UNIT-1

Introduction to Business Ethics

Business Ethics- Meaning and Definition of Business Ethics - Nature of Business Ethics - Role and
importance of Business Ethics and values in Business - Causes of unethical behaviour - Ethical issues.

1. What is the primary focus of business ethics?

a) Maximizing profit b) Achieving legal compliance
c) Promoting ethical behavior in business practices d) Reducing costs
Answer: c) Promoting ethical behavior in business practices

2. Business ethics refers to:

a) Ethical issues that arise only in the corporate sector
b) The moral principles guiding business behavior
c) Following government regulations strictly
d) Business practices that maximizes profits without considering social issues
Answer: b) The moral principles guiding business behavior

3. Which of the following is a key characteristic of business ethics?

a) Focuses only on profit generation b) Concerned with legal compliance only
c) Ensures fairness, transparency, and accountability d) Aims to reduce competition
Answer: c) Ensures fairness, transparency, and accountability

4. What does business ethics aim to balance?

a) Ethical standards and legal compliance b) Profit maximization and social responsibility
c) Operational costs and employee satisfaction d) Competition and market dominance
Answer: b) Profit maximization and social responsibility

5. Business ethics applies to:

a) Only large corporations
b) Only governmental organizations
c) All types of businesses, including small and medium enterprises
d) Only individuals, not organizations
Answer: c) All types of businesses, including small and medium enterprises

6. Which of the following is a major component of business ethics?

a) Customer loyalty b) Employee rights and fair treatment
c) Profit maximization d) Competitive advantage
Answer: b) Employee rights and fair treatment

7. What is an example of an ethical issue in business?

a) Offering discounts to customers b) Misleading advertising practices
c) Paying employees competitive salaries d) Providing excellent customer service
Answer: b) Misleading advertising practices

8. The nature of business ethics is primarily concerned with:

a) Maximizing profits through any means necessary
b) The moral principles that guide business behavior
c) Avoiding legal challenges and fines
d) Increasing the company’s market share
Answer: b) The moral principles that guide business behavior
9. Which of the following is an example of unethical behavior in business?
a) Providing fair wages to employees b) Engaging in insider trading
c) Following government regulations d) Practicing transparency in financial reporting
Answer: b) Engaging in insider trading

10. The study of business ethics helps organizations:

a) Cut costs by any means necessary b) Make morally responsible decisions in business operations
c) Ignore the rights of employees d) Maximize profits without regard to societal impact
Answer: b) Make morally responsible decisions in business operations

11. Which of the following is a major ethical principle in business?

a) Fairness and equality b) Price gouging
c) Exploiting labor for lower costs d) Deceptive marketing strategies
Answer: a) Fairness and equality

12. What does business ethics examine?

a) The legal aspects of business operations
b) The application of ethical principles in business decisions and actions
c) The economic efficiency of business practices
d) The market share of a company
Answer: b) The application of ethical principles in business decisions and actions

13. Business ethics involves the application of moral standards to which of the following?
a) Only the employees of a business
b) Only the customers of a business
c) All areas of business activities, including employees, customers, and stakeholders
d) Only the management of a business
Answer: c) All areas of business activities, including employees, customers, and stakeholders

14. Which of the following is the role of business ethics?

a) To eliminate competition in the market
b) To guide businesses on how to make morally sound decisions
c) To only focus on maximizing profits
d) To ignore the social consequences of business activities
Answer: b) To guide businesses on how to make morally sound decisions

15. What does the nature of business ethics emphasize?

a) Making profits irrespective of ethical considerations
b) Building relationships based on trust, respect, and integrity
c) Minimizing operational costs at all costs
d) Reducing legal liabilities
Answer: b) Building relationships based on trust, respect, and integrity

16. Ethical dilemmas in business arise when there is a conflict between:

a) Legal requirements and market opportunities
b) Profits and the ethical standards of the organization
c) Personal and professional goals
d) Transparency and competition
Answer: b) Profits and the ethical standards of the organization
17. What is the main objective of business ethics?
a) To maximize shareholder wealth by any means necessary
b) To create a business environment that is fair and just for all stakeholders
c) To increase market dominance through unethical behavior
d) To reduce employee wages in order to cut costs
Answer: b) To create a business environment that is fair and just for all stakeholders

18. What is one example of how businesses can implement ethics in decision-making?
a) By disregarding employee concerns to maximize profits
b) By applying a code of ethics that guides organizational decisions
c) By focusing solely on the financial bottom line
d) By avoiding all regulatory requirements
Answer: b) By applying a code of ethics that guides organizational decisions

19. Why is business ethics important for companies?

a) It enables companies to avoid regulatory compliance
b) It helps to attract customers and build long-term trust
c) It only benefits the legal system
d) It increases competition and market share
Answer: b) It helps to attract customers and build long-term trust

20. What does the term “business ethics” primarily involve?

a) Profit maximization techniques
b) The study of laws and regulations in business
c) The moral principles that guide the conduct of business in society
d) The technical efficiency of business operations
Answer: c) The moral principles that guide the conduct of business in society

21. How does business ethics benefit society?

a) By ensuring companies only focus on maximizing profits
b) By ensuring that companies consider the social and environmental consequences of their actions
c) By ignoring the interests of stakeholders to maximize revenue
d) By encouraging companies to focus on short-term financial gains
Answer: b) By ensuring that companies consider the social and environmental consequences of their actions

22. Business ethics encourages businesses to:

a) Make morally responsible decisions that benefit society
b) Focus solely on shareholder profits
c) Prioritize legal compliance over all other concerns
d) Avoid paying taxes and reducing operational costs
Answer: a) Make morally responsible decisions that benefit society

23. Which of the following is an ethical issue faced by businesses in a globalized economy?
a) The duty to maximize profits above all else
b) Respecting the cultural differences and human rights in different countries
c) Ignoring international environmental regulations
d) Focusing solely on local competition
Answer: b) Respecting the cultural differences and human rights in different countries
24. Which of the following best describes business ethics?
a) A set of laws businesses must follow
b) A philosophical approach to business focusing on values and principles
c) A series of profit-maximizing strategies
d) A tool for avoiding legal consequences
Answer: b) A philosophical approach to business focusing on values and principles

25. What is one way companies can demonstrate ethical business practices?
a) By engaging in deceptive advertising practices
b) By focusing only on maximizing profits
c) By cutting wages to reduce costs
d) By implementing a strong code of ethics and encouraging ethical behavior among employees
Answer: d) By implementing a strong code of ethics and encouraging ethical behavior among employees

26. The primary purpose of business ethics in an organization is to:

a) Guide employees on how to make morally sound and responsible decisions
b) Increase the company’s market share
c) Reduce competition in the industry
d) Cut operational costs
Answer: a) Guide employees on how to make morally sound and responsible decisions

27. Which of the following best explains the nature of business ethics?
a) Ethics are subjective and vary depending on the company's goals
b) Business ethics involves ensuring that a company makes decisions that benefit both the organization
and society
c) Ethics are only important in government and non-profit organizations
d) Business ethics focuses only on complying with the law
Answer: b) Business ethics involves ensuring that a company makes decisions that benefit both the
organization and society

28. What is the importance of values in business ethics?

a) Values guide businesses in making responsible, fair, and ethical decisions
b) Values have no significance in business ethics
c) Values are only relevant to employees and not to the company itself
d) Values focus solely on maximizing profits
Answer: a) Values guide businesses in making responsible, fair, and ethical decisions

29. A business ethics code of conduct helps to:

a) Promote transparency and fairness in business operations b) Focus solely on maximizing profits
c) Eliminate competition d) Cut employee wages
Answer: a) Promote transparency and fairness in business operations

30. Which of the following best reflects the nature of business ethics?
a) The focus on maximizing profit at all costs
b) The ability to avoid taxes through loopholes
c) The commitment to act with fairness, transparency, and social responsibility
d) The disregard for laws in favor of profit maximization
Answer: c) The commitment to act with fairness, transparency, and social responsibility
31. Why is business ethics important for long-term business success?
a) It helps businesses reduce competition
b) It ensures compliance with laws and regulations
c) It builds trust with stakeholders, ensuring sustainable growth
d) It focuses only on maximizing profits
Answer: c) It builds trust with stakeholders, ensuring sustainable growth

32. Which of the following is a consequence of unethical business practices?

a) Improved employee morale
b) Strong customer loyalty
c) Damage to a company’s reputation and brand
d) Increased sales
Answer: c) Damage to a company’s reputation and brand

