Legal Environment of Business, The, 7/E Nancy K. Kubasek Bartley A Brennan solutions manual and test bank

Legal Environment of Business, The, 7/E Nancy K. Kubasek Bartley A Brennan solutions manual and test bank

The Legal Environment of Business, 7e (Kubasek)

Chapter 2 Introduction to Law and the Legal Environment of Business

1) The purpose of the North American Free Trade Agreement (NAFTA) is to ________.

A) codify international treaties with the countries that are part of the agreement

B) increase immigration quotas in the countries that are part of the agreement

C) lower trade barriers within the countries that are part of the agreement

D) defend coastal borders of the countries involved in trade, and are part of the agreement

Answer: C

Diff: 1

Topic: Introduction

2) The Asian-Pacific Economic Cooperation (APEC) forum is discussing the creation of an economic free trade zone that would extend from ________.

A) Chile to China

B) the United States to China

C) China to Singapore

D) Japan to China

Answer: A

Diff: 1

Topic: Introduction

3) Which of the following statements is a feature of the study of the legal environment of business?

A) It is designed to maximize enrollment at schools of law throughout the United States.

B) It develops an understanding that the law is dynamic, not static.

C) It encourages the search for the one true answer to each legal question.

D) It is based on the Platonic system of social control.

Answer: B

Diff: 1

Topic: Definition of the Legal Environment of Business

4) Which of the following is a feature of the study of the legal environment of business?

A) It is arbitrary and capricious.

B) It involves theoretical legal problems.

C) It excludes ethical considerations.

D) It is interdisciplinary.

Answer: D

Diff: 1

Topic: Definition of the Legal Environment of Business

5) Which of the following schools of jurisprudence is characterized by the existence of values that are unchanging because their source is absolute?

A) natural law school

B) positivist school

C) sociological school

D) American realist school

Answer: A

Diff: 1

Topic: Definition of Law and Jurisprudence

6) Which of the following is true of a natural law school?

A) It has existed since 300 B.C. and bases law on certain unchanging value judgments.

B) It focuses on environmental concerns, such as toxic waste and air quality.

C) Its source of law is contemporary community opinion and customs.

D) It teaches that the legislature is the primary source of all law.

Answer: A

Diff: 2

Topic: Definition of Law and Jurisprudence

7) A natural law school teaches that ________.

A) good laws depend on good judges

B) law, ethics, and morality should remain separate

C) one has a moral responsibility to disobey an unjust law

D) the U. S. Constitution is the highest legal authority in the United States

Answer: C

Diff: 2

Topic: Definition of Law and Jurisprudence

8) Which of the following statements is an argument raised by critics of a natural law school?

A) It requires sophisticated quantitative methodology, relying too heavily upon statistical methods.

B) It is based primarily upon the European rather than American legal thinking.

C) It is overly subjective in a nation of differing cultures and moral values.

D) It is designed for communist and socialist political systems.

Answer: C

Diff: 2

Topic: Definition of Law and Jurisprudence

9) Which of the following schools of jurisprudence states that the source of law is the sovereign?

A) natural law school

B) positivist school

C) sociological school

D) American realist school

Answer: B

Diff: 1

Topic: Definition of Law and Jurisprudence

10) The positivist school of law states that ________.

A) certain legal values that are unchanging exist because their source is absolute

B) certain legal values that can be judged by human reason exist and once determined, they supersede any form of human law

C) law is a closed logical system in which correct legal decisions are reached solely by logic and the use of precedents

D) a legislator or a judge can determine law by making an inventory of community interests

Answer: C

Diff: 2

Topic: Definition of Law and Jurisprudence

11) Juan, a lawyer, argues that morals have no say in determining legal decisions and extralegal factors must be ignored by judges when determining violations of the law. Juan is an adherent of the ________.

A) critical legal studies school of law

B) sociological school of law

C) American realist school of law

D) positivist school of law

Answer: D

Diff: 3

Topic: Definition of Law and Jurisprudence

12) Which of the following schools of law is criticized for creating a static jurisprudence because it does not take into account social and ethical factors?

A) the sociological school

B) the American realist school

C) the positivist school

D) the natural law school

Answer: C

Diff: 2

Topic: Definition of Law and Jurisprudence

13) Which of the following arguments has been made by legal scholars when criticizing the positivist school of law?

A) It is impossible to remain positive about everything when there is so much negativity in the world.

B) The positivist school is irrational and not founded in logic.

C) The positivist school ignores the importance of precedence.

D) The positivist school adopts a view that is too narrow and literal-minded.

Answer: D

Diff: 2

Topic: Definition of Law and Jurisprudence

14) Which of the following schools of jurisprudence believes that the source of law is contemporary community opinion and customs?

A) critical legal studies school

B) sociological school

C) American realist school

D) positivist school

Answer: B

Diff: 1

Topic: Definition of Law and Jurisprudence

15) The posted speed limit on the interstate near Omar's house is 60 miles per hour, but no one ever gets a ticket unless they drive over 70 miles per hour. One morning, Omar receives a ticket for going 68 miles per hour. He is outraged and believes that a true injustice has occurred. Based on the scenario, Omar adheres to the ________.

A) feminist school of law

B) sociological school of law

C) positivist school of law

D) natural law school

Answer: B

Diff: 3

Topic: Definition of Law and Jurisprudence

16) Which of the following is true of the sociological school of law?

A) It is parallel to the positivist school of law and shares the same chief tenets.

B) Adherents of the sociological school seek to change the law by surveying case precedents and statutory law.

C) The sociological school requires a legislator or judge to make an inventory of community interests.

D) This school of law is very predictable with regard to individuals and businesses.

Answer: C

Diff: 2

Topic: Definition of Law and Jurisprudence

17) Which of the following is a difference between the sociological school of law and the positivist school of law?

A) The positivist school of law states that morals should not be considered in making legal decisions, whereas the positivist school of law advocates the use of morals in making legal decisions.

B) The source of law of the sociological school is the sovereign, whereas the source of law of the positivist school is contemporary community opinion and customs.

C) The sociological school of law looks at actual human behavior and values, whereas the positivist school of law insists that the focus should remain on statutes and precedents.

D) Adherents have criticized the sociological school of law for being too narrow and literal minded, whereas the positivist school of law has been criticized for being too unpredictable.

Answer: C

Diff: 2

Topic: Definition of Law and Jurisprudence

18) Which of the following arguments has been made by critics of the sociological school of law?

A) Sociology is not relevant to law, and so its views can be ignored.

B) The sociological school has proposed a view of law that is rigid and uncompromising.

C) The sociological school places too great an emphasis on quantitative data rather than experienced gut reactions.

D) The sociological school makes the law unpredictable, since community standards change over time.

Answer: D

Diff: 2

Topic: Definition of Law and Jurisprudence

19) The American realist school of law believes that ________.

A) the source of law is contemporary community opinion and customs

B) morals are separate from law and should not be considered in making legal decisions

C) classical economic theory and empirical methods must be applied to all areas of law in order to arrive at decisions

D) the source of law is actors in the legal system and scientific analysis of their actions

Answer: D

Diff: 1

Topic: Definition of Law and Jurisprudence

20) Which of the following is true of the American realist school of law?

A) It sees law as part of society and a means of enforcing political and social values.

B) It says that judges and legislators should use an inventory of community interests to familiarize themselves with the community's standards and mores.

C) It believes that morality is important to determine whether discrimination exists when a business pays workers differently on the basis of their sex, race, religion, or ethnic origin.

D) It is the same as the sociological school because it focuses on the larger community to determine the meaning of law.

Answer: A

Diff: 2

Topic: Definition of Law and Jurisprudence

21) Which of the following would prove to be most helpful to a disciple of the American realist school?

A) a scientific study of plea bargaining in the courtroom

B) a law passed to show the importance of morality in cases of discrimination

C) a quantitative analysis of statistical data about county government expenditures

D) a study of the community interests and standards

Answer: A

Diff: 1

Topic: Definition of Law and Jurisprudence

22) The ________ school of law seeks to connect what happens in the legal system to the political-economic context within which it operates.

