labor-intensive technologies b. have a goal of decreasing production until a steady state is achieved c. maintain a population where wealth is maintained at a minimal but constant level d. limit physical production and consumption to the lowest feasible level Answer: A Topic: The Ethics of Conserving Resources Learning Objective: 5.4: Evaluate the ethics related to the conservation of resources for future generations Skill Level: Analyze it Difficulty Level: Difficult 25. Which of the following is implied by environmental sustainability? a. The capacity of resources must continue to meet the needs of present generations. b. Future generations will have to find ways to meet their own needs through the use of technology. c. Humanity should not deplete renewable resources faster than we can replace them. d. Environmental, economic, and social sustainability are all interrelated.

Answer: C Topic: The Ethics of Conserving Resources Learning Objective: 5.4: Evaluate the ethics related to the conservation of resources for future generations Skill Level: Apply what you know Difficulty Level: Moderate SHORT ANSWER 26. How does acid rain affect the environment?

Sample Answer: Acid rain occurs when coal containing high levels of sulfur is burned and releases large quantities of sulfur oxides and nitrogen oxides into the atmosphere. These acids are carried into the air where they combine with vapor in clouds, and return to the earth as acid rain. The acid rain then gets carried into lakes and rivers. Many fish populations cannot survive in lakes and rivers that are highly acidic. Acid rain also destroys trees, plants, lichens, and mosses. Acid rain can leach toxic metals from soil and carry them into waterways, where the toxins can contaminate the drinking water. Additionally, acid rain corrodes and damages buildings and other objects, particularly those made from iron, limestone, and marble.

Topic: The Dimensions of Pollution and Resource Depletion Learning Objective 5.1: Identify environmental threats related to the production of consumer goods

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27. Discuss the various effects of climate change.

Sample Answer: The UN Intergovernmental Panel on Climate Change has found that carbon emissions are responsible for changes in the climate. Climate change has occurred on all continents and in all oceans. The more disruption to the climate, the greater the risk of severe and irreversible impacts for people and ecosystems. There have been large shifts of vegetation to higher latitudes because of global warming. Because of warming, forests and wetlands will disappear and bodies of water such as lakes and oceans will warm, shifting the distribution of fish and other marine species. Climate change also creates an increase in natural disasters, especially in low-lying coastal zones as glaciers and ice sheets melt. Third, climate change results in an increase in vector-borne infectious diseases. As temperatures rise, carriers such as mosquitoes move to cooler places, bringing diseases with them.

Topic: The Dimensions of Pollution and Resource Depletion Learning Objective 5.1: Identify environmental threats related to the production of consumer goods 28. Discuss how William Blackstone’s views on environmental rights have been supported by federal law.

Sample Answer: Blackstone believed a person has a moral right to a thing that permits him to live a human life. This would include nature and the environment. Several states have introduced laws that support this right. Additionally, the federal government has passed several acts to protect the environment. The National Environmental Policy Act of 1969 states that one of its purposes is to “assure for all Americans safe, healthful, productive, and aesthetically and culturally pleasing surroundings.” Subsequent acts such as the Water Pollution Control Act, the Clean Water Act, and the Air Quality Act have established standards to impose controls on pollution.

Topic: The Ethics of Pollution Control Learning Objective 5.2: Examine the important ethical considerations of pollution control 29. Discuss how pollution violates the justice or fairness that characterizes a competitive free market.

Sample Answer: In a well-functioning competitive free market, the value of what buyers and sellers receive from their market exchanges equals the value of what they contribute. However, when a market generates pollution, there are external costs that some people have to pay in addition to what they pay for the goods they receive from the market. These costs are unfair: they are costs the producer imposes on people against their will, and for which these people get nothing in return. All market exchanges are voluntary in a competitive free market, and the market respects the negative right to choose the exchanges made. People are free to enter or leave the market. However, when a producer generates pollution, the producer imposes costs on people who did not voluntarily choose, thereby violating their right to choose, Victims are not given the opportunity to enter or leave the market and get nothing in return.

Topic: The Ethics of Pollution Control Learning Objective 5.2: Examine the important ethical considerations of pollution control 30. Discuss how internalizing the external cost of pollution is consistent with the requirements of retributive and compensatory justice.

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Sample Answer: Retributive justice requires that those who are responsible for and benefit from an injury, such as pollution, should bear the burdens of correcting the injury. Compensatory justice requires that those who have been injured, such as those whose environment are being polluted, should be compensated by those who injure them. These requirements imply that the cost of pollution control should be paid by those who create the pollution and who have benefited from the pollution activities. Also, the benefits of pollution control should flow to those who have had to bear the external costs of pollution. Internalizing external costs seems to meet the two requirements: the costs of pollution control are borne by stockholders and customers, both of whom benefit from the polluting activities of the firms, and second, the benefits of pollution control flow to those neighbors who once had to put up with the firm’s pollution.

Topic: Remedies as Duties of the Firm Learning Objective 5.3: Assess the approaches to internalizing the external costs of pollution 31. Discuss the concept of ecofeminism.

Sample Answer: Ecofeminism is the idea that there are important connections between the domination of women and the domination of nature. Social practices that have put women in subordinate positions to men allow men to develop a “logic of domination” over all things, including nature. The subordination of women leads to a subordination of things seen as female, such as referring to nature as “mother nature.” Social ecologists argue that humans should see themselves as stewards of nature, not as masters who should dominate nature. Traditional gender roles and distinctions between feminine and masculine should be eliminated. Instead, people should work to remedy ecological problems through the creation of an alternative culture based on a perspective of caring.

Topic: Remedies as Duties of the Firm Learning Objective 5.3: Assess the approaches to internalizing the external costs of pollution 32. Discuss the utilitarian argument for conserving and preserving natural resources for future generations.

Sample Answer: Utilitarians favor the Lockean principle that each should leave enough and as good for others. Attfield suggest that is does not necessarily mean leaving the world with the same resources; rather, we should maintain the same level of output through conservation, recycling, or technological innovation. Similar utilitarian arguments say that each generation has a duty to maximize the future beneficial consequences of its actions and minimize future injurious consequences. However, they argue the future consequences should be given less weight in proportion to their uncertainty and distance into the future. Therefore, we have at least an obligation to the generation that follows ours and less responsibility for those generations off in the future because we do not know what technologies they will have.

Topic: The Ethics of Conserving Resources Learning Objective: 5.4: Evaluate the ethics related to the conservation of resources for future generations 33. Discuss the three pillars of sustainability.

Sample Answer: The concept of sustainability is commonly interpreted as depending on three pillars; our economic activities, our social activities, and our environmental activities. These three areas are interrelated and dependent on each other. Sustainability in any one area is

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possible only if the other areas are sustainable. Our lifestyles and consumption patterns, as well our economic practices (such as the way we manufacture and use resources) all affect the environment. For example, we can pursue economic growth through manufacturing that depletes our natural resources, while the depletion of the environmental resources can limit or prevent us from pursuing economic growth. Our lifestyles teach us to consume things that harm the environment, and social sustainability requires creating societies that allow us to develop cultures, communities, and ways of life that respect environmental sustainability, allowing the environment to continue to provide things we need for survival.