33. What is the role of values in business ethics?

a) Values help determine the best strategies for profit maximization
b) Values guide the behavior and decision-making processes within an organization
c) Values are irrelevant to business ethics
d) Values are only important for small businesses
Answer: b) Values guide the behavior and decision-making processes within an organization

34. Which of the following is an example of an ethical value in business?

a) Manipulating financial reports to increase profitability
b) Providing false advertising to attract customers
c) Treating employees with respect and fairness
d) Ignoring environmental laws to reduce costs
Answer: c) Treating employees with respect and fairness

35. How can ethical practices benefit a business in the market?

a) By attracting unethical customers
b) By increasing competition and market share
c) By gaining customer trust and building a strong reputation
d) By allowing businesses to ignore legal standards
Answer: c) By gaining customer trust and building a strong reputation

36. What is the impact of strong business ethics on employees?

a) Employees may become more motivated and engaged
b) Employees may feel restricted by ethical policies
c) Employees may disregard organizational values
d) Employees may become less productive
Answer: a) Employees may become more motivated and engaged

37. How does a company’s commitment to ethics affect its relationship with customers?
a) Customers may feel more confident and loyal toward the company
b) Customers may become less interested in the company
c) Customers may be unaware of the company’s ethical practices
d) Customers may demand lower prices
Answer: a) Customers may feel more confident and loyal toward the company
38. Why is corporate social responsibility (CSR) important in business ethics?
a) It is not important; focusing only on profits is key
b) CSR helps businesses improve their reputation and contribute to social well-being
c) CSR reduces the cost of operations significantly
d) CSR only applies to non-profit organizations
Answer: b) CSR helps businesses improve their reputation and contribute to social well-being

39. Which of the following is a key principle of business ethics?

a) Maximizing profit without regard to any other factor
b) Transparency in all business operations and decision-making
c) Prioritizing legal compliance over ethical responsibility
d) Reducing customer expectations to minimize costs
Answer: b) Transparency in all business operations and decision-making

40. How can business ethics impact employee performance?

a) Employees may disregard rules and regulations
b) Ethical practices encourage a culture of fairness, boosting morale and productivity
c) Ethical practices lead to increased employee turnover
d) Employees may feel discouraged and unmotivated
Answer: b) Ethical practices encourage a culture of fairness, boosting morale and productivity

41. What role do business ethics play in establishing a competitive advantage?

a) Ethical practices create an unfair advantage in the market
b) Business ethics provide transparency, build trust, and enhance customer loyalty, offering a
competitive edge
c) Ethical behavior increases competition
d) Ethics lead to reduced operational efficiency
Answer: b) Business ethics provide transparency, build trust, and enhance customer loyalty, offering a
competitive edge

42. How does business ethics contribute to legal compliance?

a) By ensuring that companies only follow the minimum requirements of the law
b) By helping businesses navigate complex laws in a responsible manner
c) By avoiding all legal requirements
d) By ignoring laws if they conflict with business goals
Answer: b) By helping businesses navigate complex laws in a responsible manner

43. What is the role of business ethics in managing corporate governance?

a) It is irrelevant to corporate governance
b) Business ethics ensure the organization’s management follows fair, transparent, and accountable
practices
c) Business ethics limit management’s decision-making freedom
d) Business ethics only apply to employees, not to management
Answer: b) Business ethics ensure the organization’s management follows fair, transparent, and accountable
practices

44. How does business ethics affect a company’s financial performance?

a) Unethical behavior may lead to higher short-term profits but long-term financial losses
b) Ethical companies tend to outperform their competitors by building trust and customer loyalty
c) Business ethics has no impact on financial performance
d) Ethical behavior reduces financial performance due to additional costs
Answer: b) Ethical companies tend to outperform their competitors by building trust and customer loyalty
45. Which of the following is an example of a business demonstrating ethical responsibility?
a) Raising prices unfairly during a crisis
b) Treating customers and employees with fairness and respect
c) Ignoring environmental concerns to reduce costs
d) Manipulating financial data to attract investors
Answer: b) Treating customers and employees with fairness and respect

46. What is the primary benefit of a business that adopts ethical values?
a) Reduced regulatory scrutiny
b) Increased financial performance at any cost
c) Enhanced public perception and long-term success
d) Reduced focus on corporate social responsibility
Answer: c) Enhanced public perception and long-term success

47. How does a company’s ethical stance affect its stakeholders?

a) It alienates stakeholders who prefer higher profits
b) It builds trust and fosters positive relationships with stakeholders
c) It leads to conflicts with all stakeholders
d) It has no effect on stakeholders
Answer: b) It builds trust and fosters positive relationships with stakeholders

48. How can a strong ethical culture contribute to a company’s reputation?

a) It may harm the company’s image by slowing down decision-making
b) It attracts investors and consumers who value ethical behavior
c) It does not impact the company’s reputation
d) It discourages competitors from adopting similar ethical values
Answer: b) It attracts investors and consumers who value ethical behavior

49. How does business ethics relate to customer satisfaction?

a) Ethical businesses tend to create better customer relationships by providing quality, honest
products and services
b) Business ethics has no impact on customer satisfaction
c) Ethical practices may reduce customer satisfaction due to higher costs
d) Ethical businesses focus only on internal employee satisfaction
Answer: a) Ethical businesses tend to create better customer relationships by providing quality, honest
products and services

50. Which of the following is a potential risk for businesses that ignore ethics?
a) Increased market share and profitability
b) Legal penalties, loss of customer trust, and damaged reputation
c) Increased employee retention
d) Gaining a competitive advantage over ethical companies
Answer: b) Legal penalties, loss of customer trust, and damaged reputation

51. Which of the following is a fundamental element of business ethics?

a) Financial profit maximization
b) Adherence to ethical standards in dealing with employees, customers, and competitors
c) Elimination of competitors from the market
d) Prioritizing short-term goals over long-term sustainability
Answer: b) Adherence to ethical standards in dealing with employees, customers, and competitors
52. How does transparency relate to business ethics?
a) It encourages businesses to hide information from stakeholders
b) Transparency is irrelevant to business ethics
c) Transparency builds trust, supports accountability, and enhances ethical decision-making
d) Transparency only applies to governmental organizations
Answer: c) Transparency builds trust, supports accountability, and enhances ethical decision-making

53. What is the significance of ethical leadership in a business?

a) Ethical leaders encourage unethical practices to achieve goals
b) Ethical leaders set an example by making responsible and fair decisions
c) Ethical leadership is not important in businesses
d) Ethical leadership leads to conflicts among employees
Answer: b) Ethical leaders set an example by making responsible and fair decisions

54. How can business ethics influence employee behavior?

a) By promoting unethical behavior as a way to achieve success
b) By encouraging employees to make morally sound decisions and act responsibly
c) By punishing employees who make mistakes
d) By focusing solely on operational efficiency
Answer: b) By encouraging employees to make morally sound decisions and act responsibly

55. What is the role of business ethics in handling conflicts of interest?

a) Business ethics encourage managers to ignore conflicts of interest to maximize profits
b) Business ethics require managers to disclose and address conflicts of interest to maintain
transparency and fairness
c) Business ethics discourage employees from discussing conflicts of interest
d) Business ethics prioritize personal gain over company values
Answer: b) Business ethics require managers to disclose and address conflicts of interest to maintain
transparency and fairness

56. What role does ethics play in marketing strategies?

a) Ethics in marketing involves misleading consumers to increase sales
b) Ethical marketing focuses on providing truthful and accurate information to consumers
c) Marketing strategies do not require ethical consideration
d) Ethics in marketing encourage deceptive advertising
Answer: b) Ethical marketing focuses on providing truthful and accurate information to consumers

57. How can a company ensure that ethical values are integrated into its operations?
a) By focusing only on the legal compliance aspect of business
b) By implementing codes of ethics, conducting training, and fostering a culture of integrity
c) By ignoring ethical considerations to reduce costs
d) By focusing solely on shareholder value
Answer: b) By implementing codes of ethics, conducting training, and fostering a culture of integrity