A) sociological

B) critical legal studies

C) American realist

D) positivist

Answer: B

Diff: 1

Topic: Definition of Law and Jurisprudence

23) Adherents of critical legal jurisprudence believe that ________.

A) morality is important to determine whether discrimination exists when a business pays workers differently on the basis of their sex, race, religion, or ethnic origin

B) law is a mix of legal and nonlegal beliefs that have been constructed by the community to rationalize their way of life

C) law reflects a cluster of beliefs that convince human beings that the hierarchical relations under which they live and work are natural and must be accommodated

D) classical economic theory and empirical methods must be applied to all areas of law in order to arrive at decisions

Answer: C

Diff: 1

Topic: Definition of Law and Jurisprudence

24) According to the critical legal studies school of law, members of society's elite have constructed an interlocking system of beliefs that ________.

A) opposes existing religious order

B) contradicts political rulings meant for the lower classes

C) focuses on advancements in infrastructure

D) reinforces established wealth and privilege

Answer: D

Diff: 1

Topic: Definition of Law and Jurisprudence

25) What is the primary argument raised by traditional critics of the critical legal studies school?

A) Critical legal theorists have constructed an essentially negative position without developing concrete strategies to bring about improvements.

B) Critical legal theorists tend to base their pronouncements on female-dominated scholarship.

C) Critical legal theorists pay too much attention to law without considering the effects of morality.

D) Critical legal theorists tend to downplay the interaction between statutory and common law.

Answer: A

Diff: 2

Topic: Definition of Law and Jurisprudence

26) Julia believes that the current jurisprudence reflects a male legislature and judicial system, and that women's views are underrepresented. Based on this scenario, she belongs to the ________ school of law.

A) feminist

B) positivist

C) critical

D) law and economics

Answer: A

Diff: 3

Topic: Definition of Law and Jurisprudence

27) Carlos believes that most court decisions and legal doctrines are best understood as efforts to promote an efficient allocation of resources in society. Carlos adheres to the ________.

A) natural law school

B) positivist school of law

C) sociological school of law

D) law and economics school of law

Answer: D

Diff: 3

Topic: Definition of Law and Jurisprudence

28) Which of the following accurately illustrates the chronological process of a bill becoming a law?

A) affirmative vote by both houses of Congress, referral to a committee, bill is marked up, subcommittee approval

B) referral of bill to a subcommittee, approval by the subcommittee and larger committee, affirmative vote by both houses of Congress, president's signature

C) president's signature, bill is marked up, subcommittee hearings, affirmative vote by both houses of Congress

D) passage of bill by Senate, passage of bill by House of Representatives, Senate-House Conference Committee reconciles differences, referral to subcommittee

Answer: B

Diff: 2

Topic: Sources of Law

29) What happens once the full House and Senate have each passed a version of a bill?

A) If the House and Senate versions are substantially similar, the Senate version goes to the president for his signature or veto.

B) The two versions of the bill go back to the applicable subcommittees in both the House and Senate to reconcile the differences and create a single version for signature or veto by the president.

C) The House and Senate versions are both sent to the president for signature or veto of the version he finds best suited to meeting the needs of the country.

D) Both, the House and Senate versions, are sent to a Senate-House Conference Committee for reconciliation and then a single version is returned to the full House and Senate for a vote.

Answer: D

Diff: 2

Topic: Sources of Law

30) What happens if the president does not sign a bill that has been passed by both houses of Congress?

A) It can never become law.

B) It does not become law unless it goes back to both houses and gets a two-thirds vote.

C) It can become law even if the Congress adjourns before the 10-day period has elapsed.

D) It can become law since it has been passed by the Congress.

Answer: B

Diff: 2

Topic: Sources of Law

31) When a president vetoes a bill, what vote is necessary to override his veto?

A) A two-thirds majority of both the house of Representatives and the Senate can override his veto.

B) A two-thirds majority of either the house of Representatives or the Senate can override his veto.

C) A four-fifths majority of both houses can override his veto.

D) No vote can overturn the president's veto.

Answer: A

Diff: 1

Topic: Sources of Law

32) When does a pocket-veto occur?

A) when the president does nothing upon receipt of a bill from Congress

B) when the president takes no action within 10 days of receiving the bill from Congress and Congress adjourns within those 10 days

C) when the president vetoes a bill from Congress during a lame-duck session and the Congress adjourns immediately thereafter

D) whenever the president vetoes a bill

Answer: B

Diff: 2

Topic: Sources of Law

33) ________ constitute a compilation of our federal and state case law.

A) Attachments

B) Testimonials

C) Reporters

D) Garnishments

Answer: C

Diff: 1

Topic: Sources of Law

34) Where would one be able to find the documentation of the contents of a Congressional debate?

A) U.S. reports

B) Congressional Record

C) Congressional Daily News

D) Title 3 of the Code of Federal Regulations

Answer: B

Diff: 1

Topic: Sources of Law

35) Judicial review is ________.

A) the power to reorganize the panel of Supreme Court judges

B) the power to determine whether a statute is constitutional

C) the power to change the working of the federal courts

D) the power given to the Senate to amend laws

Answer: B

Diff: 1

Topic: Sources of Law

36) The right of judicial review gives the ________.

A) U.S. Supreme Court the ultimate power to check the excesses of either the legislative or the executive branch

B) state courts the ultimate power to check the excesses of the judicial branch

C) state courts the ultimate power to check the excesses of the executive branch

D) U.S. Supreme Court the ultimate power to check the excesses of the administrative agencies

Answer: A

Diff: 1

Topic: Sources of Law

37) Which of the following is true of the Restatements of the Law?

A) The have the full force and effect of any other federal statute or regulation.

B) They are often relied upon by the courts when making decisions.

C) They are based on previous case decisions issued by the U.S. Supreme Court.

D) They cover only the legal subjects of contracts, torts, and agency.

Answer: B

Diff: 2

Topic: Sources of Law

38) The executive branch of the government is composed of the ________.

A) various administrative agencies

B) House of Representatives and the Senate

C) president, the president's staff, and the cabinet

D) federal and state courts

Answer: C

Diff: 1

Topic: Sources of Law

39) Congress has delegated the authority of making rules governing the conduct of business and labor in certain areas to the ________.

A) federal courts

B) House of Representatives and the Senate

C) U.S. president

D) administrative agencies

Answer: D

Diff: 1

Topic: Sources of Law

40) Which of the following is true of administrative agencies?

A) Their purpose is to create regulations that guide the functions of the executive branch.

B) Their authority to issue regulations comes directly from the President.

C) They regulate business in areas such as employment, trade, and safety.

D) They do not constitute a branch of the government.

Answer: C

Diff: 2

Topic: Sources of Law

41) Statutory law is made by the ________ branch of the government.

A) legislative

B) executive

C) judicial

D) administrative

Answer: A

Diff: 1

Topic: Sources of Law

42) Which of the following is true of criminal law?

A) The purpose of criminal law is purely punitive.

B) An act that is a misdemeanor in one state could be a felony in another state.

C) It does not believe in rehabilitation of offenders or restitution to victims.

D) It is the law governing litigation between two private parties.

Answer: B

Diff: 2

Topic: Classifications of Law

43) Brian pointed a gun at Ray and took Ray's wallet which contained $10,000. Brian has been accused of robbery, the taking of the property of another by force or fear. Based on this scenario, which of the following statements is true?

A) Brian will be the defendant in a civil suit brought by the government.

B) Brian will not be tried in a criminal court because he did not shoot Ray.

C) Brian will be charged with robbery by Ray, the victim of the robbery.

D) Brian will be charged with robbery by the government.

Answer: D

Diff: 3

Topic: Classifications of Law

44) Which of the following crimes is a misdemeanor?

A) drunken driving

B) rape

C) arson

D) armed robbery

Answer: A

Diff: 1

Topic: Classifications of Law

45) ________ deals with the relationship of government to individual citizens.

A) Property law

B) Civil law

C) Private law

D) Public law

Answer: D

Diff: 1

Topic: Classifications of Law

46) Which of the following can be classified as public law?

A) contracts

B) torts

C) criminal law

D) property law

Answer: C

Diff: 1

Topic: Classifications of Law

47) ________ covers the process by which individuals or businesses can redress grievances against regulatory agencies such as the FTC and the SEC.