Topic: The Ethics of Conserving Resources Learning Objective: 5.4: Evaluate the ethics related to the conservation of resources for future generations

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Chapter 6 Velasquez Test Bank MULTIPLE CHOICE 1. Which of the following unethical practices occurs when consumers are signed up and billed for third-party services without their knowledge or consent? a. Fraud and deception b. Due care c. Coercion d. Cramming Answer: D Topic: Everyday Consumer Risks Learning Objective 6.1: Identify risks that may occur with the use of consumer products Skill Level: Understand the concepts Difficulty Level: Moderate 2. Which of the following represents an argument for the market approach to consumer protection? a. More demands for safety means government should not have to interfere. b. Sellers will provide safety even if consumers do not demand it. c. More demand for safety encourages more safety. d. Government intervention makes the market fair, efficient, and less coercive.

Answer: C Topic: Markets and Consumer Protection Learning Objective 6.2: Evaluate the arguments for and against consumer protection within markets Skill Level: Apply what you know Difficulty Level: Moderate 3. In terms of product safety, what is the potential result of government intervention in consumer markets? a. Safety is reduced to a commodity that must be provided even if unwanted. b. Markets become unfair, inefficient, and coercive. c. The government bears the added cost of incorporating safety. d. Consumers will pay extra for safety if sellers provide it.

Answer: B Topic: Markets and Consumer Protection Learning Objective 6.2: Evaluate the arguments for and against consumer protection within markets

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Skill Level: Analyze it Difficulty Level: Moderate 4. Which of the following views supports the idea that when consumers use products in a manner that is careless, and then become injured, the responsibility is on the consumer, not the manufacturer? a. Contractual b. Due-care c. Social cost d. Irrational purchases Answer: A Topic: Markets and Consumer Protection Learning Objective 6.2: Evaluate the arguments for and against consumer protection within markets Skill Level: Understand the concepts Difficulty Level: Moderate 5. Which of the following is a common problem with the market approach to consumer protection? a. Consumers are often not rational about product risk or probabilities. b. Consumers have too much information and won’t take time to understand it. c. Government has made excess information too inexpensive and easy to find. d. Consumers expect the government to monitor all aspects of safety.

Answer: A Topic: Markets and Consumer Protection Learning Objective 6.2: Evaluate the arguments for and against consumer protection within markets Skill Level: Analyze it Difficulty Level: Moderate 6. According to the contractual view of the business firm’s duties to its customers, what is created by the contractual relationship between a firm and its customers? a. Universalized contracts b. Moral duties c. Social rules d. Secondary duties Answer: B Topic: The Contractual View of the Manufacturer’s Duties to Consumers Learning Objective 6.3: Explain how a firm's moral duties to consumers may be held in a contractual relationship Skill Level: Analyze it Difficulty Level: Moderate

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7. The most basic moral duty of a business is to provide customers with a product or service that lives up to all claims made about that product or service by the business. This is referred to as a(n) a. undue influence. b. secondary duty. c. express warranty. d. service life.

Answer: C Topic: The Contractual View of the Manufacturer’s Duties to Consumers Learning Objective 6.3: Explain how a firm's moral duties to consumers may be held in a contractual relationship 3 Skill Level: Understand the concepts Difficulty Level: Moderate 8. Which implied claim refers to the estimated amount of time a product will function as effectively as a consumer is led to believe it will? a. Reliability b. Service life c. Maintainability d. Product safety Answer: B Topic: The Contractual View of the Manufacturer’s Duties to Consumers Learning Objective 6.3: Explain how a firm's moral duties to consumers may be held in a contractual relationship Skill Level: Apply what you know Difficulty Level: Moderate 9. Which of the following represents the idea that a business has a moral responsibility to fully explain what a buyer is purchasing and exactly what the terms of the sale are? a. The duty not to misrepresent b. The duty not to coerce c. The duty to comply with express claims d. The duty of disclosure Answer: D Topic: The Contractual View of the Manufacturer’s Duties to Consumers Learning Objective 6.3: Explain how a firm's moral duties to consumers may be held in a contractual relationship Skill Level: Understand the concepts Difficulty Level: Moderate 10. Which of the following is one of the main objections to the contractual view of a business firm’s duties to its customers? a. The use of indirect agreements that cover implied warranties

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b. The idea that buyers and sellers are equals in the transaction c. The assumption that sellers deal directly with buyers d. The enforcement of the doctrine of caveat emptor Answer: C Topic: The Contractual View of the Manufacturer’s Duties to Consumers Learning Objective 6.3: Explain how a firm's moral duties to consumers may be held in a contractual relationship Skill Level: Analyze it Difficulty Level: Moderate 11. Which of the following is based on the idea that consumers and sellers are not equals in the transactional relationship? a. The doctrine of caveat emptor b. The Uniform Commercial Code c. The social costs view d. The due-care view Answer: D Topic: The Due-Care View of the Manufacturer’s Duties to Consumers Learning Objective 6.4: Describe the manufacturer’s responsibilities to consumers as presented by the due-care view Skill Level: Understand the concepts Difficulty Level: Moderate 12. Which of the following represents the responsibility of a manufacture under the due-care view of business responsibility? a. Consumers and sellers are equally skilled in evaluating the quality of a product, and they must protect their own best interests. b. Consumers depend on the expertise of the manufacturer; therefore, the manufacturer must take due care to ensure others are not injured by the product. c. Consumers are free to agree to buy a product with certain qualities, and they are also free to buy products with other qualities. d. The seller has a moral responsibility to the buyer of its product, often a wholesaler, and does not have a due-care relationship with the end-user of the product, often a consumer.

Answer: B Topic: The Due-Care View of the Manufacturer’s Duties to Consumers Learning Objective 6.4: Describe the manufacturer’s responsibilities to consumers as presented by the due-care view Skill Level: Apply what you know Difficulty Level: Difficult 13. Under the due-care view of moral responsibility, why do manufacturers have a greater duty to take care to ensure that consumers’ interests are not harmed by the products they offer? a. Manufacturers have greater knowledge and expertise that consumers lack.

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b. There is a strong bond of trust between consumers and manufacturers. c. Consumers have less time to adequately research goods and services before purchase decisions. d. Manufacturers have more time to consider the needs of each consumer and how they will use a product or service.

Answer: A Topic: The Due-Care View of the Manufacturer’s Duties to Consumers Learning Objective 6.4: Describe the manufacturer’s responsibilities to consumers as presented by the due-care view Skill Level: Analyze it Difficulty Level: Moderate 14. How can a manufacturer practice due care in the production and manufacturing process? a. Determine the mental capacities of all persons who will use the product. b. Ensure compromises are not made that will affect the safety of the final product. c. Test the product under a variety of conditions with a variety of materials. d. Determine the effects of aging and wear based on product design.

Answer: B Topic: The Due-Care View of the Manufacturer’s Duties to Consumers Learning Objective 6.4: Describe the manufacturer’s responsibilities to consumers as presented by the due-care view Skill Level: Apply what you know Difficulty Level: Moderate 15. Which of the following represents a major fault in the due-care view of moral responsibility? a. It places the cost for unforeseen product injuries in the hands of the manufacturer. b. It requires the consumers to use products in a way that minimizes risk of injury or harm. c. It requires the manufacturer to determine how much risk is acceptable for the consumer. d. It identifies specific formulas to determine the levels of due care required for each product.