58. What is a potential outcome of not adhering to ethical business practices?

a) Improved company performance and long-term success
b) Legal consequences, loss of trust, and a damaged brand reputation
c) Increased customer loyalty and trust
d) A competitive advantage in the marketplace
Answer: b) Legal consequences, loss of trust, and a damaged brand reputation
59. Which of the following is NOT a benefit of business ethics?
a) Improved public image
b) Higher employee satisfaction and productivity
c) Increased customer trust and loyalty
d) Reduced operational costs through unethical cost-cutting practices
Answer: d) Reduced operational costs through unethical cost-cutting practices

60. Why is it important for businesses to consider the ethical implications of their decisions?
a) Ethical decision-making helps businesses achieve sustainable success and avoid reputational risks
b) It ensures the business makes more profit in the short term
c) It eliminates competition in the marketplace
d) It allows businesses to ignore legal requirements
Answer: a) Ethical decision-making helps businesses achieve sustainable success and avoid reputational
risks

61. Which of the following is often cited as a major reason for unethical behavior in an organization?
a) A well-established code of ethics
b) Lack of proper oversight and weak internal controls
c) Clear communication and training on ethical standards
d) Ethical decision-making models in place
Answer: b) Lack of proper oversight and weak internal controls

62. What role does organizational culture play in unethical behavior?

a) It has no impact on ethical behavior
b) A culture of honesty and transparency promotes ethical behavior, while a toxic culture encourages
unethical behavior
c) It only influences legal compliance, not ethical behavior
d) Organizational culture solely affects employee motivation
Answer: b) A culture of honesty and transparency promotes ethical behavior, while a toxic culture
encourages unethical behavior

63. Which of the following can contribute to unethical behavior in a competitive business environment?
a) Collaboration and teamwork
b) A focus on short-term profits at the expense of ethical standards
c) High standards for ethical conduct
d) Ethical decision-making frameworks
Answer: b) A focus on short-term profits at the expense of ethical standards

64. How does inadequate ethical leadership contribute to unethical behavior in organizations?
a) Leaders who model unethical behavior create a precedent for employees to follow
b) Ethical leaders inspire employees to act with integrity
c) Ethical leaders ensure that business decisions are always legal
d) Ethical leaders never need to address unethical behavior
Answer: a) Leaders who model unethical behavior create a precedent for employees to follow

65. Which of the following factors can lead employees to engage in unethical behavior?
a) Clear, consistent ethical standards
b) Fear of losing their job or position in the organization
c) Open communication about company goals and values
d) A positive, transparent work environment
Answer: b) Fear of losing their job or position in the organization
66. How can reward systems in a company contribute to unethical behavior?
a) Reward systems based on unethical practices can encourage employees to cut corners or act
dishonestly to achieve targets
b) Reward systems do not affect ethical behavior
c) Rewarding employees for ethical behavior improves overall organizational culture
d) Reward systems only focus on financial results
Answer: a) Reward systems based on unethical practices can encourage employees to cut corners or act
dishonestly to achieve targets

67. Which of the following is a potential cause of unethical behavior in organizations?

a) Clear and consistent ethical guidelines
b) Lack of proper ethical training and awareness
c) Strong oversight and accountability
d) A transparent decision-making process
Answer: b) Lack of proper ethical training and awareness

68. What is the role of peer pressure in fostering unethical behavior?

a) Peer pressure has no impact on ethical decision-making
b) Employees may feel compelled to conform to the unethical behavior of their peers, especially if they
believe it will help them fit in or achieve success
c) Peer pressure encourages all employees to behave ethically
d) Peer pressure solely encourages legal behavior in business
Answer: b) Employees may feel compelled to conform to the unethical behavior of their peers, especially if
they believe it will help them fit in or achieve success

69. What is "ethical fading," and how does it contribute to unethical behavior?
a) It is the process of making ethical decisions based on long-term goals
b) It occurs when individuals focus solely on profits, ignoring the ethical implications of their actions
c) It is when employees consciously choose unethical behavior due to high pressure
d) It is a temporary loss of ethical awareness when individuals are overly focused on their goals or
interests
Answer: d) It is a temporary loss of ethical awareness when individuals are overly focused on their goals or
interests

70. Which of the following is an environmental factor that can lead to unethical behavior in an organization?
a) A strong internal audit system
b) A culture that prioritizes winning at any cost, regardless of how it is achieved
c) Transparent communication between departments
d) A commitment to corporate social responsibility
Answer: b) A culture that prioritizes winning at any cost, regardless of how it is achieved

71. How can ambiguity in ethical standards lead to unethical behavior?

a) Clear guidelines help employees understand what is expected of them
b) Ambiguous ethical standards can lead to confusion, making it easier for individuals to justify
unethical behavior
c) Ambiguity encourages employees to make decisions based on their personal ethics
d) Ambiguity does not affect ethical behavior in any way
Answer: b) Ambiguous ethical standards can lead to confusion, making it easier for individuals to justify
unethical behavior
72. How does a lack of accountability contribute to unethical behavior?
a) When employees feel they will not be held accountable for their actions, they may engage in
unethical behavior without fear of consequences
b) Lack of accountability leads to increased ethical awareness
c) Accountability has no impact on unethical behavior
d) Accountability ensures that only ethical decisions are made
Answer: a) When employees feel they will not be held accountable for their actions, they may engage in
unethical behavior without fear of consequences

73. Which of the following is a potential consequence of organizational stress and pressure?
a) It often leads to more ethical decision-making
b) It can cause individuals to rationalize unethical behavior in order to meet expectations or avoid
failure
c) It encourages employees to report unethical behavior
d) It has no impact on ethical decision-making
Answer: b) It can cause individuals to rationalize unethical behavior in order to meet expectations or avoid
failure

74. How does lack of training on ethical decision-making lead to unethical behavior?
a) Employees are not able to identify ethical dilemmas or are unsure of how to respond to them
b) Training on ethics has no effect on decision-making
c) Ethical training encourages employees to break the rules
d) Lack of training improves decision-making by allowing employees to act intuitively
Answer: a) Employees are not able to identify ethical dilemmas or are unsure of how to respond to them

75. How does the "end justify the means" mentality contribute to unethical behavior?
a) It leads individuals to ignore ethical considerations, focusing only on achieving their goals
b) It encourages employees to behave ethically regardless of the outcome
c) It discourages unethical decision-making
d) It promotes a focus on process rather than results
Answer: a) It leads individuals to ignore ethical considerations, focusing only on achieving their goals

76. Which of the following can cause employees to make unethical decisions in business?
a) Clear ethical guidelines and training
b) Feeling pressure to achieve results without regard to the means of achieving them
c) High moral standards set by leadership
d) A culture that promotes work-life balance
Answer: b) Feeling pressure to achieve results without regard to the means of achieving them

77. How can a focus on individual achievement lead to unethical behavior?

a) It encourages employees to act in a self-interested way, potentially ignoring ethical norms to achieve
personal success
b) It promotes ethical behavior by focusing on collective goals
c) It encourages employees to work together and avoid unethical actions
d) It reduces pressure to engage in unethical practices
Answer: a) It encourages employees to act in a self-interested way, potentially ignoring ethical norms to
achieve personal success
78. Which of the following can increase the likelihood of unethical behavior in business?
a) Ethical behavior is encouraged and rewarded
b) Employees are aware of the potential consequences of unethical actions
c) Unclear, contradictory policies and a lack of enforcement of rules
d) Clear and transparent decision-making processes
Answer: c) Unclear, contradictory policies and a lack of enforcement of rules

79. What role does a lack of moral sensitivity play in unethical behavior?
a) It increases the ability to make ethical decisions
b) It causes individuals to overlook or fail to recognize the ethical implications of their actions
c) It prevents individuals from acting in self-interest
d) It ensures that decisions are made with full ethical consideration
Answer: b) It causes individuals to overlook or fail to recognize the ethical implications of their actions

80. Which of the following is a personal factor that can contribute to unethical behavior?
a) Personal financial need or greed can cause individuals to act unethically to gain personal benefits
b) A strong sense of ethical duty encourages ethical behavior
c) Personal satisfaction from doing the right thing prevents unethical behavior
d) Moral values always guide decisions
Answer: a) Personal financial need or greed can cause individuals to act unethically to gain personal benefits

81. Which of the following is considered an ethical issue in business?

a) The decision to reduce prices to compete in the market
b) The decision to cut costs by laying off employees without proper severance
c) The decision to expand the business into new markets
d) The decision to invest in new technology for product development
Answer: b) The decision to cut costs by laying off employees without proper severance