A) Administrative law

B) Constitutional law

C) Civil law

D) Criminal law

Answer: A

Diff: 1

Topic: Classifications of Law

48) Which of the following can be classified as private law?

A) administrative law

B) property law

C) constitutional law

D) criminal law

Answer: B

Diff: 1

Topic: Classifications of Law

49) Which of the following best describes a private law?

A) a law dealing with the enforcement of contracts and torts between two businesses

B) a law requiring a local zoning board to conduct a hearing before approving a request to change the zoning assigned to a particular parcel of land

C) a law defining burglary as the breaking and entering of the property of another with the intent to commit a felony

D) a law requiring police officers to have probable cause when requesting a search warrant

Answer: A

Diff: 2

Topic: Classifications of Law

50) ________ sets forth the rules of enforcing substantive rights in a court of law.

A) Public law

B) Constitutional law

C) Private law

D) Procedural law

Answer: D

Diff: 1

Topic: Classifications of Law

51) The study of the legal environment includes the study of the administrative law process and the role of businesspeople in that process.

Answer: TRUE

Diff: 1

Topic: Definition of the Legal Environment of Business

52) The United States, Canada, and Mexico created the North American Free Trade Agreement (NAFTA) to lower trade barriers among themselves.

Answer: TRUE

Diff: 1

Topic: Introduction

53) An important function of the World Trade Organization is to lower trade barriers.

Answer: TRUE

Diff: 1

Topic: Introduction

54) Since the pace of economic globalization has slowed in recent years, there is less reason to be concerned about political and economic developments in other countries.

Answer: FALSE

Diff: 1

Topic: Introduction

55) American law is not dynamic; rather, its precepts are "written in stone."

Answer: FALSE

Diff: 1

Topic: Definition of the Legal Environment of Business

56) According to the American jurist Oliver Wendell Holmes, law is grounded in theory rather than experience.

Answer: FALSE

Diff: 1

Topic: Definition of the Legal Environment of Business

57) Jurisprudence is the science or philosophy of law, or law in its most generalized form.

Answer: TRUE

Diff: 1

Topic: Definition of Law and Jurisprudence

58) Plato believed that law is a rule of conduct, a contract, or an ideal of reason.

Answer: FALSE

Diff: 1

Topic: Definition of Law and Jurisprudence

59) Hobbes believed that law is the command of the sovereign.

Answer: TRUE

Diff: 1

Topic: Definition of Law and Jurisprudence

60) Disciples of the positivist school would argue that when Congress has not acted on a matter, the Supreme Court has no power to act on that matter.

Answer: TRUE

Diff: 1

Topic: Definition of Law and Jurisprudence

61) The feminist school bases legal precedent only on cases involving plaintiffs and defendants who were female.

Answer: FALSE

Diff: 1

Topic: Definition of Law and Jurisprudence

62) Some proponents of the feminist school have argued that the First Amendment was authored by men and is presently interpreted by male-dominated courts to allow pornographers to make large profits.

Answer: TRUE

Diff: 1

Topic: Definition of Law and Jurisprudence

63) The U.S. constitution has one indirect and three direct sources of law.

Answer: TRUE

Diff: 1

Topic: Sources of Law

64) The source of Congress's legislative powers comes from Article 1, Section 1 of the U.S. Constitution.

Answer: TRUE

Diff: 1

Topic: Sources of Law

65) A pocket-veto occurs whenever the president signs a bill into law.

Answer: FALSE

Diff: 1

Topic: Sources of Law

66) Legal opinions published on the Internet have no precedential value.

Answer: FALSE

Diff: 1

Topic: Sources of Law

67) Statutory law is the law made by the legislative branch of government.

Answer: TRUE

Diff: 1

Topic: Classifications of Law

68) Civil law is the law governing litigation between two private parties.

Answer: TRUE

Diff: 1

Topic: Classifications of Law

69) Property law falls under public law.

Answer: FALSE

Diff: 1

Topic: Classifications of Law

70) Procedural law sets forth the rules for enforcing substantive rights in a court of law.

Answer: TRUE

Diff: 1

Topic: Global Dimensions of the Legal Environment of Business

71) State the top 10 reasons for studying the legal environment of business.

Answer:

1. Becoming aware of the rules of doing business.

2. Familiarizing yourself with the legal limits on business freedom.

3. Forming an alertness to potential misconduct of competitors.

4. Appreciating the limits of entrepreneurship.

5. Being able to communicate with your lawyer.

6. Making you a more fully informed citizen.

7. Developing an employment-related skill.

8. Exploring the fascinating complexity of business decisions.

9. Providing a heightened awareness of business ethics.

10. Opening your eyes to the excitement of the law and business.

Diff: 2

Topic: Definition of Law and Jurisprudence

72) Explain the characteristics of the natural law school.

Answer: For adherents of the natural law school, which has existed since 300 B.C., law consists of the following concepts: (1) There exist certain legal values or value judgments (e.g., a presumption of innocence until guilt is proved); (2) these values or value judgments are unchanging because their source is absolute (e.g., nature, God, or reason); (3) these values or value judgments can be determined by human reason; and (4) once determined, they supersede any form of human law.

Diff: 2

Topic: Definition of Law and Jurisprudence

73) State the steps in determining law based on the sociological school of law.

Answer: Followers of the sociological school propose three steps in determining law:

1. A legislator or a judge should make an inventory of community interests.

2. Judges and legislators should use this inventory to familiarize themselves with the community's standards and mores.

3. The judge or legislator should rule or legislate in conformity with those standards and mores.

Diff: 2

Topic: Definition of Law and Jurisprudence

74) List the various steps involved in the legislative process.

Answer:

Step 1: A bill is introduced into the U.S. House of Representatives or Senate by a single member or by several members. It is generally referred to the committee of the House or Senate that has jurisdiction over the subject matter of the bill.

Step 2: Let's briefly follow through the House of Representatives a bill proposing to deregulate the trucking industry by doing away with the rate-making power of the Interstate Commerce Commission (ICC). This bill would be referred to the House Committee on Energy and Commerce, which, in turn, would refer it to the appropriate subcommittee.

Step 3: The House subcommittee holds hearings on the bill, listening to testimony from all concerned parties and establishing a hearing record.

Step 4: After hearings, the bill is "marked up" (drafted in precise form) and then referred to the subcommittee for a vote.

Step 5: If the vote is affirmative, the subcommittee forwards the bill to the full House Energy and Commerce committee, which either accepts the subcommittee's recommendation, puts a hold on the bill, or rejects it. If the House committee votes to accept the bill, it reports the bill to the full House of Representatives for a vote by all members.

Step 6: If the bill is passed by the House of Representatives and a similar bill is passed by the Senate, the bills go to a Senate—House Conference Committee to reconcile any differences in content. After compromise and reconciliation of the two bills, a single bill is reported to the full House and Senate for a vote.

Step 7: If there is a final affirmative vote by both houses of Congress, the bill is forwarded to the president, who may sign it into law or veto it. When the president signs the bill into law, it becomes known as a statute, meaning it is written down and codified in the United States Code. In the event of a presidential veto, a two-thirds vote of the Senate and House membership is required to override the veto. If the president takes no action within 10 days of receiving the bill from Congress, the bill automatically becomes law without the president's signature.

Diff: 2

Topic: Sources of Law

75) Compare and contrast criminal law and civil law.

Answer: Criminal law comprises those federal and state statutes that prohibit wrongful conduct such as arson, rape, murder, extortion, forgery, and fraud. The purposes of criminal law are punitive (punishing offenders by imprisonment or fines), rehabilitative (rehabilitating offenders), and restitutive (making restitution to victims). The plaintiff in a criminal case is the United States, State X, County X, or City X, representing society and the victim against the defendant, who is most likely to be an individual but may also be a corporation, partnership, or single proprietorship. The plaintiff must prove beyond a reasonable doubt that the defendant committed a crime. Crimes are generally divided into felonies and misdemeanors. In most states, felonies are serious crimes (e.g., rape, arson, and criminal fraud) that are punishable by incarceration in a state penitentiary. Misdemeanors are less serious crimes (e.g., driving while intoxicated) that are usually punishable by shorter periods of imprisonment in a county or city jail or by fines. An act that is a misdemeanor in one state could be a felony in another state.