Answer: C Topic: The Due-Care View of the Manufacturer’s Duties to Consumers Learning Objective 6.4: Describe the manufacturer’s responsibilities to consumers as presented by the due-care view Skill Level: Analyze it Difficulty Level: Difficult 16. Which of the following views of the manufacturers’ duties to consumers holds that the manufacturer should pay the cost of injuries sustained through defects in the product, even when due care has been exercised? a. The due-care view of business responsibility b. The contractual view of manufacturers’ responsibilities c. The duty of disclosure d. The social costs view of the manufacturers’ duties

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Answer: D Topic: The Social Costs View of the Manufacturer’s Duties to Consumers Learning Objective 6.5: Examine the broader role of manufacturer responsibility as expressed by the social costs view Skill Level: Analyze it Difficulty Level: Moderate 17. Which of the following is the basis for the social cost view? a. Caveat vendor b. Cramming c. Coercion d. Caveat emptor Answer: A Topic: The Social Costs View of the Manufacturer’s Duties to Consumers Learning Objective 6.5: Examine the broader role of manufacturer responsibility as expressed by the social costs view Skill Level: Understand the concepts Difficulty Level: Easy 18. Which of the following criticisms of the social cost view supports the idea that the social cost view is unjust? a. The social cost view assumes that being required to pay for the cost of injuries will inspire manufacturers to reduce the number of accidents. b. The social cost view requires manufacturers to pay for unforeseeable and unpreventable injuries. c. The social cost view has increased the number of lawsuits under the strict liability claim. d. The social cost view does not consider the standard utilitarian assumptions about the values of efficiency.

Answer: B Topic: The Social Costs View of the Manufacturer’s Duties to Consumers Learning Objective 6.5: Examine the broader role of manufacturer responsibility as expressed by the social costs view Skill Level: Analyze it Difficulty Level: Moderate 19. Which of the following is a claim made by critics of the social costs view based on the idea that an increase in consumer carelessness will lead to an increase in consumer injuries? a. The social cost view is unjust. b. The social cost view places undue burdens on manufacturers. c. The social cost view is based on incorrect assumptions. d. The social cost view places undue burdens on insurance carriers.

Answer: C

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Topic: The Social Costs View of the Manufacturer’s Duties to Consumers Learning Objective 6.5: Examine the broader role of manufacturer responsibility as expressed by the social costs view Skill Level: Analyze it Difficulty Level: Moderate 20. Which of the following best describes the implied value of the function of commercial advertising? a. To provide unbiased information to the consumer b. To distinguish a mass audience from a private, more specific audience c. To provide objective information to the consumer d. To sell a product to the consumer Answer: D Topic: Advertising Ethics Learning Objective 6.6: Assess the ethical concerns associated with information and persuasion in advertising Skill Level: Apply what you know Difficulty Level: Easy 21. Which of the following are the costs of the resources consumed in producing or improving a product? a. Selling costs b. Production costs c. Social effects costs d. Materialistic value Answer: B Topic: Advertising Ethics Learning Objective 6.6: Assess the ethical concerns associated with information and persuasion in advertising Skill Level: Understand the concepts Difficulty Level: Moderate 22. Which of the following ethical factors are being evaluated when we look at an advertisement’s ability to inform or persuade a consumer? a. Effects on belief b. Materialistic values c. Effects on desire d. Social effects Answer: C Topic: Advertising Ethics Learning Objective 6.6: Assess the ethical concerns associated with information and persuasion in advertising Skill Level: Analyze it

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Difficulty Level: Moderate 23. Which of the following describes a person’s thoughts, beliefs, values, and feelings? a. Moral rights b. Physical privacy c. Ethical rights d. Psychological privacy Answer: D Topic: Consumer Privacy Learning Objective 6.7: Outline ethical and unethical business practices as they relate to the consumer’s right to privacy Skill Level: Understand the concepts Difficulty Level: Moderate 24. Which of the following describes an enabling function of privacy? a. Privacy helps to keep potentially embarrassing information private. b. Privacy helps individuals to sustain distinct social roles. c. Privacy helps protect individual rights based on values others may not hold. d. Privacy helps individuals from involuntarily harming their own reputation.

Answer: B Topic: Consumer Privacy Learning Objective 6.7: Outline ethical and unethical business practices as they relate to the consumer’s right to privacy Skill Level: Analyze it Difficulty Level: Moderate 25. Which of the following describes the reason physical privacy is as important as psychological privacy. a. Inner lives cannot be intruded upon by other individuals. b. Individuals have the moral right to substantial interests in things. c. Inner lives are revealed by physical activities and expressions. d. Revealing private information is an invasion of the physical person.

Answer: C Topic: Consumer Privacy Learning Objective 6.7: Outline ethical and unethical business practices as they relate to the consumer’s right to privacy Skill Level: Apply what you know Difficulty Level: Moderate SHORT ANSWER 26. Explain the idea that in the market approach to consumer protection, when consumers demand more safety from products, increased product safety is encouraged.

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Sample Answer: In the market approach to consumer protection, consumer safety can be provided efficiently through the free market because sellers must respond to consumer demand if they are to make a profit. If consumers want products to be safer, they will buy products that are safe and refuse to buy products that are unsafe. Manufacturers will respond to this demand by building more safety into their products, or they will risk losing customers to competitors with safer products. Thus, if consumers want safety, the market will provide it, and sellers will price it according to how much it costs to provide it and how consumers think the safety features are worth. As a result, the market will provide safety at a fair price in ways that include an efficient use of society’s resources.

Topic: Markets and Consumer Protection Learning Objective 6.2: Evaluate the arguments for and against consumer protection within markets 27. Discuss the idea of limiting the government’s interference in safety of consumer products.

Sample Answer: If consumers do not place a high value on safety and will not pay more for safety or safe products, then government should not force manufacturers to build more safety into their products. Forcing manufacturers to provide more safety than consumers want will increase manufacturing costs, which will lead to higher consumer prices. Ultimately, consumers are forced to pay for a product feature they did not want. Such government interference distorts markets by leading manufacturers to invest society’s resources where there is little demand. Only consumers can say what value they place on safety, the market approach argues, and they should be allowed to register their preferences through their free choices in markets and not be coerced by businesses or governments into paying for safety levels they do not want. Such coercion leads to unfairness and does not respect consumers’ right of free choices, and thereby reduces social utility.

Topic: Markets and Consumer Protection Learning Objective 6.2: Evaluate the arguments for and against consumer protection within markets 28. According to the contractual view of the business firm’s duties to its customers, what are the four main moral duties a business is responsible for?

Sample Answer: The contractual view of a business firm’s duties to consumers claims that a business has four main moral duties. First, a business has the basic duty of complying with the terms of the sales contract and the secondary duties. Second, the business must disclose the nature of the product or service. The third moral duty in the contractual view requires the business to avoid misrepresentation, and fourth, the business must avoid the use of duress and undue influence.

Topic: The Contractual View of the Manufacturer’s Duties to Consumers Learning Objective 6.3: Explain how a firm's moral duties to consumers may be held in a contractual relationship 29. Discuss the relationship between the principle of non-harm and the due-care view of moral responsibility.

Sample Answer: The due-care view rests on the idea that agents have a moral duty not to harm or injure others by their acts. This is especially true when those other parties are vulnerable and dependent on the judgment of the agent. While this idea can be supported from a variety of moral

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perspectives, it is most clearly implied by the requirements of an ethic of care. The principle requires that one should care for the well-being of those with whom one has a special relationship, especially a relationship of dependence. An ethic of care requires that we should carefully examine the needs and characteristics of the people with whom we have a special relationship with to ensure that care for others is based on specific needs of the others.