82. What ethical dilemma arises when businesses prioritize profits over environmental responsibility?
a) The conflict between economic growth and environmental protection
b) The conflict between legal compliance and customer satisfaction
c) The conflict between fair wages and market competition
d) The conflict between advertising and public trust
Answer: a) The conflict between economic growth and environmental protection

83. Which of the following represents a potential ethical issue in marketing?

a) Offering a product at a discounted price to attract new customers
b) Exaggerating product claims or making misleading advertisements to increase sales
c) Ensuring products are of high quality and safety standards
d) Providing clear and transparent pricing information to customers
Answer: b) Exaggerating product claims or making misleading advertisements to increase sales

84. Which of the following is an example of a conflict of interest in business?

a) An employee making decisions that favor their personal financial interests over the company's
b) An employee taking time off to attend a family event
c) A company deciding to increase prices due to rising costs of production
d) A company providing paid leave to its employees
Answer: a) An employee making decisions that favor their personal financial interests over the company's
85. What ethical issue might arise from the use of customer data in marketing?
a) Overuse of resources
b) Violation of privacy and data protection rights
c) Offering discounts to loyal customers
d) Transparent communication of product features
Answer: b) Violation of privacy and data protection rights

86. What is a common ethical issue in the hiring process?

a) Ensuring a diverse and inclusive workforce
b) Offering competitive salaries and benefits
c) Discriminating based on gender, race, or age during recruitment
d) Providing equal opportunities for all candidates
Answer: c) Discriminating based on gender, race, or age during recruitment

87. Which of the following is an example of an ethical issue related to corporate governance?
a) Following company policies to achieve business goals
b) Top executives using insider information to benefit personally from stock trades
c) Encouraging employees to improve productivity
d) Reinvesting profits back into the business for growth
Answer: b) Top executives using insider information to benefit personally from stock trades

88. What ethical issue is associated with employee compensation?

a) Ensuring that employees are paid fairly for their work
b) Offering benefits and bonuses to motivate employees
c) Paying employees below minimum wage or failing to provide fair compensation for their work
d) Providing training and development opportunities for employees
Answer: c) Paying employees below minimum wage or failing to provide fair compensation for their work

89. What is the ethical concern related to outsourcing jobs to countries with lower labor costs?
a) Offering fair wages to workers in developing countries
b) Exploiting workers by paying low wages and providing poor working conditions
c) Providing career development opportunities for local employees
d) Ensuring the quality of products and services remains high
Answer: b) Exploiting workers by paying low wages and providing poor working conditions

90. What ethical issue arises when a company makes false claims about the environmental impact of its
products?
a) The issue of corporate social responsibility
b) Greenwashing, or misleading customers about the environmental benefits of products
c) Product innovation and customer satisfaction
d) Meeting legal standards for environmental protection
Answer: b) Greenwashing, or misleading customers about the environmental benefits of products

91. What is the ethical issue related to the use of intellectual property?
a) Fair use of content without proper attribution
b) Ensuring that products are innovative and competitive
c) Providing clear ownership rights and respect for patents and trademarks
d) Licensing products for a fair price
Answer: a) Fair use of content without proper attribution
92. How does an organization address the ethical issue of discrimination?
a) By providing promotions based solely on performance
b) By creating a diverse and inclusive workplace free from bias based on race, gender, or age
c) By promoting only senior employees
d) By hiring the most qualified candidate regardless of gender or background
Answer: b) By creating a diverse and inclusive workplace free from bias based on race, gender, or age

93. Which of the following is an ethical issue in corporate social responsibility (CSR)?
a) Failing to contribute to the community or environmental causes while claiming to be socially
responsible
b) Implementing employee wellness programs
c) Developing green technologies
d) Promoting charity events and fundraising
Answer: a) Failing to contribute to the community or environmental causes while claiming to be socially
responsible

94. What is the ethical dilemma when a company is faced with cutting costs and the need to maintain quality
standards?
a) Cutting quality to improve profits at the cost of customer safety and satisfaction
b) Ensuring the products meet all quality standards at higher costs
c) Innovating new methods of production that increase efficiency
d) Focusing on employee welfare over company profits
Answer: a) Cutting quality to improve profits at the cost of customer safety and satisfaction

95. What is the ethical issue associated with lobbying and political donations by businesses?
a) Encouraging fair competition in the marketplace
b) Using financial power to influence political decisions for the company’s benefit at the expense of
public interest
c) Promoting ethical practices in government policy
d) Supporting environmental regulations
Answer: b) Using financial power to influence political decisions for the company’s benefit at the expense of
public interest

96. Which of the following is an ethical issue in the pharmaceutical industry?

a) Providing accurate drug information to consumers
b) Distributing expired or unsafe medication to increase sales
c) Testing products for safety and effectiveness
d) Offering discounts to customers for essential medication
Answer: b) Distributing expired or unsafe medication to increase sales

97. How can the use of non-compete clauses create an ethical issue for employees?
a) By ensuring fair competition among companies
b) By limiting employees' career growth and freedom to find employment in their field after leaving a
company
c) By promoting job stability and security
d) By encouraging employees to stay with a company for longer periods
Answer: b) By limiting employees' career growth and freedom to find employment in their field after leaving
a company
98. What ethical issue is associated with automated or AI decision-making in hiring processes?
a) Ensuring equal opportunities for all applicants
b) AI systems reinforcing biases by using flawed data that may disadvantage certain groups of
candidates
c) Ensuring that AI systems comply with data protection laws
d) Enhancing decision-making efficiency through AI
Answer: b) AI systems reinforcing biases by using flawed data that may disadvantage certain groups of
candidates

99. What is the ethical issue related to workplace surveillance?

a) Enhancing employee productivity through better communication
b) Monitoring employees excessively, infringing on privacy and creating a lack of trust in the
workplace
c) Ensuring that employees are aware of the surveillance systems in place
d) Reducing workplace accidents and increasing safety
Answer: b) Monitoring employees excessively, infringing on privacy and creating a lack of trust in the
workplace

100. What ethical issue arises when companies make their products in countries with weak labor laws?
a) Exploiting workers by paying low wages and failing to ensure safe working conditions
b) Improving labor standards globally by adhering to local laws
c) Helping developing countries build their economies
d) Creating jobs and supporting local businesses
Answer: a) Exploiting workers by paying low wages and failing to ensure safe working conditions
 UNIT-II

Ethical Theories
Ethical Decision Making -Decision Making (Normal Dilemmas and problems) - Application of Ethical
Theories in Business - Traditional Ethical Theories - Utilitarianism, - Ethical Egoism - Ethics of
Duties - Normative Theories of Business Ethics - Stakeholder Theory - Stockholder Theory -
Lawrence Kohlberg’s Theory Model Development
1. What is the first step in the ethical decision-making process?
a) Gather all relevant facts
b) Identify the ethical issue
c) Evaluate alternatives
d) Choose the best solution
Answer: b) Identify the ethical issue

2. Which of the following is a common ethical dilemma in business?

a) Deciding whether to comply with company policy
b) Deciding between the interests of shareholders and employees
c) Deciding how to increase market share
d) Deciding what marketing strategy to use
Answer: b) Deciding between the interests of shareholders and employees

3. Which of the following is most important in ethical decision-making?

a) Compliance with the law
b) Maximizing profits
c) Considering the impact on all stakeholders
d) Following company procedures
Answer: c) Considering the impact on all stakeholders

4. What is a key challenge in ethical decision-making?

a) Balancing legal compliance with ethical considerations
b) Identifying the most profitable solution
c) Ignoring external pressures
d) Focusing on immediate rewards
Answer: a) Balancing legal compliance with ethical considerations

5. Which of the following best describes an ethical dilemma in business?

a) A decision that involves legal compliance
b) A situation where there is a conflict between two ethical principles
c) A decision that only benefits the company
d) A choice with no moral implications
Answer: b) A situation where there is a conflict between two ethical principles

6. Which approach should a manager take when faced with an ethical dilemma?
a) Focus on profit maximization
b) Consider the long-term consequences of the decision
c) Prioritize the company's interests over all other stakeholders
d) Avoid making a decision at all
Answer: b) Consider the long-term consequences of the decision
7. In ethical decision-making, which of the following is most critical?
a) Making a quick decision
b) Ensuring fairness and transparency
c) Following company rules without deviation
d) Minimizing risks to the company’s reputation
Answer: b) Ensuring fairness and transparency