Civil law comprises federal and state statutes governing litigation between two private parties. Neither the state nor the federal government is represented in most civil cases. Rather than prosecutors, there are plaintiffs, who are usually individuals or businesses suing other individuals or businesses (the defendants) to obtain compensation for an alleged breach of a private duty.

Diff: 2

Topic: Classifications of Law

76) Discuss how one determines whether a law is just or unjust.

Answer: A just law is a manmade code that squares with the moral law or the law of God. An unjust law is a code that is out of harmony with the moral law. To put it in the terms of the writings of Saint Thomas Aquinas, an unjust law is a human law that is not rooted in eternal and natural law. Any law that uplifts human personality is just. Any law that degrades human personality is unjust. All segregation statutes are unjust because segregation distorts the soul and damages the personality. An unjust law is a code that a majority inflicts on a minority but that is not binding on the majority itself. In contrast, a just law is a code that a majority compels a minority to follow that it is willing to follow itself. This is sameness made legal. An unjust law is a code inflicted upon a minority that that minority had no part in enacting or creating because they did not have the unhampered right to vote.

Diff: 3

Topic: Definition of Law and Jurisprudence

77) Discuss how the executive branch is a source of law in two ways.

Answer: The executive branch is a source of law in two ways:

Treaty Making: The president has the power, subject to the advice and consent of the Senate, to make treaties. These treaties become the law of the land, on the basis of the Supremacy Clause of the U.S. Constitution (Article VI), and supersede any state law. When President Carter entered into a treaty returning the Panama Canal Zone to the nation of Panama under certain conditions, it became the law of the land, and the treaty provisions superseded any federal or state laws inconsistent with the treaty.

Executive Orders: Throughout history, the president has made laws by issuing executive orders. For example, President Reagan, by virtue of an executive order, ruled that all executive federal agencies must do a cost-benefit analysis before setting forth a proposed regulation for comment by interested parties. The executive order as a source of law is also used by state governors to deal with emergencies and budget functions. Often, a governor will call out the National Guard or, in some states, implement particular aspects of the budget by executive order.

Diff: 2

Topic: Sources of Law

 

Chapter 2

Introduction to Law and the Legal Environment of Business

Introduction

To promote an environment in which instructors and the students have a question-asking attitude, instructors should present each chapter as one that address several questions.

Chapter Two addresses these questions:

· How can legal environment of business be defined?

· How can law and jurisprudence be defined? Do alternative definitions of law exist?

· Where does law come from?

· What are the classifications of law?

· What are the global dimensions of the legal environment of business?

Chapter Two is significant because it provides background information that influences the way students think about cases and legal ideas. When instructors teach this chapter, they should emphasize on the significance of considering alternative perspectives.

Achieving Teaching Excellence

Creating a Student-Centered Classroom That Promotes Students’ Intellectual Development

Instructors can probably choose this textbook over others in part because they wanted to encourage their students to engage in critical thinking about the law. This goal is important. To achieve this goal, instructors will want students and their intellectual development to be the focus of what happens in class.

First, this section explains alternative perspectives on how to conduct class. Second, this section will explain why a specific type of student-centered classroom is likely to help instructors achieve their goal of encouraging their students to engage in critical thinking.

In The University Teacher as Artist, Joseph Axelrod describes different teaching styles. Axelrod classifies these teaching styles. One major category includes didactic styles. Didactic teaching styles do not encourage inquiry by the student. The other category includes evocative styles. These styles require student inquiry when completing the tasks the instructor has assigned.

Axelrod explains that didactic teaching styles stress either knowledge acquired by memorization, or skill mastery through repetition and practice. Evocative modes stress student inquiry and discovery. A teaching style that encourages critical thinking is an evocative style.

Within the category of evocative styles, different teaching styles emphasize different components. Some styles focus on the teacher, some on the learner, and some on the subject matter. A teaching style that stresses critical thinking is an evocative style that focuses on the learner and his or her understanding of course material. Axelrod would call this style a student-centered style rather than an instructor-centered style. A critical thinking approach assumes the teacher will create a classroom environment in which the students’ intellectual development is the focus of classroom attention. A teacher who uses this approach would be likely to say what a professor in Axelrod’s book says, “I train minds.” Promoting critical thinking is one way to train students’ minds.

Now the question arises as to how instructors will know whether they have created a student-centered classroom that emphasizes intellectual development. First, they will be talking less and listening to their students more. Second, they will be emphasizing on higher-order thinking skills rather than asking their students to recite principles and facts. Third, instructors will be observing how students are doing at grasping the critical thinking model. They should not be watching instructors to see what a good critical thinker they are. Fourth, class time will be spent working with the material, rather than making sure they have “covered” everything.

Reference:

· Joseph Axelrod, The University Teacher as Artist (Jossey-Bass, Inc., Publishers 1973).

Chapter Overview, Topic Outline, and Discussion Questions

Chapter Overview

This book is about the legal environment in which the business community operates today. Although the book concentrates on law and the legal variables that help shape business decisions, it has not overlooked the ethical, political, and economic questions that often arise in business decision making. This chapter is especially concerned with legal variables in the context of critical thinking. In addition, it examines the international dimensions of several areas of law.

Instructors who want to encourage students to work with the material in class sometimes realize they cannot always “cover” all the material in the book. After several years of not covering everything, instructors should be comfortable knowing that the material encourages students to work on in class and is understood by most of them. Instructors can choose parts of each chapter that are especially challenging or confusing. This is the material that deserves the most attention in class. Some chapter material is easy, and students pick it up well on their own.

In Chapter Two, the material that is the most challenging or confusing falls into these subsections:

· Definition of Law and Jurisprudence

· Classifications of Law

After presenting a topic outline for Chapter Two, this section provides discussion questions that help students increase their understanding of the material presented in the two sections listed above.

Topic Outline

I. Definition of the Legal Environment of Business

II. Definition of Law and Jurisprudence

A. Natural Law School

B. Positivist School

C. Sociological School

D. American Realist School

E. Critical Legal Studies School

F. Feminist School

G. Law and Economics School

III. Sources of Law

A. The Legislature as a Source of Statutory Law

B. The Judicial Branch as a Source of Case Law

Case Law Precedents and the Internet

C. The Executive Branch as a Source of Law

Treaty Making

Executive Orders

D. Administrative Agencies as a Source of Law

IV. Classifications of Law

A. Criminal Law and Civil Law

B. Public and Private Law

C. Substantive and Procedural Law

Substantive Law

Procedural Law

D. Cyberlaw

V. Global Dimensions of the Legal Environment of Business

VI. Summary

Discussion Questions for Chapter Two

1. In answering the question “What is Law?”, why is it appropriate to answer, “It depends?”

The question “What is Law?” is not as straightforward as it appears. Most people would give an answer that shows their understanding and acceptance of the positivist school of jurisprudence. However, a person’s answer to the question “What is Law?” depends on which school of jurisprudence the person prefers. For instance, a positivist thinker might say that law is a set of rules created by the legislature that people must follow or they will be punished or fined. A critical legal studies scholar might say law is an institution that protects those in power. Students should notice the difference in those two answers. Given the wide range of beliefs about the definition of law, it is wise to say the answer to the question depends on the school of jurisprudence a person prefers.

2. How would an individual decide which school of jurisprudence a particular judge prefers?

This question triggers many reminders. First, a judge, legal scholar, or thinker might agree with more than one school of jurisprudence, or with some elements of more than one school of jurisprudence. For instance, feminist legal scholars and critical legal scholars share some beliefs. It could be possible to agree with both of those theories to some extent. Second, judges, legal scholars, and thinkers rarely announce their preferred school of jurisprudence. (Some might even be confused about the schools of jurisprudence.) To figure out the view a judge prefers, an individual would need to read their legal decisions and scholarly writings carefully. An individual can infer their views from their writings or what they say in public about a particular decision.