Topic: The Due-Care View of the Manufacturer’s Duties to Consumers Learning Objective 6.4: Describe the manufacturer’s responsibilities to consumers as presented by the due-care view 30. Discuss the three areas of due-care responsibilities imposed on a manufacturer.

Sample Answer: There are three areas of due care identified in the text that manufacturers are responsible for. The first area of due care is in the design process of a product. Manufacturers must ascertain whether the design has concealed dangers, whether it incorporates all feasible safety devices, and whether it uses materials that are adequate for the purposes the product is intended to serve. The second area of due care is in the production process. The manufacturer must control the process to eliminate any defective items, identify weaknesses that become apparent during production, and ensure shortcuts or substitutions do not compromise the safety of the final product. Third, manufacturers must take due care in the marketing of products.

Products must include labels, notices, and instructions to warn users of all dangers involved in using or misusing the item, so the user can guard against harm or injury. It is a breach of the duty not to harm or injure if the manufacturer attempts to conceal the dangers or risks.

Topic: The Due-Care View of the Manufacturer’s Duties to Consumers Learning Objective 6.4: Describe the manufacturer’s responsibilities to consumers as presented by the due-care view 31. Discuss how the legal doctrine of strict liability will lead to a more efficient use of society’s resources.

Sample Answer: The social cost view based on the legal doctrine of strict liability is founded on utilitarian arguments. This says the external costs of injuries are part of the costs society must pay for producing the items. Internalizing all costs will lead to a more efficient use of resources because the price will reflect all the costs of producing and using the items, and market forces will ensure the product is not overproduced and resources are not wasted on it. Second, because manufacturers have to pay the costs of injuries, they will exercise greater care and thereby reduce the number of accidents. Manufacturers will work to cut the social costs of injuries, which means a more efficient use of resources. Third, by internalizing the costs of injury this way, the manufacturers can distribute losses among all users of the product instead of allowing losses to fall on a few injured individuals who would otherwise have to bear the costs of injury.

Topic: The Social Costs View of the Manufacturer’s Duties to Consumers Learning Objective 6.5: Examine the broader role of manufacturer responsibility as expressed by the social costs view 32. Discuss the three elements of advertising’s deceptive effects on consumer beliefs.

Sample Answer: All communication involves three elements: those who originate the communication, the medium used to convey the communication, and the audience who receives the communication. Because advertising is a form of communication, it can be as truthful or deceptive as any other form of communication. These conditions indicate that the deliberate

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intent to have an audience believe something false by merely implying it is already a deception.

They also indicate that the advertiser cannot be held morally responsible for misinterpretations of an advertisement when these are the unintended and unforeseen results of unreasonable carelessness on the part of the audience. The “author” of an advertisement should be taken to include not only the heads of an advertising agency but also the persons who create advertising copy and those who “endorse” a product. By offering their positive cooperation in the making of an advertisement, they become morally responsible for its deceptive effects as long as they knew what they were doing and could have opted out of doing it.

Topic: Advertising Ethics Learning Objective 6.6: Assess the ethical concerns associated with information and persuasion in advertising 33. Identify six areas where considerations of privacy rights should recognize and respect by an organization?

Sample Answer: An organization should only collect information on a specific consumer if the purpose for which the information was collected is a legitimate business need. Second, databases containing information on consumers should include only information that is directly relevant to the purpose for which the database is being compiled. Third, those who collect information on consumers should inform consumers that information is being collected and inform them about the purpose. Consumers should be able to opt out of the collection process. Fourth, an individual should consent to providing information a business wishes to collect and only if the information is to be used for the purpose for which the consumer intended, such as information on a credit card application. Fifth, agencies collecting information on a person must ensure the information is accurate and inaccuracies are corrected. Finally, agencies that collect information on individuals must ensure the information is secure and not revealed to other parties not consented to by the individual.

Topic: Consumer Privacy Learning Objective 6.7: Outline ethical and unethical business practices as they relate to the consumer’s right to privacy

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Chapter 7 Velasquez Test Bank MULTIPLE CHOICE 1. Which of the following arguments are used by those organizations that support the goal of diversity in the workforce? a. Affirmative action plans eliminate reverse discrimination. b. Global marketplaces can only be developed with exposure to diversity. c. Racial discrimination still exists today and must be ended. d. Sexism and racist bigotry deny women and minorities opportunities.

Answer: B Topic: Divided over Discrimination Learning Objective 7.1: Describe the legal climate and key legal decisions that have affected how discrimination in the workplace is viewed Skill Level: Analyze it Difficulty Level: Difficult 2. a. b. c. d.

Which of the following must be involved in order to have discrimination in employment?

The discrimination must be based on long-standing beliefs about a person or group.

The decision must be based on prejudice.

The decision must be based on individual merit.

The decision must be supported by the institution or organization.

Answer: B Topic: The Nature of Job Discrimination Learning Objective 7.2: Analyze the nature of job discrimination based on study of intentional, unintentional, individual, and institutional forms Skill Level: Understand the concept Difficulty Level: Moderate 3. Decisions based on _____ are decisions based on ideas about race, gender, or other stereotypes. a. a negative impact b. a harmful impact c. individual merit d. prejudice Answer: D Topic: The Nature of Job Discrimination Learning Objective 7.2: Analyze the nature of job discrimination based on study of intentional, unintentional, individual, and institutional forms

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Skill Level: Apply what you know Difficulty Level: Moderate 4. Which of the following is carried out as the result of unconscious factors such as processes that have unintended outcomes? a. Intentional discrimination b. Unintentional discrimination c. Individual discrimination d. Institutional discrimination Answer: B Topic: The Nature of Job Discrimination Learning Objective 7.2: Analyze the nature of job discrimination based on study of intentional, unintentional, individual, and institutional forms Skill Level: Apply what you know Difficulty Level: Moderate 5. Which of the following types of discrimination has widespread effects within an organization because it is based on processes and policies? a. Intentional b. Unintentional c. Individual d. Institutional Answer: D Topic: The Nature of Job Discrimination Learning Objective 7.2: Analyze the nature of job discrimination based on study of intentional, unintentional, individual, and institutional forms Skill Level: Analyze it Difficulty Level: Moderate 6. Which of the following forms of discrimination is the result of one or a few people acting on their own? a. Intentional b. Unintentional c. Individual d. Institutional Answer: C Topic: The Nature of Job Discrimination Learning Objective 7.2: Analyze the nature of job discrimination based on study of intentional, unintentional, individual, and institutional forms Skill Level: Apply what you know Difficulty Level: Easy

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7. Which of the following viewed discrimination as an intentional act by an organization and sought to eliminate discrimination on the part of the employer? a. Executive Order 11246 b. Affirmative action c. Equal Employment Opportunity Act of 1972 d. Title VII of the Civil Rights Act of 1964 Answer: D Topic: The Nature of Job Discrimination Learning Objective 7.2: Analyze the nature of job discrimination based on study of intentional, unintentional, individual, and institutional forms Skill Level: Analyze it Difficulty Level: Moderate 8. Which of the following describes an indication that discrimination exists because there is a disproportionate number of a protected group in less desirable positions within the organization? a. Prima facie b. Intentionality c. Adverse impact d. Affirmative action Answer: A Topic: The Nature of Job Discrimination Learning Objective 7.2: Analyze the nature of job discrimination based on study of intentional, unintentional, individual, and institutional forms Skill Level: Apply what you know Difficulty Level: Moderate 9. Families headed by single women are now _____ as likely to be poor compared to families headed by single men. a. twice b. three times c. four times d. five times Answer: A Topic: The Extent of Discrimination in the United States Learning Objective 7.3: Outline the extent of employment discrimination by making comparisons among groups Skill Level: Analyze it Difficulty Level: Easy 10. Which of the following describes the relationship between pay and the number of women working in an occupation? a. The more women in an occupation, the higher the pay for that occupation. b. The more women in an occupation, the lower the pay for that occupation.