8. Which of the following is an example of a "normal dilemma" in business decision-making?

a) Deciding whether to follow the law
b) Choosing between short-term profits and long-term sustainability
c) Deciding on the pricing strategy for a product
d) Deciding on a company's expansion plans
Answer: b) Choosing between short-term profits and long-term sustainability

9. In business ethics, moral reasoning involves:

a) Following company rules
b) Making decisions based on laws only
c) Considering the ethical implications of each action
d) Prioritizing profits over people
Answer: c) Considering the ethical implications of each action

10. Which decision-making model involves the least harm or most benefit for the most people?
a) Deontological ethics b) Utilitarianism c) Ethical egoism d) Virtue ethics
Answer: b) Utilitarianism

11. Which of the following best describes a Utilitarian approach to business?

a) Maximizing benefits for the individual b) Making decisions that benefit the majority
c) Following ethical rules at all times d) Prioritizing the interests of the company
Answer: b) Making decisions that benefit the majority

12. Which ethical theory in business would emphasize the duty to treat all employees fairly, regardless
of outcomes?
a) Utilitarianism b) Kantian ethics c) Ethical egoism d) Virtue ethics
Answer: b) Kantian ethics

13. Which ethical theory in business would focus on maximizing personal happiness and self-interest?
a) Deontological ethics b) Ethical egoism c) Social contract theory d) Virtue ethics
Answer: b) Ethical egoism

14. In a business context, Deontological ethics would focus on:

a) The consequences of actions b) The moral duties and rights of individuals
c) Maximizing profits for shareholders d) The virtues of the decision-maker
Answer: b) The moral duties and rights of individuals

15. Which ethical theory would most likely support a decision to lay off employees if it benefits the
larger community?
a) Kantian ethics b) Virtue ethics c) Utilitarianism d) Social contract theory
Answer: c) Utilitarianism
16. Which of the following best describes Virtue ethics in business?
a) Following a set of moral rules regardless of outcomes
b) Focusing on the character traits of decision-makers
c) Maximizing overall happiness
d) Acting in the best interest of the company’s shareholders
Answer: b) Focusing on the character traits of decision-makers

17. In the context of Kantian ethics, what would be considered morally right in a business decision?
a) Following moral duties, regardless of the consequences
b) Focusing on the consequences for the largest number of people
c) Maximizing the happiness of employees
d) Ensuring compliance with the law
Answer: a) Following moral duties, regardless of the consequences

18. According to Utilitarianism, which action is morally right in business?

a) Maximizing profits for the company, regardless of the harm caused
b) Prioritizing the needs of the majority over the individual
c) Treating employees fairly, even if it decreases profits
d) Following a strict code of ethics regardless of outcomes
Answer: b) Prioritizing the needs of the majority over the individual

19. Which of the following is an example of Ethical egoism in a business decision?

a) A company cuts costs to provide higher dividends to shareholders, ignoring the impact on
employees.
b) A company focuses on creating a sustainable business model that benefits society.
c) A company follows strict ethical codes and moral duties regardless of consequences.
d) A company makes decisions based on the greatest good for all stakeholders.
Answer: a) A company cuts costs to provide higher dividends to shareholders, ignoring the impact
on employees.

20. In Virtue ethics, what is emphasized when making business decisions?

a) The consequences of the action
b) The moral character of the decision-maker
c) The legal implications of the decision
d) The short-term financial results
Answer: b) The moral character of the decision-maker

21. Which ethical theory is primarily concerned with following rules and duties?
a) Utilitarianism b) Deontology c) Virtue ethics d) Ethical egoism
Answer: b) Deontology

22. Which of the following statements best reflects Kantian ethics?

a) The ends justify the means.
b) People should always be treated as ends in themselves, not as means to an end.
c) The greatest good for the greatest number is the right course of action.
d) Actions are right if they benefit the individual.
Answer: b) People should always be treated as ends in themselves, not as means to an end.
23. In Deontological ethics, a business decision is morally right if it:
a) Produces the best consequences for all stakeholders
b) Aligns with the company’s profit goals
c) Adheres to moral rules and principles, regardless of the outcome
d) Fosters positive relationships with all stakeholders
Answer: c) Adheres to moral rules and principles, regardless of the outcome

24. What is the focus of Virtue ethics in business decisions?

a) The consequences of the action
b) The maximization of profits
c) The development of moral virtues in decision-makers
d) The adherence to laws and regulations
Answer: c) The development of moral virtues in decision-makers

25. Which of the following best represents the Utilitarian approach to decision-making?
a) Following established ethical rules regardless of outcomes
b) Maximizing the greatest good for the greatest number of people
c) Maximizing self-interest at the expense of others
d) Ensuring compliance with the law, no matter the cost
Answer: b) Maximizing the greatest good for the greatest number of people

26. Which of the following ethical theories focuses on the greatest benefit for society as a whole?
a) Virtue ethics b) Utilitarianism c) Kantian ethics d) Ethical egoism
Answer: b) Utilitarianism

27. Which of the following is a key feature of Ethical egoism?

a) The action that benefits the most people is the right one
b) People should act in their own self-interest
c) Every action should respect others' rights
d) People should act according to universal moral duties
Answer: b) People should act in their own self-interest

28. Which theory is most aligned with the view that people should prioritize their own happiness and
well-being over others?
a) Kantian ethics b) Utilitarianism c) Ethical egoism d) Virtue ethics
Answer: c) Ethical egoism

29. In business ethics, which of the following would Utilitarianism support?

a) A decision that promotes the greatest good for the majority, even at the expense of a few
individuals
b) A decision that prioritizes the rights of individuals, even if it causes harm to others
c) A decision that follows moral duties without regard for consequences
d) A decision that benefits the self-interest of key stakeholders only
Answer: a) A decision that promotes the greatest good for the majority, even at the expense of a few
individuals

30. In Virtue ethics, a morally right decision is one that:

a) Produces the best consequences
b) Follows ethical rules and laws
c) Reflects virtuous traits like honesty, courage, and integrity
d) Benefits the majority of stakeholders
Answer: c) Reflects virtuous traits like honesty, courage, and integrity
31. What is a key principle of Ethical egoism in business?
a) Making decisions that benefit the greatest number of people
b) Acting in a way that maximizes one’s own self-interest
c) Following moral rules regardless of personal gain
d) Focusing on the well-being of society as a whole
Answer: b) Acting in a way that maximizes one’s own self-interest

32. Which of the following best describes the idea behind Ethical egoism?
a) Every action should be made to benefit others
b) Each person should act in their own self-interest
c) People should act according to moral rules and duties
d) The goal of every decision is to maximize overall happiness
Answer: b) Each person should act in their own self-interest

33. Ethical egoism would most likely support a business decision that:
a) Benefits the individual at the expense of the greater good
b) Prioritizes the welfare of employees over shareholder profits
c) Maximizes the happiness of all stakeholders equally
d) Ensures the company's reputation and long-term sustainability
Answer: a) Benefits the individual at the expense of the greater good

34. Which of the following is a criticism of Ethical egoism?

a) It disregards personal rights
b) It encourages actions that harm others for personal gain
c) It focuses too much on the happiness of others
d) It encourages individuals to follow moral duties
Answer: b) It encourages actions that harm others for personal gain

35. According to Ethical egoism, the right thing to do in business is:

a) The decision that benefits the most people
b) The action that benefits oneself the most
c) The action that respects moral duties
d) The action that benefits society
Answer: b) The action that benefits oneself the most

36. Which of the following is most likely to be supported by Ethical egoism?

a) A business decision that maximizes personal profits while disregarding environmental harm
b) A business decision that minimizes harm to others while benefiting society
c) A business decision that creates mutual benefits for all involved parties
d) A business decision that prioritizes the community’s welfare over profits
Answer: a) A business decision that maximizes personal profits while disregarding environmental
harm

37. In Ethical egoism, the moral agent is primarily concerned with:

a) The impact of decisions on society
b) The long-term welfare of all stakeholders
c) The benefits to oneself
d) The consequences for the majority of people
Answer: c) The benefits to oneself
38. Which of the following ethical theories would most likely support a decision to prioritize self-
interest over the common good in business?
a) Deontological ethics b) Utilitarianism c) Ethical egoism d) Virtue ethics
Answer: c) Ethical egoism