3. Which schools of jurisprudence probably have the fewest followers within the legal community?

Probably, critical legal studies and feminist views of jurisprudence have the fewest followers. Both evaluate the legal system in a structural way; they question the very structure of law as a societal institution. Most followers of these schools are legal scholars rather than judges or practicing attorneys. People engaged in the daily practice of law might want some kind of incremental legal reform, but they are unlikely to question law in a structural way or advocate major changes.

4. Create a fact situation that could end as both a civil and a criminal lawsuit.

Instructors should encourage students to be creative with this one. For instance, a bank robber was injured while committing a bank robbery. After collecting the money, it exploded in his pockets because a device attached to the money was poorly designed. The robber would be prosecuted for the crime of bank robbery, and could sue the manufacturer of the exploding device under civil law. (This was a real case. The robber sued the manufacturer from jail, and lost.) A more realistic and common example would be one in which someone engaged in driving while under the influence of alcohol, caused a car accident, and injured someone. The driver would be prosecuted under criminal law, and the injured parties could sue the driver civilly.

5. Explain how a court’s decision (case law) might lead to changes in legislation (statutory law). Are there any situations in which this has happened?

A legislature (either state or federal) might be so concerned about a judge’s decision that it will pass a law that in effect reverses the judge’s decision. One example is the Civil Rights Act of 1991, which changed several decisions the U.S. Supreme Court had rendered. Congress was changing the Supreme Court’s decisions by changing statutory law.

Answers to Critical Thinking about the Law Questions, Review Questions, Review Problems, and Case Problems

Suggested Answers to Critical Thinking about the Law Questions

1. Learning about relevant laws regarding business helps one understand what the law is, but does not help one evaluate legal arguments. The critical thinking questions that help one evaluate legal arguments are:

· Does the legal argument contain significant ambiguity?

· What ethical norms are fundamental to the Court’s reasoning?

· How appropriate are the legal analogies?

· Is there relevant missing information?

The question about ethical norms most clearly addresses the ethical component of the legal environment of business. Knowing the ethical norms that are fundamental to a court’s reasoning helps one decide whether to accept or reject the court’s conclusion.

2. Knowing the school of thought the judge prefers helps one critically evaluate a judge’s reasoning because one can determine the assumptions the judge makes. For instance, if one knows the judge prefers the critical legal studies view of jurisprudence, one knows the judge would favor structural change in the legal system—he or she does not have to tell them. One would also know the judge is likely to prefer a definition of justice defined as to treat all humans identically, regardless of class, race, gender, age, and so on. The critical legal studies movement strives to point out how the legal system perpetuates inequality.

3. One might want to ask the lawyer whether their mutual respect for a particular school of jurisprudence will bring about the action they want. For instance, mutual respect for natural law might yield interesting discussions between people and their attorney, but it will do little to help them pursue the landlord. One would also want to ask the lawyer basic questions about competence, the lawyer’s area of expertise, whether the lawyer has time to take on a case of this nature, and the lawyer’s fee.

Answers to Review Questions

2-1. The source of law is different in the sociological school’s definition of law and that of the feminist school. The source of law for the sociological school of law is contemporary community opinion and customs. In contrast the feminist school is based on jurisprudence that reflects a male-dominated executive, legislative, and judicial system in which women’s perspectives are ignored and women are victimized.

2-2. The critical legal theorist school and the feminist school of jurisprudence are similar because both evaluate the legal system. Both find major inadequacies in the legal system. Critical legal theorists think the legal system protects economically privileged individuals; feminist scholars think the legal system protects the rights of men.

2-3. The legislative branch (Article I) is the maker or creator of laws and for this reason it is a source of law. In addition to that statutory laws are made by the legislative branch.

2-4. Statutory law is made by legislatures. Case law is made by judges.

2-5. If the President vetoes a bill passed by the House and the Senate, the bill can become a law if two-thirds of the Senate and House membership vote to override the veto.

2-6. a. Public law is a classification of law that deals with the relationship of government to individual citizens. Private law is generally concerned with the enforcement of private duties.

b. In criminal law, a prosecutor aims to prove beyond a reasonable doubt that the defendant committed a crime and should be punished. In civil law, a private individual or business tries to show by the preponderance of the evidence that another private individual or business is liable and should have to compensate the plaintiff.

c. Felonies are punishable by incarceration in a state penitentiary. Misdemeanors are usually punishable by shorter periods of imprisonment in a county or city jail.

Answers to Review Problems

2-7. Justice A belongs to the positivist school of jurisprudence. One knows that because this justice is unwilling to look beyond statutes and case precedents in interpreting the law.

2-8. Justice B is a natural law thinker. One knows that because this justice is willing to ignore man-made law and rule based upon something higher—the laws of nature.

2-9. Justice C is a sociological thinker. This justice bases her decision on contemporary community customs or thought.

2-10. A judge who follows the natural law school of thought would hear out the case and based on the evidence presented would make his or her decision. These value judgments would remain unchanged as there is an absolute source of law. Therefore, the decision made in this case would be dependent on the merits of the case.

2-11. Precedent refers to case law courts follow. Judges interpret legislation on a case-by-case basis. These cases establish a line of authoritative cases on a particular subject that must be followed by lower courts. Here, the precedent tells Marshall his legal rights. The attorney can predict that Marshall will win a lawsuit to collect the reasonable value of his work.

2-12. No, the California court does not have to follow decisions from North Dakota and Ohio. The California appellate court must listen to higher courts in California, but not higher courts in other states. The California court might consider the North Dakota and Ohio case law, but it is not required to do so.

Answers to Case Problems

2-13. Students should note that ethical issues such as the one raised in this case do not get resolved necessarily by exploring the legal issue that brought the case before the court in the first place. Rather than focusing on whether the practices of Myspace qualify as copyright infringement, the court concentrated on whether Myspace’s counsel should be disqualified because of its past association with Universal Music Group. The court ruled that Myspace’s counsel should not be disqualified as long as it met several conditions. In this case, the court focused on which should hold more weight, the current client of the law firm, Myspace’s, right to counsel of its choice or the former client, Universal Music Group’s, right to maintain its confidentiality. Using a sociological approach, the court used California Rules of Professional Conduct Rule 3-310 and decided it was most important to preserve the public’s trust in the integrity of California attorneys and the bar. The goal of this court was to uphold community customs and assume that the law firm would act ethically. If another school of thought had been used, such as the natural or positivist approach, the verdict may have been different. A judge using natural philosophy might focus on how it is unreasonable or unnatural for a law firm to represent opposing clients, whereas a judge using positivist philosophy might concentrate solely on the words within the law and not on its affects on the public.

2-14. Yes, Vermont’s marriage license law violates same-sex couples’ rights under the Vermont Constitution. The court ruled that the State had failed to provide a reasonable and just basis for excluding same-sex couples from benefits incident to Vermont’s civil marriage license. The court indicated that a parallel “domestic partnership” system would meet Vermont’s constitutional guarantee of “the common benefit, protection, and security of the law.”

2-15. No. The court ruled that Margaret was allowed to sue her husband for damages in the case. In making this ruling, the court overruled the judicially created doctrine that prevented one spouse from suing another. The court did so as an act of fairness. They did not want the family to suffer the financial consequences of the accident simply because of the husband’s negligence.

2-16. The Supreme Court ruled in favor of the individual workers. Now, employees have the burden of proof and can therefore argue that there is no “reasonable” factor than age involved in their termination.

2-17. A & M Records won. The works at issue in the case were copyrighted, the plaintiffs would be likely to prove vicarious infringement, and the “safe harbor” provision of the Digital Millennium Copyright Act protects A & M.

2-18. The court ruled that Roommate.com was immune from the Fair Housing Act charges, because of Section 230 of the Communications Decency Act. Section 230 states that “interactive computer services” acting as “service providers” are not responsible for information that has been provided by another “information content provider.” In this case, Roommate.com was seen as both a service provider and an information content provider, but the court emphasized that in close cases, the ruling should be in favor of Section 230 immunity. The court could have focused on Roommate.com being a service provider or an information content provider and based on its interpretation, the verdict would differ. In this case, the court focused on Roommate.com as a service provider and used a broad interpretation of Section 230 immunity. Not all judges would view such a ruling as prudent.