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c. The fewer women in an occupation, the higher the pay for women in that occupation. d. The fewer women in an occupation, the lower the pay for everyone in that occupation.

Answer: B Topic: The Extent of Discrimination in the United States Learning Objective 7.3: Outline the extent of employment discrimination by making comparisons among groups Skill Level: Analyze it Difficulty Level: Moderate 11. Which of the following best describes barriers encountered by women as they advance in their careers? a. Affirmative action b. Prima facie c. Glass ceiling d. Intentionality Answer: C Topic: The Extent of Discrimination in the United States Learning Objective 7.3: Outline the extent of employment discrimination by making comparisons among groups Skill Level: Apply what you know Difficulty Level: Moderate 12. Of all the new jobs created during the past two decades, how many of them require education beyond high school? a. One-tenth b. One-quarter c. One-third d. One-half Answer: C Topic: The Extent of Discrimination in the United States Learning Objective 7.3: Outline the extent of employment discrimination by making comparisons among groups Skill Level: Apply what you know Difficulty Level: Moderate 13. Which of the following is cited as one reason why minorities make less money than whites? a. Minorities are steered into low-paying professions such as education. b. Minorities face a glass ceiling as they advance in their career. c. Sexual harassment is greater for minorities than other groups, including women. d. Minorities need skills and education but have a comparative lack of both.

Answer: D Topic: The Extent of Discrimination in the United States

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Learning Objective 7.3: Outline the extent of employment discrimination by making comparisons among groups Skill Level: Analyze it Difficulty Level: Moderate 14. The idea that a society’s productivity will be optimized to the extent that jobs are awarded based on competency is supported by the _____ argument against discrimination. a. utilitarian b. rights-based c. justice-based d. distribution Answer: A Topic: Discrimination: Utility, Rights, and Justice Learning Objective 7.4: Analyze discrimination using utilitarian, rights-based, and justice-based arguments Skill Level: Analyze it Difficulty Level: Moderate 15. According to the utilitarian argument against discrimination, jobs should be assigned based on _____ as long as such assignments advance the public welfare. a. gender b. qualifications c. education d. race Answer: B Topic: Discrimination: Utility, Rights, and Justice Learning Objective 7.4: Analyze discrimination using utilitarian, rights-based, and justice-based arguments Skill Level: Analyze it Difficulty Level: Moderate 16. Which of the following arguments against discrimination supports the view that discrimination arbitrarily closes off to minorities and women the more desirable positions, thereby not giving them an opportunity equal to others? a. Nonutilitarian b. Rights-based c. Justice-based d. Kantian Answer: C Topic: Discrimination: Utility, Rights, and Justice Learning Objective 7.4: Analyze discrimination using utilitarian, rights-based, and justice-based arguments Skill Level: Apply what you know

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Difficulty Level: Moderate 17. Which of following best describes the idea that individuals who are equal in all respects relevant to a type of treatment should be treated equally even if they are dissimilar in other, nonrelevant respects. a. Kantian arguments b. Stereotyping c. Cultural traditions d. Principles of equality Answer: D Topic: Discrimination: Utility, Rights, and Justice Learning Objective 7.4: Analyze discrimination using utilitarian, rights-based, and justice-based arguments Skill Level: Analyze it Difficulty Level: Moderate 18. Which type of sexual harassment occurs when superiors or other workers engage in unwelcome sexual conduct that results in a workplace that is offensive or abusive to an employee? a. Hostile environment harassment b. Coercive c. Quid pro quo d. Implicit Answer: A Topic: Discrimination: Utility, Rights, and Justice Learning Objective 7.4: Analyze discrimination using utilitarian, rights-based, and justice-based arguments Skill Level: Apply what you know Difficulty Level: Moderate 19. Which of the following was designed to protect people who have a physical or mental limitation that might prevent them from doing some aspect of a job? a. Age Discrimination in Employment Act b. Affirmative action c. Quotas d. Americans with Disabilities Act of 1990 Answer: D Topic: Discrimination: Utility, Rights, and Justice Learning Objective 7.4: Analyze discrimination using utilitarian, rights-based, and justice-based arguments Skill Level: Apply what you know Difficulty Level: Easy

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20. Which of the following is a criticism of current affirmative action plans? a. They work to eliminate discrimination in the future, but they do not correct past wrongs. b. They work to protect the opportunities of women and minorities, but not other groups. c. They work to correct past wrongs, not prevent further discrimination. d. They work to provide additional compensation to those that have been wronged, but do not work to protect entire groups.

Answer: C Topic: Affirmative Action Learning Objective 7.5: Examine the policy of affirmative action from practical, legal, and moral points of view Skill Level: Analyze it Difficulty Level: Moderate 21. Which of the following provides for a way to measure the success of affirmative action programs? a. A clear identification of the purpose of the study b. Specific and measureable quotas c. A comparison of women and minorities in each job classification d. Coordinated increased recruitment of women and minorities Answer: B Topic: Affirmative Action Learning Objective 7.5: Examine the policy of affirmative action from practical, legal, and moral points of view Skill Level: Analyze it Difficulty Level: Moderate 22. Which of the follow is an outcome of Supreme Court rulings that pertain to affirmative action programs in the workplace? a. Race and gender can be the only factors in an affirmative action program. b. Affirmative action programs must have specific quota goals. c. Affirmative action programs must be temporary and narrowly tailored to achieve their objectives. d. Affirmative action programs cannot be used to increase diversity at public institutions.

Answer: C Topic: Affirmative Action Learning Objective 7.5: Examine the policy of affirmative action from practical, legal, and moral points of view Skill Level: Analyze it Difficulty Level: Moderate 23. Which of the following supports the idea that people have an obligation to pay those whom they have intentionally and unjustly wronged? a. Affirmative action

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b. Compensatory justice c. Quotas d. Increasing utility Answer: B Topic: Affirmative Action Learning Objective 7.5: Examine the policy of affirmative action from practical, legal, and moral points of view Skill Level: Apply what you know Difficulty Level: Moderate 24. Which of the following is a goal of affirmation action programs from an equal justice perspective? a. To place society’s benefits and burdens on protected classes b. To neutralize competitive advantages c. To neutralize unconscious bias in employment decisions d. To eliminate the need for a more just society Answer: C Topic: Affirmative Action Learning Objective 7.5: Examine the policy of affirmative action from practical, legal, and moral points of view Skill Level: Analyze it Difficulty Level: Moderate 25. Opponents of affirmative action programs have argued that criteria besides race and sex must be considered when making job decisions. Which of the following indicates the need for the inclusion of other criteria? a. If only race and sex are used as criteria, the result will be the hiring of unqualified workers. b. Productivity will remain steady but will not improve if hiring is done on the basis of race and sex. c. Only women and minorities with equal skills and qualifications should be considered. d. The Civil Rights Act of 1964 does not allow employers to correct programs that are not morally unjust.