39. According to Ethical egoism, which of the following is morally right?

a) Helping others even if it harms you
b) Acting in a way that benefits others over yourself
c) Acting in your own best interest, even if it harms others
d) Acting to create the most happiness for society
Answer: c) Acting in your own best interest, even if it harms others

40. Which ethical theory argues that businesses should act in ways that serve the self-interest of their
decision-makers?
a) Utilitarianism b) Ethical egoism c) Kantian ethics d) Virtue ethics
Answer: b) Ethical egoism

41. A business following Ethical egoism would prioritize:

a) Maximizing the overall good for the majority
b) Long-term benefits for society and shareholders
c) Maximizing self-interest and individual benefits
d) Upholding moral duties and rules
Answer: c) Maximizing self-interest and individual benefits

42. A key criticism of Ethical egoism is that it can lead to:

a) Altruistic behavior in decision-makers
b) Harm to others in pursuit of personal gain
c) Emphasis on legal compliance over ethical behavior
d) A focus on the community's welfare over profits
Answer: b) Harm to others in pursuit of personal gain

43. Which of the following best summarizes the idea of Ethical egoism?
a) Decisions should maximize benefits for society
b) Individuals should always act in their own best interests
c) Every action should respect the moral rights of others
d) Businesses should maximize profits for shareholders
Answer: b) Individuals should always act in their own best interests

44. In business, Ethical egoism can sometimes lead to conflicts with:

a) The interests of employees b) The company’s legal obligations
c) The happiness of customers d) The welfare of stakeholders
Answer: d) The welfare of stakeholders

45. Which theory would support a decision to cut costs by outsourcing labor to reduce company
expenses?
a) Utilitarianism b) Ethical egoism c) Kantian ethics d) Virtue ethics
Answer: b) Ethical egoism
46. In Utilitarianism, the right decision is the one that:
a) Maximizes personal happiness
b) Follows universal moral rules
c) Maximizes the happiness of the greatest number of people
d) Respects individual rights above all
Answer: c) Maximizes the happiness of the greatest number of people

47. Which ethical theory would justify business decisions that harm a few individuals if it benefits the
majority?
a) Ethical egoism b) Deontological ethics c) Utilitarianism d) Kantian ethics
Answer: c) Utilitarianism

48. Which ethical theory focuses on moral rules and duties rather than outcomes?
a) Virtue ethics b) Utilitarianism c) Deontological ethics d) Ethical egoism
Answer: c) Deontological ethics

49. Which theory advocates for making decisions that promote the long-term well-being of all parties
involved?
a) Virtue ethics b) Utilitarianism c) Ethical egoism d) Kantian ethics
Answer: b) Utilitarianism

50. A business decision made using Virtue ethics would primarily focus on:
a) The greatest good for the greatest number
b) Following moral rules and duties
c) The character and integrity of the decision-maker
d) Maximizing profits for the company
Answer: c) The character and integrity of the decision-maker

51. Which of the following best represents the ethical approach known as the "ethics of duties"?
a) Actions are morally right if they adhere to specific moral duties and rules.
b) Actions are morally right if they maximize overall happiness.
c) The rightness of an action is based on the consequences it produces.
d) Decisions should be made based on the virtues of the decision-maker.
Answer: a) Actions are morally right if they adhere to specific moral duties and rules.

52. The Ethics of Duties is most closely associated with which ethical theory?
a) Utilitarianism b) Virtue ethics c) Kantian ethics d) Ethical egoism
Answer: c) Kantian ethics

53. In the ethics of duties, moral obligations are considered:

a) Subjective and flexible, depending on the situation.
b) Universal and binding, regardless of the consequences.
c) Focused on individual desires and interests.
d) A means to an end, to maximize happiness.
Answer: b) Universal and binding, regardless of the consequences.

54. Which of the following statements aligns with Kant's Ethics of Duties?
a) It is moral to break a promise if it leads to a greater overall happiness.
b) People should be treated as ends in themselves, never merely as means.
c) The consequences of an action justify whether it is morally right.
d) Each person’s happiness should be maximized over others'.
Answer: b) People should be treated as ends in themselves, never merely as means.
55. Kantian ethics would argue that a business practice is morally wrong if:
a) It leads to a high level of profit for shareholders.
b) It fails to respect the autonomy and dignity of individuals involved.
c) It benefits society as a whole, even if it harms a few individuals.
d) It follows legal regulations, even if it negatively impacts the environment.
Answer: b) It fails to respect the autonomy and dignity of individuals involved.

56. According to the ethics of duties, which of the following would be considered a morally wrong
decision in business?
a) A company cutting costs to improve profits for shareholders, even at the expense of its
employees’ well-being.
b) A company making decisions that lead to the greatest happiness for the most people.
c) A company following moral rules, even if it results in lower profits.
d) A company acting in its own self-interest, as long as it does not violate the law.
Answer: a) A company cutting costs to improve profits for shareholders, even at the expense of its
employees’ well-being.

57. In the ethics of duties, moral actions are determined by:

a) The consequences of the action. b) The intrinsic value of the action itself.
c) The benefits to society. d) The virtues of the person performing the action.
Answer: b) The intrinsic value of the action itself.

58. Which is NOT a key feature of Kantian ethics in business?

a) Treating employees with respect and dignity.
b) Maximizing profits for shareholders at all costs.
c) Upholding moral principles even if they do not lead to profit.
d) Recognizing the intrinsic value of each person involved.
Answer: b) Maximizing profits for shareholders at all costs.

59. The ethics of duties would most likely support a business decision that:
a) Follows a strict code of moral duties, even at the expense of profits.
b) Prioritizes profitability over employee welfare.
c) Focuses on maximizing the greatest good for the greatest number.
d) Is based on the moral virtues of the decision-maker.
Answer: a) Follows a strict code of moral duties, even at the expense of profits.

60. Normative business ethics primarily focuses on:

a) What businesses actually do in practice.
b) The ethical standards and principles that should guide business practices.
c) How businesses respond to external pressure from the government.
d) The legal regulations businesses must follow.
Answer: b) The ethical standards and principles that should guide business practices.

61. Which of the following is a key characteristic of Normative ethics?

a) It aims to describe and explain what businesses do.
b) It seeks to provide guidelines for how businesses ought to behave.
c) It focuses solely on the economic outcomes of business decisions.
d) It involves following the prevailing social norms of the time.
Answer: b) It seeks to provide guidelines for how businesses ought to behave.
62. In normative business ethics, which theory emphasizes the moral responsibilities of businesses to
protect the rights of individuals?
a) Utilitarianism b) Stakeholder theory c) Deontological ethics d) Social contract theory
Answer: c) Deontological ethics

63. Which of the following is a key difference between normative ethics and descriptive ethics in
business?
a) Normative ethics focuses on what businesses do, while descriptive ethics focuses on what they
should do.
b) Descriptive ethics focuses on how businesses should behave, while normative ethics focuses on
actual business practices.
c) Normative ethics is concerned with business outcomes, while descriptive ethics is concerned with
moral duties.
d) Descriptive ethics looks at actual business behavior, while normative ethics provides
guidelines for ideal behavior.
Answer: d) Descriptive ethics looks at actual business behavior, while normative ethics provides
guidelines for ideal behavior.

64. Which normative theory would most likely support a business decision that maximizes overall
happiness for all stakeholders?
a) Stockholder theory b) Virtue ethics c) Stakeholder theory d) Ethical egoism
Answer: c) Stakeholder theory

65. Which ethical theory holds that businesses should maximize shareholder value above all else?
a) Stakeholder theory b) Social contract theory c) Stockholder theory d) Kantian
ethics
Answer: c) Stockholder theory

66. According to Stockholder theory, businesses have a primary responsibility to:

a) Ensure fairness to all stakeholders.
b) Maximize profits for shareholders.
c) Prioritize the well-being of employees.
d) Follow ethical duties regardless of profit.
Answer: b) Maximize profits for shareholders.

67. Which of the following is a key concept in Stakeholder theory?

a) A company’s only responsibility is to its shareholders.
b) The interests of all stakeholders should be considered in business decision-making.
c) Business decisions should prioritize profits over social responsibility.
d) Ethical behavior is not necessary for maximizing profits.
Answer: b) The interests of all stakeholders should be considered in business decision-making.