Thinking Critically about Relevant Legal Issues

1. The issue here is framed in a very optimistic, naturalistic way. In an essay, one would focus on the benefits of this type of thinking and the best way to ensure complete objectivity. The conclusion would contain an account of how many problems and squabbles over objectivity would cease if the naturalistic approach was taken.

2. The author here seems to value justice, defined as moral absolutes that make clear what is good. The author may also value tradition, as what the author assumes is that what is “good” is what is conventionally right.

3. Good here means what is conventionally right. Evil means what is wrong. Both of these terms are ambiguous and take away from the argument. Again, the author assumes that all people are thinking the same way and live in the same environment.

4. Students would probably make a more realistic argument, citing differences in areas across the country in culture, religion, and so on. Sometimes absolute, conventional good is not synonymous with right.

 

CHAPTER 2 - BUSINESS ETHICS AND SOCIAL RESPONSIBILITY

TRUE/FALSE

1. Ethics is the study of how people should behave.

ANS: T PTS: 1 DIF: Difficulty: Easy

NAT: BUSPROG: Ethics STA: AICPA: BB-Critical Thinking

TOP: A-Head: Introduction KEY: Bloom’s: Comprehension

2. Life Principles are set by your parents and do not change over time.

ANS: F PTS: 1 DIF: Difficulty: Moderate

NAT: BUSPROG: Ethics STA: AICPA: BB-Critical Thinking

TOP: A-Head: Introduction KEY: Bloom’s: Analysis

3. There is strong evidence that ethical behavior pays off financially for businesses.

ANS: F PTS: 1 DIF: Difficulty: Moderate

NAT: BUSPROG: Ethics STA: AICPA: FN-Risk Analysis

TOP: A-Head: Why Bother to Act Ethically at All? KEY: Bloom’s: Analysis

4. Unethical behavior is a barrier to financial success.

ANS: F PTS: 1 DIF: Difficulty: Moderate

NAT: BUSPROG: Ethics STA: AICPA: FN-Risk Analysis

TOP: A-Head: Why Bother to Act Ethically at All? KEY: Bloom’s: Analysis

5. John Akers, former chairman of IBM, argues that ethics are not important to economic competitiveness.

ANS: F PTS: 1 DIF: Difficulty: Easy

NAT: BUSPROG: Ethics STA: AICPA: FN-Risk Analysis

TOP: A-Head: Why Bother to Act Ethically at All? KEY: Bloom’s: Analysis

6. Society is hurt when business managers behave ethically.

ANS: F PTS: 1 DIF: Difficulty: Easy

NAT: BUSPROG: Ethics STA: AICPA: FN-Risk Analysis

TOP: A-Head: Why Bother to Act Ethically at All? KEY: Bloom’s: Analysis

7. Researchers who study happiness find that people expect money to make them happier than it actually does.

ANS: T PTS: 1 DIF: Difficulty: Moderate

NAT: BUSPROG: Ethics STA: AICPA: FN-Risk Analysis

TOP: A-Head: Ethical Traps KEY: Bloom’s: Application

8. Generally, ethical managers have happier, more satisfying lives.

ANS: T PTS: 1 DIF: Difficulty: Easy

NAT: BUSPROG: Ethics STA: AICPA: FN-Risk Analysis

TOP: A-Head: Why Bother to Act Ethically at All? KEY: Bloom’s: Analysis

9. The behavior of top executives regarding ethical issues has little effect on the behavior of the employees of the organization.

ANS: F PTS: 1 DIF: Difficulty: Easy

NAT: BUSPROG: Ethics STA: AICPA: FN-Risk Analysis

TOP: A-Head: Chapter Conclusion KEY: Bloom’s: Analysis

10. A company that engages in unethical behavior may suffer severe consequences.

ANS: T PTS: 1 DIF: Difficulty: Moderate

NAT: BUSPROG: Ethics STA: AICPA: FN-Risk Analysis

TOP: A-Head: Why Bother to Act Ethically at All? KEY: Bloom’s: Analysis

11. Wever, Inc. is considering relocating a facility to Mexico. The interests of the various stakeholders affected by this decision may conflict.

ANS: T PTS: 1 DIF: Difficulty: Moderate

NAT: BUSPROG: Ethics STA: AICPA: FN-Risk Analysis

TOP: A-Head: Stakeholder Ethics KEY: Bloom’s: Application

12. Utilitarian ethics holds that decisions should be made on the basis of practicality, and whatever action is most convenient should be favored.

ANS: F PTS: 1 DIF: Difficulty: Moderate

NAT: BUSPROG: Ethics STA: AICPA: BB-Critical Thinking

TOP: A-Head: Theories of Ethics KEY: Bloom’s: Application

13. Lying is always considered unethical, even if it seems to be justified by the ends.

ANS: F PTS: 1 DIF: Difficulty: Moderate

NAT: BUSPROG: Ethics STA: AICPA: BB-Critical Thinking

TOP: A-Head: When, If Ever, Is Lying Acceptable? KEY: Bloom’s: Evaluation

14. Deontologists would agree that the increasing medical concern over obesity in the United States justifies federal regulation of high fat, high sugar, low nutrition food advertising during children’s television programs.

ANS: T PTS: 1 DIF: Difficulty: Moderate

NAT: BUSPROG: Ethics STA: AICPA: FN-Risk Analysis

TOP: A-Head: Theories of Ethics KEY: Bloom’s: Evaluation

15. Immanuel Kant was a German philosopher who was a proponent of utilitarian ethics.

ANS: F PTS: 1 DIF: Difficulty: Easy

NAT: BUSPROG: Analytic STA: AICPA: BB-Critical Thinking

TOP: A-Head: Theories of Ethics KEY: Bloom’s: Knowledge

MULTIPLE CHOICE

1. In analyzing a situation to determine how to act ethically, a business manager should:

a.	gather background information by either talking firsthand with the people involved or by talking to those who gained information informally through the company “grapevine.”
b.	narrowly focus on a single issue.
c.	determine whether an alternative violates important values.
d.	All of the answers are correct.

ANS: C PTS: 1 DIF: Difficulty: Moderate

NAT: BUSPROG: Ethics STA: AICPA: FN-Decision Making

TOP: A-Head: Introduction | A-Head: Applying Personal Ethics in the Workplace

KEY: Bloom’s: Application

2. Zeno, Inc. is considering relocating its manufacturing facility from Illinois to Mexico City. The stakeholders in this decision might include:

a.	Zeno's shareholders.
b.	customers.
c.	the Illinois community in which Zeno operates.
d.	All of the above.

ANS: D PTS: 1 DIF: Difficulty: Easy

NAT: BUSPROG: Reflective Thinking STA: AICPA: BB-Critical Thinking

TOP: A-Head: Stakeholder Ethics KEY: Bloom’s: Application

3. Ethics is the study of:

a.	sovereign immunity.
b.	how people should act.
c.	respondeat superior.
d.	victimization.

ANS: B PTS: 1 DIF: Difficulty: Easy

NAT: BUSPROG: Ethics STA: AICPA: BB-Critical Thinking

TOP: A-Head: Introduction KEY: Bloom’s: Comprehension

4. Does ethical behavior maximize profitability?

a.	Yes, there is concrete evidence that ethical behavior maximizes profitability.
b.	No, there is concrete evidence that unethical companies outperform ethical companies.
c.	Although there is no guarantee that ethical behavior pays in the short or long run, there is evidence that the ethical company is more likely to win financially.
d.	There is strong evidence that ethical behavior pays financially in the long run, but not in the short run.

ANS: C PTS: 1 DIF: Difficulty: Moderate

NAT: BUSPROG: Ethics STA: AICPA: BB-Critical Thinking

TOP: A-Head: Why Bother to Act Ethically at All? KEY: Bloom’s: Analysis

5. Why should ethics be a concern to business?

a.	Society as a whole benefits from ethical behavior.
b.	People feel better when they behave ethically.
c.	Unethical behavior can be very costly.
d.	All of the above.