Answer: A Topic: Affirmative Action Learning Objective Learning Objective 7.5: Examine the policy of affirmative action from practical, legal, and moral points of view Skill Level: Analyze it Difficulty Level: Moderate

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SHORT ANSWER 26. Several companies urged the Supreme Court to protect the University of Michigan’s goal of achieving diversity through its affirmative action program. Discuss the four reasons why organizations sought to protect diversity and affirmative action.

Sample Answer: The companies found that individuals who have been educated in a diverse setting are more likely to succeed because they can make valuable contributions to the workforce in several important and concrete ways. First, a diverse group of individuals educated in a crosscultural environment has the ability to facilitate unique and creative approaches to problemsolving arising from the integration of different perspectives. Second, such individuals are better able to develop products and services that appeal to a variety of consumers and to market offerings in ways that appeal to those consumers. Third, a racially diverse group of managers with cross-cultural experience is better able to work with business partners, employees, and clientele in the United States and around the world. Fourth, individuals who have been educated in a diverse setting are likely to contribute to a positive work environment, by decreasing incidents of discrimination and stereotyping.

Topic: Divided over Discrimination Learning Objective 7.1: Describe the legal climate and key legal decisions that have affected how discrimination in the workplace is viewed 27. Discuss the four forms of discrimination that might be present in an organization.

Sample Answer: The first is individual and intentional. A discriminatory act may be the isolated act of a single individual who intentionally discriminates out of personal prejudice. The second is institutional and intentional. A discriminatory act may be part of the routine institutional behavior of a group that intentionally discriminates because of the shared prejudices of its members. The third type is individual and unintentional. An act of discrimination may be the isolated act of a single (or a few) individual(s) who unintentionally discriminates against women or minorities because the individual has unconscious stereotypes about the abilities of women or minorities, perhaps absorbed from surrounding society. The fourth type is institutional and unintentional. A discriminatory act may be the result of the institutionalized routines of a corporate organization whose procedures and practices discriminate against women or minorities unintentionally; that is, without anyone in the organization consciously intending that result.

Topic: The Nature of Job Discrimination Learning Objective 7.2: Analyze the nature of job discrimination based on study of intentional, unintentional, individual, and institutional forms 28. Discuss the role of the Equal Employment Opportunity Commission.

Sample Answer: The Equal Employment Opportunity Act of 1972 gave the Equal Employment Opportunity Commission (EEOC) increased power to combat discrimination and to even require affirmative action programs to correct any deficiencies. The EEOC is a national (federal) government agency established in 1964 to enforce our federal civil rights laws.

Topic: The Nature of Job Discrimination Learning Objective 7.2: Analyze the nature of job discrimination based on study of intentional, unintentional, individual, and institutional forms

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29. Based on information in the text, what reasonable conclusion can be drawn about employment discrimination?

Sample Answer: Extensive research shows that differences in pay and opportunity for women and minorities are not necessarily due to the preferences or qualifications of women and minorities, but suggest that any business organization still have some degree of probably unintentional yet institutionalized discrimination. Women and minorities do not yet have opportunities equal to those of white males. Trends indicate that unless we change the way we hire and promote, the situation for minorities and women will not improve. Some solutions include access to education and completion of advanced degrees.

Topic: The Extent of Discrimination in the United States Learning Objective 7.3: Outline the extent of employment discrimination by making comparisons among groups 30. Discuss how a lack of education promotes discrimination and lack of opportunity for minorities in the workplace?

Sample Answer: When minorities join the labor market, they often find that well-paying jobs require greater skills and education than they have. Of all the new jobs created during the past two decades, more than half require some education beyond high school and almost a third require a college degree. Among the fastest-growing fields are professions with relatively high education requirements, such as technicians, engineers, and health professionals. Jobs that require low levels of education, such as machine operators, blue-collar supervisors, and assemblers, have been declining in number. Many jobs require the ability to read and write clearly, use computers, and employ basic algebra. Thus, most good new jobs demand more education and higher levels of language, math, and reasoning.

Topic: The Extent of Discrimination in the United States Learning Objective 7.3: Outline the extent of employment discrimination by making comparisons among groups 31. Discuss the three conditions that would constitute sexual harassment in the workplace.

Sample Answer: Unwelcome sexual advances, requests for sexual favors, and other verbal or physical contact of a sexual nature constitute sexual harassment when submission to such conduct is made either explicitly or implicitly a term or condition of an individual’s employment.

It is also considered to be sexual harassment when submission to or rejection of such conduct by an individual is used as the basis for reemployment decisions affecting such individuals. In addition, sexual harassment exists when such conduct has the purpose or effect of unreasonably interfering with an individual’s work performance or creating an intimidating, hostile, or offensive working environment. Sexual harassment can occur regardless of whether the employer knew the harassment was occurring and regardless of whether it is was forbidden by the employer.

Topic: Discrimination: Utility, Rights, and Justice Learning Objective 7.4: Analyze discrimination using utilitarian, rights-based, and justice-based arguments 32. Discuss the view of reverse discrimination created or supported by affirmative action programs.

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Sample Answer: Affirmative action programs have been attacked on the grounds that, in an attempt to correct past discrimination, the programs themselves are racially or sexually discriminatory. Critics argue that by showing preference to minorities or women, the programs institute a form of reverse discrimination against white males by using nonrelevant characteristics—race or sex—to make employment decisions. Critics argue this violates justice by violating the principles of equality and equal opportunity.

Topic: Affirmative Action Learning Objective 7.5: Examine the policy of affirmative action from practical, legal, and moral points of view 33. How does the promotion of affirmative action programs act as a method of increasing utility?

Sample Answer: Affirmative action programs are based on the idea that these programs are morally legitimate ways of achieving morally legitimate ends. Public welfare is promoted if the position of impoverished persons is improved by giving them special educational and employment opportunities. The utilitarian view is that need, not race, is the criterion by which affirmative action programs distribute benefits. Race is an inexpensive indicator of need because past discrimination has created a high correlation between race and need.

Topic: Affirmative Action Learning Objective 7.5: Examine the policy of affirmative action from practical, legal, and moral points of view

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Chapter 8 Velasquez Test Bank MULTIPLE CHOICE 1. Which of the following is considered to be the most fundamental elements of a rational organization? a. Top managers b. Organizational charts c. Formal hierarchies of authority d. Operations Answer: C Topic: The Rational Organization Learning Objective 8.1: Describe the rational model of the business organization in terms of structure and the obligations of employee and employer Skill Level: Understand the concept Difficulty Level: Moderate 2. Who directly produces the goods and services that are the essential outputs of an organization? a. Agents b. Middle managers c. Consumers d. Operating layer employees Answer: D Topic: The Rational Organization Learning Objective 8.1: Describe the rational model of the business organization in terms of structure and the obligations of employee and employer Skill Level: Apply what you know Difficulty Level: Moderate 3. Which of the following indicates an employee’s moral responsibility to obey the employer and the employer’s moral responsibility to provide wages and working conditions it agreed to provide? a. Contractual agreements b. Rational agreements c. Moral obligations d. Rational obligations Answer: A Topic: The Rational Organization

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Learning Objective 8.1: Describe the rational model of the business organization in terms of structure and the obligations of employee and employer Skill Level: Understand the concept Difficulty Level: Moderate 4. Which of the following is a type of conflict of interest based on emotional ties and relationships? a. Actual b. Subjective c. Apparent d. Objective Answer: B Topic: The Rational Organization Learning Objective 8.1: Describe the rational model of the business organization in terms of structure and the obligations of employee and employer Skill Level: Understand the concept Difficulty Level: Moderate 5. Which of the following exists when there is no conflict of interest, but other people who consider the employee’s situation believe that the employee has a conflict of interest? a. Actual b. Subjective c. Apparent d. Ethical Answer: C Topic: The Rational Organization Learning Objective 8.1: Describe the rational model of the business organization in terms of structure and the obligations of employee and employer Skill Level: Analyze it Difficulty Level: Moderate 6. Which of the following is an example of commercial extortion? a. Something of value is offered to an employee if the employee deals favorably with the firm. b. Payment, preferential treatment, or goods are offered when an employee shows preference to an organization. c. An employee uses the resources of the employer for his or her own benefit without the consent of the employer. d. An employee demands a payment of money or goods from an organization in order to continue doing business together.