68. Which normative theory emphasizes the role of businesses in protecting the environment and
ensuring social responsibility?
a) Stockholder theory
b) Corporate social responsibility (CSR)
c) Ethical egoism
d) Deontological ethics
Answer: b) Corporate social responsibility (CSR)
69. Stakeholder theory argues that:
a) Only shareholders have legitimate interests in business decisions.
b) Businesses should prioritize maximizing shareholder profits.
c) Businesses must balance the interests of all stakeholders, not just shareholders.
d) Businesses should focus on short-term profits for the company.
Answer: c) Businesses must balance the interests of all stakeholders, not just shareholders.

70. Which of the following groups is considered a "primary" stakeholder according to stakeholder
theory?
a) Customers b) Competitors c) Shareholders d) Local community members
Answer: c) Shareholders

71. According to Stakeholder theory, a business’s moral responsibility extends to:

a) Only its employees and shareholders.
b) Society as a whole, including all affected by the company’s actions.
c) Maximizing profits for its owners.
d) Following the law, regardless of other ethical concerns.
Answer: b) Society as a whole, including all affected by the company’s actions.

72. Which of the following would most align with the principles of Stakeholder theory?
a) A business decision that maximizes shareholder returns, even at the expense of employees' well-
being.
b) A business decision that considers the impact on employees, customers, suppliers, and the
community.
c) A business decision focused solely on long-term profit maximization.
d) A decision to reduce environmental costs, even if it harms employees.
Answer: b) A business decision that considers the impact on employees, customers, suppliers, and
the community.

73. Which of the following is a key criticism of Stakeholder theory?

a) It ignores the interests of shareholders.
b) It is too focused on maximizing profits.
c) It can be difficult to balance the interests of all stakeholders.
d) It does not account for environmental concerns.
Answer: c) It can be difficult to balance the interests of all stakeholders.

74. Stockholder theory asserts that the primary responsibility of a business is to:
a) Maximize profits for employees. b) Maximize profits for shareholders.
c) Promote environmental sustainability. d) Ensure fairness to all stakeholders.
Answer: b) Maximize profits for shareholders.

75. Which of the following would most align with Stockholder theory?
a) A decision to invest in employee welfare if it benefits shareholder value.
b) A decision to limit environmental impact even if it costs more in the short term.
c) A decision to prioritize the interests of the community over shareholder interests.
d) A decision to maximize profits by cutting wages for employees.
Answer: a) A decision to invest in employee welfare if it benefits shareholder value.
76. The primary critique of Stockholder theory is that it:
a) Prioritizes shareholders at the expense of other stakeholders.
b) Fails to consider the ethical rights of employees.
c) Is too focused on social responsibility.
d) Encourages businesses to ignore profits for ethical considerations.
Answer: a) Prioritizes shareholders at the expense of other stakeholders.

77. Lawrence Kohlberg’s Theory of Moral Development includes which of the following stages?
a) Pre-conventional, conventional, and post-conventional stages
b) Pre-rational, rational, and post-rational stages
c) Fixed, flexible, and adaptable stages
d) Simple, complex, and advanced stages
Answer: a) Pre-conventional, conventional, and post-conventional stages

78. Which stage of Kohlberg's moral development involves making decisions based on avoiding
punishment?
a) Pre-conventional stage b) Conventional stage
c) Post-conventional stage d) Conventional and post-conventional stages
Answer: a) Pre-conventional stage

79. In Kohlberg’s post-conventional stage of moral development, individuals:

a) Follow rules to avoid punishment.
b) Seek approval from others.
c) Make decisions based on universal ethical principles.
d) Focus on obedience to authority figures.
Answer: c) Make decisions based on universal ethical principles.

80. Which stage of moral development in Kohlberg’s model focuses on fulfilling roles and maintaining
social order?
a) Pre-conventional stage b) Conventional stage c) Post-conventional stage d) All stages
Answer: b) Conventional stage

81. Which level of Kohlberg’s theory is associated with individuals making ethical decisions based on
self-interest?
a) Pre-conventional level b) Conventional level c) Post-conventional level d) Ethical egoism level
Answer: a) Pre-conventional level

82. Kohlberg’s theory suggests that moral development is:

a) Static and unchangeable.
b) Dependent on external social norms only.
c) A progressive, stage-based process.
d) Focused on individual happiness rather than social order.
Answer: c) A progressive, stage-based process.

83. In Kohlberg’s post-conventional stage, individuals make moral decisions based on:
a) Following societal rules and laws.
b) Universal ethical principles, even if they conflict with laws.
c) Pleasing others and gaining social approval.
d) Personal gain and self-interest.
Answer: b) Universal ethical principles, even if they conflict with laws.
84. In Kohlberg's theory, the "Conventional" level of moral development is characterized by:
a) Making decisions based on self-interest and avoiding punishment.
b) A focus on maintaining social order and fulfilling duties to society.
c) Adherence to universal ethical principles that transcend societal norms.
d) Concern with personal gain and achieving approval from others.
Answer: b) A focus on maintaining social order and fulfilling duties to society.

85. According to Kohlberg, people at the Post-conventional level of moral development:

a) Follow the rules to avoid punishment.
b) Make decisions based on self-interest and personal gain.
c) Are guided by universal principles such as justice, fairness, and equality.
d) Focus on gaining social approval and meeting societal expectations.
Answer: c) Are guided by universal principles such as justice, fairness, and equality.

86. Which of the following is the highest level of moral development according to Kohlberg?
a) Pre-conventional b) Conventional c) Post-conventional d) None of the above
Answer: c) Post-conventional

87. At the Pre-conventional stage of moral development, an individual’s decisions are based primarily
on:
a) Following societal rules and norms.
b) The desire to avoid punishment or seek rewards.
c) A deep understanding of universal ethical principles.
d) Fulfilling obligations to others in society.
Answer: b) The desire to avoid punishment or seek rewards.

88. Kohlberg's Conventional stage of moral development is characterized by a concern for:

a) Moral principles and justice.
b) What is fair to the greatest number of people.
c) Gaining approval and maintaining social order.
d) Self-interest and avoiding punishment.
Answer: c) Gaining approval and maintaining social order.

89. Which of the following is a key criticism of Kohlberg’s stages of moral development?
a) They emphasize too much on universal principles over individual rights.
b) They fail to account for gender differences in moral reasoning.
c) They overlook the importance of cultural influences on moral development.
d) All of the above.
Answer: d) All of the above.

90. In the Post-conventional stage, Kohlberg's theory suggests that individuals:

a) Rely on societal laws and conventions to make moral decisions.
b) Make decisions based on the principle of maximizing happiness for the greatest number of people.
c) Follow internalized ethical principles that may conflict with societal laws.
d) Make decisions based on their own personal interests or desires.
Answer: c) Follow internalized ethical principles that may conflict with societal laws.

91. At the Conventional level of moral development, people are most concerned with:
a) Avoiding punishment.
b) Gaining rewards.
c) Following societal norms and the expectations of others.
d) Adhering to universal ethical principles.
Answer: c) Following societal norms and the expectations of others.
92. A person at the Pre-conventional level of Kohlberg’s model would justify an unethical business
practice by:
a) Arguing that it serves the greater good of society.
b) Following the rules, even if they seem inconvenient.
c) Believing that the action will result in personal gain or avoidance of punishment.
d) Evaluating the fairness of the action based on ethical principles.
Answer: c) Believing that the action will result in personal gain or avoidance of punishment.

93. According to Kohlberg, most adults operate primarily at which stage of moral development?
a) Pre-conventional b) Conventional c) Post-conventional d) None of the above
Answer: b) Conventional

94. Which of the following would be most consistent with Kohlberg's Post-conventional stage of moral
reasoning?
a) A business decision that follows the law, even if it causes harm to others.
b) A decision to violate company rules in order to support a greater moral cause, such as
saving the environment.
c) A decision based on gaining approval from peers or superiors.
d) A decision to comply with societal norms to avoid social conflict.
Answer: b) A decision to violate company rules in order to support a greater moral cause, such as
saving the environment.

95. Kohlberg's stages of moral development are meant to apply to:

a) Children and adolescents only.
b) Adults as well, although they may progress through the stages at different rates.
c) Only individuals in certain cultural contexts.
d) Ethical decision-making in businesses only.
Answer: b) Adults as well, although they may progress through the stages at different rates.

96. Which of the following business decisions would most likely be supported by Stakeholder theory?
a) Outsourcing labor to reduce costs, even if it harms local workers.
b) Reducing environmental regulations to increase company profits.
c) Making decisions that consider the interests of employees, customers, and the community.
d) Prioritizing the company's short-term financial performance above all other factors.
Answer: c) Making decisions that consider the interests of employees, customers, and the
community.