ANS: D PTS: 1 DIF: Difficulty: Moderate

NAT: BUSPROG: Ethics STA: AICPA: FN-Decision Making

TOP: A-Head: Why Bother to Act Ethically at All? KEY: Bloom’s: Evaluation

6. Warren Buffet is quoted as saying, “The five most dangerous words in business may be:

a.	‘Everyone else is doing it.’’
b.	‘It’s none of your business.’’
c.	‘We have always done this.’’
d.	‘Nobody will ever find out.’’

ANS: A PTS: 1 DIF: Difficulty: Moderate

NAT: BUSPROG: Ethics STA: AICPA: BB-Critical Thinking

TOP: A-Head: Ethical Traps KEY: Bloom’s: Knowledge

7. In 1919, Henry Ford was sued by the Dodge brothers for:

a.	supporting humanitarian projects instead of paying dividends with profits.
b.	theft of a design of a new automobile.
c.	luring a valuable employee away from Dodge to work for Ford.
d.	embezzlement of union dues.

ANS: A PTS: 1 DIF: Difficulty: Moderate

NAT: BUSPROG: Ethics STA: AICPA: FN-Risk Analysis

TOP: A-Head: Stakeholder Ethics KEY: Bloom’s: Comprehension

8. A manager making a decision based on an idea such as, “I’m not really hurting anyone by this action...” is engaging in:

a.	euphemisms.
b.	conformity.
c.	rationalization.
d.	embezzlement.

ANS: C PTS: 1 DIF: Difficulty: Easy

NAT: BUSPROG: Ethics STA: AICPA: FN-Decision Making

TOP: A-Head: Ethical Traps KEY: Bloom’s: Comprehension

9. Research has shown that the least important motivation for managers in behaving ethically is:

a.	they want to feel good about themselves.
b.	they want to feel good about the decisions they make.
c.	they value their reputation.
d.	profitability.

ANS: D PTS: 1 DIF: Difficulty: Easy

NAT: BUSPROG: Ethics STA: AICPA: BB-Critical Thinking

TOP: A-Head: Why Bother to Act Ethically at All? KEY: Bloom’s: Comprehension

10. Why do many major corporations actively encourage ethical behavior?

a.	Unethical behavior always damages a business.
b.	Unethical behavior can quickly destroy a business.
c.	Unethical acts are always illegal.
d.	All of the above are reasons that corporations actively encourage ethical behavior.

ANS: B PTS: 1 DIF: Difficulty: Moderate

NAT: BUSPROG: Ethics STA: AICPA: FN-Risk Analysis

TOP: A-Head: Why Bother to Act Ethically at All? KEY: Bloom’s: Comprehension

11. Unethical behavior in an organization can create:

a.	a cynical workforce.
b.	a resentful workforce.
c.	an unproductive workforce.
d.	All of the above.

ANS: D PTS: 1 DIF: Difficulty: Moderate

NAT: BUSPROG: Ethics STA: AICPA: FN-Risk Analysis

TOP: A-Head: Why Bother to Act Ethically at All? KEY: Bloom’s: Application

12. The idea that corporations’ two primary responsibilities are to obey the law and make a profit is attributed to:

a.	Justice Potter Stewart.
b.	John Akers.
c.	Milton Friedman.
d.	Jeffrey Sachs.

ANS: C PTS: 1 DIF: Difficulty: Moderate

NAT: BUSPROG: Ethics STA: AICPA: FN-Risk Analysis

TOP: A-Head: Stakeholder Ethics KEY: Bloom’s: Application

13. E-presto, Inc. has established an EthicsLine. EthicsLine is a toll-free phone number that employees can call any time of the day, any day of the week to discuss ethics and report suspected unethical or improper conduct. Why would E-presto establish the EthicsLine?

a.	Ethical behavior improves productivity.
b.	Ethical behavior increases job stability.
c.	Unethical behavior can destroy a business.
d.	All of the above are reasons that would justify establishing an EthicsLine.

ANS: D PTS: 1 DIF: Difficulty: Moderate

NAT: BUSPROG: Ethics STA: AICPA: BB-Critical Thinking

TOP: A-Head: Why Bother with Ethics At All? | A-Head: Applying Personal Ethics in the Workplace KEY: Bloom’s: Analysis

14. Kent needed to reduce his workforce by five people. Before notifying them, he thought about how he would feel if he were the one receiving the news and he tried to find ways to help the employees in their transition. Kent was exercising the value of:

a.	courage.
b.	compassion.
c.	fairness.
d.	responsibility.

ANS: B PTS: 1 DIF: Difficulty: Moderate

NAT: BUSPROG: Reflective Thinking STA: AICPA: BB-Critical Thinking

TOP: A-Head: Introduction | A-Head: Applying Personal Ethics in the Workplace

KEY: Bloom’s: Application

15. Charlie Sheen’s drug use and violent behavior:

a.	were bad enough to make CBS consider firing him from a hit TV show.
b.	have no impact on his job as an actor.
c.	enhance his reputation as a “tough guy” and should be tolerated.
d.	are false accusations.

ANS: A PTS: 1 DIF: Difficulty: Moderate

NAT: BUSPROG: Ethics STA: AICPA: BB-Critical Thinking

TOP: A-Head: Applying Personal Ethics in the Workplace KEY: Bloom’s: Analysis

16. Ethical companies:

a.	tend to earn higher returns than companies that engage in wrong-doing.
b.	tend to have more creative employees than companies that engage in wrong-doing.
c.	are guaranteed to be more profitable in the long run than companies that engage in wrong-doing.
d.	All of the above.
e.	Both (a) and (b).

ANS: E PTS: 1 DIF: Difficulty: Moderate

NAT: BUSPROG: Ethics STA: AICPA: BB-Critical Thinking

TOP: A-Head: Why Bother to Act Ethically at All? KEY: Bloom’s: Comprehension

17. Chelvam is the director of quality control. Chelvam rejected some parts as non-conforming to the specifications. Chelvam's supervisor directs him to accept the parts. Which value might give Chelvam the strength to oppose his supervisor?

a.	Consideration.
b.	Courage.
c.	Fairness.
d.	Ambition.

ANS: B PTS: 1 DIF: Difficulty: Easy

NAT: BUSPROG: Ethics STA: AICPA: BB-Critical Thinking

TOP: A-Head: Applying Personal Ethics in the Workplace KEY: Bloom’s: Application

18. Paul decided he did not want the new jeans he had purchased from a large discount department store. He had worn them three times and decided he just did not want them because his friends said they weren’t “cool.” The jeans fit him fine and there is nothing wrong with them. He took the jeans back to the store and requested a full refund of his money. Which statement is correct?

a.	Paul's conduct was ethical as long as he was within the time frame for returns.
b.	Paul's conduct was unethical unless the store’s policy included “satisfaction guaranteed” and allowed returns for any reason.
c.	This is not an issue of ethics since people do this all the time.
d.	Paul's conduct was ethical since the store has a legal duty to return his money when he returned the jeans.

ANS: B PTS: 1 DIF: Difficulty: Moderate

NAT: BUSPROG: Ethics STA: AICPA: BB-Critical Thinking

TOP: A-Head: Ethical Traps KEY: Bloom’s: Analysis

19. The Chief Executive Officer of Ticor, Inc. must decide about the disposal of toxic waste materials. Which of the following considerations should help the CEO reach an ethical business decision?

a.	Toxic waste disposal law.
b.	The harm the disposal could cause to the environment.
c.	The impact on the business if the decision is publicly disclosed through the news media.
d.	All of the above.

ANS: D PTS: 1 DIF: Difficulty: Moderate

NAT: BUSPROG: Ethics STA: AICPA: FN-Risk Analysis

TOP: A-Head: Why Bother to Act Ethically at All? KEY: Bloom’s: Analysis

20. Don runs a construction company. He hires people to work on his projects and tells them they are all "independent contractors." Legally, they are not independent contractors since Don tells the workers when to come to work, how long to work, what days to work, what they are to do each day, and so forth. At the end of each week, Don pays his workers in cash rather than with a check. Also, he does not withhold any state, federal or local withholding tax (since he claims the workers are independent contractors). Which statement is correct?

a.	Don has committed both unethical and illegal conduct.
b.	Don has committed unethical conduct, but it is legal.
c.	Don has committed ethical conduct but it is illegal.
d.	Don has committed both ethical and legal conduct.