Answer: D Topic: The Rational Organization Learning Objective 8.1: Describe the rational model of the business organization in terms of structure and the obligations of employee and employer

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Skill Level: Analyze it Difficulty Level: Moderate 7. Which of the following is proprietary information that concerns a company’s activities, technologies, plans, policies, and other information that, if known to competitors, could affect the company’s ability to compete? a. Trade secrets b. Commercial extortion c. Conflict of interest d. Insider trading Answer: A Topic: The Rational Organization Learning Objective 8.1: Describe the rational model of the business organization in terms of structure and the obligations of employee and employer Skill Level: Apply what you know Difficulty Level: Moderate 8. Which of the following describes an organization model that focuses less on formal lines of authority and communication, and more on the lines of competing power coalitions and lines of influence and communication that stem from these coalitions? a. Rational b. Political c. Justice-based d. Goal-directed Answer: B Topic: The Political Organization Learning Objective 8.2: Analyze the political model of the organization in terms of power and rights and justice Skill Level: Analyze it Difficulty Level: Moderate 9. Which of the following represents the three basic differences between the power of corporate managers and the power of government officials? a. Centralization, decision-making process, and legal authority b. Economic leverage, mobility, and decentralization c. Consent, limits, and mobility d. Monopoly power, legal authority, and consent Answer: C Topic: The Political Organization Learning Objective 8.2: Analyze the political model of the organization in terms of power and rights and justice Skill Level: Apply what you know Difficulty Level: Moderate

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10. The right of people to determine what, to whom, and how much information they disclose to others is called a. psychological privacy. b. physical privacy. c. the technological dilemma of modern organizations. d. the right to privacy.

Answer: D Topic: The Political Organization Learning Objective 8.2: Analyze the political model of the organization in terms of power and rights and justice Skill Level: Understand the concept Difficulty Level: Easy 11. Which element of privacy limits the personal information an employer can pursue to information that is directly relevant to the issue at hand, such as performance on the job? a. Relevance b. Consent c. Methods d. Ordinary Answer: A Topic: The Political Organization Learning Objective 8.2: Analyze the political model of the organization in terms of power and rights and justice Skill Level: Understand the concept Difficulty Level: Moderate 12. Which of the following offers protection to employees who report the wrongdoings of an organization that violates the law? a. Freedom of conscience b. Whistleblowing c. Right to privacy d. Organizational democracy Answer: B Topic: The Political Organization Learning Objective 8.2: Analyze the political model of the organization in terms of power and rights and justice Skill Level: Apply what you know Difficulty Level: Moderate 13. Which of the following is achieved when decisions that affect a group are made by the majority of its members after full, free, and open discussion? a. Freedom of conscience

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b. Rational agreement c. Organizational democracy d. Formal hierarchies of authority Answer: C Topic: The Political Organization Learning Objective 8.2: Analyze the political model of the organization in terms of power and rights and justice Skill Level: Apply what you know Difficulty Level: Moderate 14. Which political tactic creates the appearance of being thoughtful, honest, and sensitive and can aid in making a decision maker well-liked and confident? a. Image building b. Ingratiation c. Controlling information d. Forming power coalitions Answer: A Topic: Informal Power Relationships in Organizations Learning Objective 8.3: Explain informal power relationships in organizations from an ethical perspective Skill Level: Analyze it Difficulty Level: Moderate 15. Often considered unethical, which political tactic contradicts utilitarian principles? a. Those that knowingly involve laminating inefficiency and waste b. Those that take advantage of emotional dependencies when promoting products c. Those that eliminate moral disrespect in the decision-making process d. Those that involve the pursuit of personal goals at the expense of the organization’s productive goals Answer: D Topic: Informal Power Relationships in Organizations Learning Objective 8.3: Explain informal power relationships in organizations from an ethical perspective Skill Level: Analyze it Difficulty Level: Moderate 16. Which of the following political tactics creates a dependency as a source of power? a. Getting control over scarce resources desired by others b. Eliminating obligations and friendships in relationships c. Allowing others to have power for decision making. d. Integrating the workforce and helping workers pursue the organization’s interests Answer: A

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Topic: Informal Power Relationships in Organizations Learning Objective 8.3: Explain informal power relationships in organizations from an ethical perspective Skill Level: Apply what you know Difficulty Level: Moderate 17.

The value of work as a basic economic contribution and as a tool to develop potential is the _____ of work. a. instrumental value b. due process outcome c. intrinsic value d. doctrine of employment principles Answer: C Topic: Informal Power Relationships in Organizations Learning Objective 8.3: Explain informal power relationships in organizations from an ethical perspective Skill Level: Understand the concept Difficulty Level: Moderate 18. Which of the following supports the view that managers are authoritarian and controlling, and therefore less democratic? a. Theory Y b. Rensis Likert’s view c. Theory X d. Raymond Miles’s view Answer: A Topic: The Political Organization Learning Objective 8.2: Analyze the political model of the organization in terms of power and rights and justice Skill Level: Analyze it Difficulty Level: Moderate 19. Which of the following is derived from the right of all people to be treated as free and equal persons, and has acted as a method to balance the power between a corporation and its employees? a. The right to advance notice of plant closings and layoffs b. Free trade agreements c. The intrinsic value of work d. A worker’s right to organize into a union Answer: D Topic: The Political Organization Learning Objective 8.2: Analyze the political model of the organization in terms of power and rights and justice

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Skill Level: Analyze it Difficulty Level: Moderate 20. Which of the following concepts is based on the close interpersonal relationships that extend between an organization and those external individuals with whom the organization interacts? a. Connected selves b. The justice of results c. The impact of caring d. Sense of responsibility Answer: A Topic: The Caring Organization Learning Objective 8.4: Evaluate the ethical characteristics of the caring organization Skill Level: Understand the concept Difficulty Level: Moderate 21. Which of the following is an aspect of the caring model of the organization? a. Caring is focused on how to best improve profits and quality. b. Caring is done as a way to enhance quality and profits. c. Caring is directed at groups and is objective based on quality of output. d. Caring aims to enhance the growth of others by helping them develop their full capacities.

Answer: D Topic: The Caring Organization Learning Objective 8.4: Evaluate the ethical characteristics of the caring organization Skill Level: Apply what you know Difficulty Level: Moderate 22. Which of the following arguments in favor of the caring organization include the idea of caring about those external people and companies we do business with? a. Increased economic performance b. The creation of customer value c. The enhanced growth of full capacities d. Fulfillment of needs and aspirations Answer: B Topic: The Caring Organization Learning Objective 8.4: Evaluate the ethical characteristics of the caring organization Skill Level: Apply what you know Difficulty Level: Moderate 23. Which of the following best describes the caring model of the organization? a. Caring is focused on quality and profitability. b. Caring should be viewed as a way to increase productivity. c. Caring is personal in nature. d. Caring will enhance the performance of those who receive the care.

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Answer: C Topic: The Caring Organization Learning Objective 8.4: Evaluate the ethical characteristics of the caring organization Skill Level: Analyze it Difficulty Level: Moderate 24. Which of the following best describes why insider trading is said to be unethical? a. The theft of information gives the insider an unfair advantage in the organization and the markets. b. The theft of information can change the value of the stock so that it reflects the true value of the organization. c. Insider trading harms relationships between the organization and its customers. d. Insider trading increases society’s overall utility by increasing the size of the market.

Answer: A Topic: The Rational Organization Learning Objective 8.1: Describe the rational model of the business organization in terms of structure and the obligations of employee and employer Skill Level: Analyze it Difficulty Level: Difficult 25. Which of the following should be at the foundation of a global company’s basis of determining wages in developing nations? a. Wages should be set at the same rate as wages in the company’s home country. b. Wages should be set based on supply and demand in the local economy. c. Wages should be set based on the local labor market. d. Wages should be set based on the retail price of a product in the United States.

Answer: C Topic: The Rational Organization Learning Objective 8.1: Describe the rational model of the business organization in terms of structure and the obligations of employee and employer Skill Level: Apply what you know Difficulty Level: Moderate SHORT ANSWER 26. Describe the functions of a rational model of an organization.

Sample Answer: In a rational model of an organization, information is collected from the operating layers, and it rises through various formal management levels. Each of these levels moves the information higher in the organization until it reaches top management levels. On the basis of this information, the top managers make general policy decisions and commands, which are then passed downward through the formal hierarchy, until they reach the operating layer as detailed work instructions. These decisions are assumed to be aimed at supporting a business

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goal. The goal is defined by those at the top of the hierarchy of authority, who are assumed to have a legitimate right to make these decisions.

Topic: The Rational Organization Learning Objective 8.1: Describe the rational model of the business organization in terms of structure and the obligations of employee and employer 27. How are conflicts of interest created in an organization?

Sample Answer: Conflicts of interest in business arise when an employee or officer of a company is engaged in carrying out a task for the employer and has an interest that provides him or her with an incentive or motive to do the task in a way that serves that interest. That employee or officer has an obligation to do the task in a way that serves the interests of the employer, free of any incentives to serve another interest. If that employee or officer does not, or chooses to pursue an incentive not in the employer’s best interest, a conflict of interest has arisen. It is important to notice that the mere existence of an interest that provides an incentive or motive that could influence an employee’s actions on behalf of the employer is enough to give that employee a conflict of interest even if the employee does not allow the interest to influence him or her.

Topic: The Rational Organization Learning Objective 8.1: Describe the rational model of the business organization in terms of structure and the obligations of employee and employer 28. Describe the hierarchy of power in a political model of an organization.

Sample Answer: Because there is not a neat hierarchy, the political model creates a messier and more complex network of power relationships that cross communication channels. This model recognizes that people in an organization group together to form a coalition that competes with others for resources, benefits, and influence. The goals of the organization become those established by the most powerful or dominant coalitions. There is not a formal authority or contractual relationships, only power that can be wielded over workers.

Topic: The Political Organization Learning Objective 8.2: Analyze the political model of the organization in terms of power and rights and justice 29. Discuss why privacy protection rights are important for workers.

Sample Answer: First, privacy protects us. Privacy lets us protect information about ourselves that could embarrass or shame us, and it protects us from having others interfere in our lives merely because they disagree with our values. Privacy also lets us protect those we love from knowledge about ourselves that might hurt them, and it protects our reputation. Privacy also empowers and enables us. It enables us to have intimacy, which lets us develop personal relationships of love, friendship, and trust. It enables us to maintain confidential relationships with professionals such as doctors and lawyers and allows us to maintain private social roles that are distinct form our public roles. Privacy enables us to determine our self-identify by letting us control the way that society in general and selected individuals will look at us.

Topic: The Political Organization Learning Objective 8.2: Analyze the political model of the organization in terms of power and rights and justice

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30. Discuss the ways political tactics can create injustice among those employees with no political skills.

Sample Answer: Political tactics create injustices among those who have few or no political skills. Those without political skills are easily maneuvered into accepting a smaller share of the organization’s benefits than their abilities or needs may merit in comparison to others. Benefits are then no longer distributed to these people on the basis of their relevant characteristics, and an injustice is committed against them.

Topic: Informal Power Relationships in Organizations Learning Objective 8.3: Explain informal power relationships in organizations from an ethical perspective 31. Discuss the political tactics used by those with power in an organization to create dependency.

Sample Answer: Some researchers have argued that the basic source of power is the creation of dependency. Some authors identify two categories of political tactics as encompassing the main kinds of tactics by which such dependencies can be created. One is getting control over scarce resources desired by others. Controlling employees, buildings, access to influential persons, equipment, and useful information are examples of this. The second is by establishing favorable relationships. Getting others to feel obligated to oneself, making others think one is a friend, building a reputation as an expert, and encouraging others to believe that one has power and that they are dependent on that power.

Topic: Informal Power Relationships in Organizations Learning Objective 8.3: Explain informal power relationships in organizations from an ethical perspective 32. Discuss moral problems associated with caring too much in an organization.

Sample Answer: The needs of those we care for can demand a response from us that can overwhelm us, leading to eventual “burnout.” The conflict is between the needs of others and the needs of the self. Some argue that the ethic of care requires achievement of a mature balance between the caring for the needs of others and caring for one’s own needs. Others argue that burnout occurs not because people are overwhelmed by the needs of others, but because organizations place bureaucratic burdens on caregivers and limit their autonomy and influence in decision making. In addition to conflicts between the needs of the self and the needs of others, the demands of caring can lead to a different kind of conflict: the need of those for whom we care can demand a response that conflicts with what we may feel we owe others. This is a problem of balancing partiality toward those for whom we care with the impartial demands of other moral considerations, such as the impartial demands of fairness or of moral rights. For example, we may be torn between caring for a friend who is violating company policy and fairness toward the company that requires the violation to be reported. The question arises as to whether we satisfy the demand of caring or the demands of impartial morality.

Topic: The Caring Organization Learning Objective 8.4: Evaluate the ethical characteristics of the caring organization 33. Discuss the relationship between being a caring organization and creating customer value.

Sample Answer: It has been argued that business organizations that support caring develop a concern for serving the customer and creating customer value that in turn enables such

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organizations to achieve a competitive advantage over other organizations. In such a business organization, the focus is not on producing differentiated or low-cost products for growing markets, but on creating value for particular customers and remaining tuned in to their evolving needs. Such a focus on knowing and serving the customer enables the company to continually adapt to the rapid changes that characterize most markets today. Moreover, the caring that gives rise to a focus on the customer can also inspire and motivate employees to excel in a way that contractual and power relationships do not.

Topic: The Caring Organization Learning Objective 8.4: Evaluate the ethical characteristics of the caring organization

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