ANS: A PTS: 1 DIF: Difficulty: Challenging

NAT: BUSPROG: Ethics STA: AICPA: BB-Critical Thinking

TOP: A-Head: Stakeholder Ethics KEY: Bloom’s: Analysis

21. Which of the following is NOT a stakeholder?

a.	a business competitor.
b.	shareholders.
c.	employees.
d.	the environment.

ANS: A PTS: 1 DIF: Difficulty: Moderate

NAT: BUSPROG: Ethics STA: AICPA: BB-Critical Thinking

TOP: A-Head: Stakeholder Ethics KEY: Bloom’s: Comprehension

22. Nortron Corporation wants to be ethical and profitable. What arguments might it use to justify using sweatshop factories in China?

a.	Sweatshops provide products at a very low cost to consumers.
b.	Sweatshop employees often ask for more hours, even though the work is hard.
c.	Countries that allow sweatshops have found that the increased output is the stepping stone out of poverty.
d.	All of the above arguments are valid arguments in favor of sweatshops.

ANS: D PTS: 1 DIF: Difficulty: Moderate

NAT: BUSPROG: Ethics STA: AICPA: FN-Decision Making

TOP: A-Head: Stakeholder Ethics KEY: Bloom’s: Analysis

23. Lois is running for political office. She trails the incumbent and decides to start running a series of "attack ads." The attack ads are very effective and one week before the election it appears that she has drawn even with her opponent. Lois admits that the attack ads were exaggerations and contained some distortions. Which statement is correct?

a.	Lois has engaged in unethical behavior.
b.	Lois has engaged in ethical behavior since she has an obligation to her supporters to run a campaign that will help her get elected.
c.	It is not possible to determine whether Lois's attack ads were ethical or unethical.
d.	Assuming Lois's attack ads were unethical, her conduct is justified and proper if she gets elected.

ANS: A PTS: 1 DIF: Difficulty: Moderate

NAT: BUSPROG: Ethics STA: AICPA: BB-Critical Thinking

TOP: A-Head: When, If Ever, Is Lying Acceptable? KEY: Bloom’s: Analysis

24. Which of the following was true of public policy after the Dodge Brothers’ 1919 suit against Henry Ford and up to World War II?

a.	Companies were legally required to follow the “shareholder model.”
b.	Companies were legally required to follow the “stakeholder model.”
c.	Companies were allowed to choose to follow either the “shareholder model” or the “stakeholder model.”
d.	Companies were allowed to make charitable contributions only after paying at least a 10% dividend to shareholders.

ANS: A PTS: 1 DIF: Difficulty: Moderate

NAT: BUSPROG: Ethics STA: AICPA: BB-Critical Thinking

TOP: A-Head: Stakeholder Ethics KEY: Bloom’s: Analysis

25. John discovered his company's accountant was "skimming" money from the business. The accountant agreed to pay John a one-time payment of $25,000 not to report the skimming to company officials. The accountant promised she would pay the money back when she could. John accepted the money and never reported what he knew. A year later the accountant was fired when the embezzlement was discovered. She was also prosecuted for theft. The payment to John was never discovered. Which statement is correct?

a.	John's act was unethical and illegal.
b.	John's act was unethical but not necessarily illegal.
c.	John's act was ethical since he believed the accountant would return the money; however, it was illegal.
d.	Based on the facts, John's conduct was both ethical and legal given the special circumstances of this case.

ANS: A PTS: 1 DIF: Difficulty: Moderate

NAT: BUSPROG: Ethics STA: AICPA: BB-Critical Thinking

TOP: A-Head: Ethical Traps KEY: Bloom’s: Analysis

ESSAY

1. Oxtron, Inc. arranged for two employees, Kaiya and Gary, to attend "The Business Ethics 2008 Conference: Maintaining Credibility" in New York City. Although Gary goes to New York, he does not participate in the conference. Instead, he takes in the local attractions. Kaiya fully participated in the conference. Using ethical standards, describe what Kaiya should do about Gary's failure to participate in the conference.

ANS:

Kaiya has to decide what to do based on her Life Principles. She might ask herself some questions such as the following in order to apply her Life Principles. She must also avoid the ethical traps of rationalization, conformity, and using euphemisms.

·	Is there an issue of dishonesty in this case?
·	Who, if anyone, is hurt by Gary’s action?
·	Who, if anyone, would be hurt if I reported Gary’s action?
·	What are my alternatives?
·	What is my responsibility to my company?
·	Which action matches my Life Principles?

PTS: 1 DIF: Difficulty: Challenging

NAT: BUSPROG: Ethics | BUSPROG: Communication

STA: AICPA: FN-Decision Making TOP: A-Head: Introduction

KEY: Bloom’s: Evaluation

2. Tianhui was recently hired as a sales representative by Oxtron, Inc. Before leaving on his first sales trip, a number of the other sales representatives take Tianhui aside and tell him that it is customary for the sales representatives to "pad" (increase) their expense reports each month by 20%. Use utilitarian ethics to decide what Tianhui should do about the expense report he submits to Oxtron.

ANS:

Utilitarian ethics focuses on making choices that maximize overall happiness and minimizes overall pain. According to utilitarian ethics, Tianhui could use excuses such as the following to justify padding his report:

·	It will increase his overall happiness.
·	Increase in pay will help him feel better about going on trips, and make him more successful.
·	Help him “fit in” with the other sales staff, increasing morale for all.
·	The end result will be better because he will more likely stay with this job, decreasing employee turnover costs.

PTS: 1 DIF: Difficulty: Challenging NAT: BUSPROG: Ethics

STA: AICPA: BB-Critical Thinking TOP: A-Head: Theories of Ethics

KEY: Bloom’s: Evaluation

3. Many of America’s largest consumer product companies, such as Wal-Mart, Nike, and Land’s End, buy fabric produced in China by Fountain Set Holdings Ltd. Chinese government investigators recently discovered that Fountain Set has contaminated a local river by dumping dye waste into it. What responsibility do U.S. companies have to ensure safe environmental practices by overseas suppliers?

ANS:

The answer to this problem is not a simple as it might seem. Most Americans would support taking measures to force the Chinese company to be more environmentally responsible, but few recognize what the cost for that would be. Americans are too used to having low prices and many choices in consumer goods, and would protest if that were to change. Most Americans also do not realize that modernization and financial wealth for a society often begins with industries that have less than admirable practices, such as sweatshop conditions and environmental disrespect.

PTS: 1 DIF: Difficulty: Challenging NAT: BUSPROG: Ethics

STA: AICPA: BB-Critical Thinking TOP: A-Head: Stakeholder Ethics

KEY: Bloom’s: Evaluation

4. Li is the vice president of marketing for Felson, Inc., a manufacturer of children’s clothing Felson is considering building a factory in a developing country, where there are few restrictions on working conditions, wages, or maximum work hours. Which viewpoint: utilitarian or deontological would support this move? Why?

ANS:

A utilitarian viewpoint would support building a factory in a developing country because:

·	Felson would save money, enabling them to lower their prices to consumers.
·	Workers in developing countries are willing to work, even under harsh conditions, because they need the money.
·	Industrialization, even with sweatshops, leads to economic growth for a society.
·	Without the factory, the workers in this country may even starve.

PTS: 1 DIF: Difficulty: Challenging NAT: BUSPROG: Ethics

STA: AICPA: BB-Critical Thinking TOP: A-Head: Theories of Ethics

KEY: Bloom’s: Evaluation

5. Oxtron, Inc. is considering establishing a program that actively encourages ethical behavior. What reasons would support Oxtron's adoption of an ethics program?

ANS:

The following reasons support an ethics program: (1) society as a whole benefits from ethical behavior; (2) people feel better when they behave ethically; (3) unethical behavior can be very costly; and (4) ethical behavior is more likely to pay off with a better reputation, more creative and cooperative employees, and higher returns than companies that engage in wrong-doing.

PTS: 1 DIF: Difficulty: Moderate NAT: BUSPROG: Ethics

STA: AICPA: BB-Critical Thinking TOP: A-Head: Why Bother to Act Ethically at All?

KEY: Bloom’s: Analysis