97. Which of the following would be most supported by Stockholder theory in business?
a) Prioritizing environmental sustainability over profitability.
b) Cutting employee wages to increase shareholder dividends.
c) Following ethical guidelines even if it reduces short-term profits.
d) Making decisions that balance the interests of all stakeholders.
Answer: b) Cutting employee wages to increase shareholder dividends.

98. According to Lawrence Kohlberg’s model, a person at the Post-conventional level might consider:
a) How to avoid punishment for violating company rules.
b) The most ethical action that aligns with universal ethical principles, even if it conflicts with
laws.
c) How the decision will affect the company's profitability.
d) How the decision will maintain social order and gain approval from others.
 Answer: b) The most ethical action that aligns with universal ethical principles, even if it conflicts
with laws.

99. Which of the following best characterizes Stockholder theory?

a) Businesses should serve the interests of all stakeholders equally.
b) The primary duty of a business is to maximize shareholder value.
c) A business's responsibility is to act in an environmentally sustainable manner.
d) Businesses should prioritize social and ethical responsibilities over profits.
Answer: b) The primary duty of a business is to maximize shareholder value.

100. Which ethical framework argues that businesses have a moral responsibility to consider the
impact of their decisions on all individuals and groups affected?
a) Stockholder theory b) Ethical egoism c) Stakeholder theory d) Virtue ethics
Answer: c) Stakeholder theory
 Unit III
Moral Issues in Business
Moral Issues in Business - Importance of moral issues and reasoning - Whistle Blowing- Kinds of
Whistle Blowing - Ethical issues in functional areas of business.
Marketing and Advertising - Truth in Advertising- Manipulation – Coercion-Trade Secrets-
Corporate disclosure-Insider trading.
Finance -Fairness’ and efficiency in Financial Market – Greenmail-Golden Parachute. HR: Workers
Rights and Duties - Work place Safety - Sexual Harassment-Equal Employment Opportunity-
Preferential hiring.
Environmental Protection - Safety and acceptable risk- Environmental Harm, Pollution
and its Control– Product Safety and Corporate Liability.

1. Why is moral reasoning important in business?

a) It ensures legal compliance.
b) It helps maximize profits for shareholders.
c) It guides businesses in making decisions that consider the welfare of all stakeholders.
d) It minimizes taxes and regulatory burdens.
Answer: c) It guides businesses in making decisions that consider the welfare of all stakeholders.

2. Which of the following is a common moral issue faced in business?

a) Maximizing profits at any cost.
b) Balancing stakeholder interests fairly.
c) Following legal regulations without considering ethical principles.
d) Ignoring customer feedback.
Answer: b) Balancing stakeholder interests fairly.

3. Moral reasoning in business involves:

a) Following company policy without question.
b) Analyzing the impact of decisions on all affected parties.
c) Making decisions that maximize shareholder value, regardless of the consequences.
d) Relying solely on personal intuition in decision-making.
Answer: b) Analyzing the impact of decisions on all affected parties.

4. Which of the following is NOT typically considered a moral issue in business?

a) Fair treatment of employees.
b) Environmental sustainability.
c) Meeting financial targets at any cost.
d) Ethical marketing practices.
Answer: c) Meeting financial targets at any cost.

5. A business that is committed to making moral decisions will:

a) Prioritize profits above all else.
b) Only consider shareholder interests.
c) Take into account the interests of all stakeholders involved.
d) Ignore ethical issues if they conflict with business strategy.
 Answer: c) Take into account the interests of all stakeholders involved.

6. What is whistleblowing?
a) Reporting the performance of a business in annual reports.
b) Exposing unethical or illegal activities within an organization to the public or authorities.
c) Increasing sales or profit margins in a company.
d) Competing with other businesses to gain market share.
Answer: b) Exposing unethical or illegal activities within an organization to the public or authorities.

7. Which of the following is a key ethical issue related to whistleblowing?

a) Protecting whistleblowers from retaliation.
b) Maximizing profits for the company.
c) Ensuring that employees do not report any issues.
d) Maintaining secrecy and confidentiality in all situations.
Answer: a) Protecting whistleblowers from retaliation.

8. Which type of whistleblowing occurs when an employee reports wrongdoing within the organization
to external authorities, such as government regulators?
a) Internal whistleblowing
b) External whistleblowing
c) Anonymous whistleblowing
d) Protected whistleblowing
Answer: b) External whistleblowing

9. Which of the following is considered a protected whistleblower?

a) Someone who reports unethical practices within the organization without fear of retaliation.
b) An employee who leaks confidential information to competitors.
c) An employee who quits their job due to ethical concerns.
d) A person who exposes trade secrets for personal gain.
Answer: a) Someone who reports unethical practices within the organization without fear of
retaliation.

10. The main ethical concern for businesses regarding whistleblowing is:
a) How to suppress whistleblowers effectively.
b) Whether to reward whistleblowers financially.
c) Ensuring that whistleblowers are protected from retaliation.
d) Maintaining secrecy about unethical practices.
Answer: c) Ensuring that whistleblowers are protected from retaliation.

11. What type of whistleblowing occurs when an employee reports unethical practices within the
company to a supervisor or manager?
a) External whistleblowing b) Internal whistleblowing
c) Anonymous whistleblowing d) Public whistleblowing
Answer: b) Internal whistleblowing

12. Which of the following best describes anonymous whistleblowing?

a) Reporting unethical activities within the organization to management without revealing the
whistleblower's identity.
b) Exposing unethical practices to external authorities only after consulting the organization.
c) Reporting wrongdoing directly to the public or media.
d) Disclosing information without any protection or legal support.
 Answer: a) Reporting unethical activities within the organization to management without revealing
the whistleblower's identity.
13. Which type of whistleblowing involves a whistleblower going to the press, media, or public with
information about the wrongdoings in their organization?
a) Internal whistleblowing b) External whistleblowing
c) Public whistleblowing d) Confidential whistleblowing
Answer: c) Public whistleblowing

14. Which of the following is an advantage of external whistleblowing?

a) It provides an internal solution to the problem.
b) It avoids potential conflicts within the organization.
c) It might lead to the exposure of the issue on a broader scale, prompting external oversight.
d) It guarantees that the organization will resolve the issue internally.
Answer: c) It might lead to the exposure of the issue on a broader scale, prompting external
oversight.

15. A key ethical issue with public whistleblowing is:

a) It helps resolve the issue without public involvement.
b) It could damage the reputation of the company or industry.
c) It is always legal in all jurisdictions.
d) It guarantees that all stakeholders are protected.
Answer: b) It could damage the reputation of the company or industry.

16. Which of the following is an ethical issue that can arise in marketing?
a) Developing truthful and transparent advertising.
b) Cutting production costs to improve profits.
c) Creating a product with minimal market research.
d) Setting unrealistic sales targets.
Answer: a) Developing truthful and transparent advertising.

17. In human resources (HR), an ethical issue could be:

a) Hiring the best-qualified candidates without discrimination.
b) Favoring certain employees based on personal relationships.
c) Providing equal opportunities for employee development.
d) Offering competitive salaries and benefits.
Answer: b) Favoring certain employees based on personal relationships.

18. An ethical issue in finance could involve:

a) Manipulating financial statements to make the company appear more profitable than it is.
b) Ensuring accurate reporting and transparency in financial documents.
c) Cutting costs to maximize short-term profits for shareholders.
d) Planning financial strategies that minimize tax burdens legally.
Answer: a) Manipulating financial statements to make the company appear more profitable than it is.

19. In operations management, an ethical issue might include:

a) Failing to maintain worker safety standards to reduce production costs.
b) Improving production efficiency through innovation.
c) Ensuring that all products meet quality standards.
d) Using environmentally sustainable practices in production.
Answer: a) Failing to maintain worker safety standards to reduce production costs.
20. Which of the following would be an ethical issue in customer service?
a) Providing honest and helpful responses to customer inquiries.
b) Prioritizing loyal customers over new ones for incentives.
c) Concealing product defects to make sales.
d) Ensuring that all customer data is securely stored and protected.
Answer: c) Concealing product defects to make sales.

21. Which of the following is the most important aspect of truth in advertising?
a) To create advertisements that appeal to emotions.
b) To ensure that the claims made in advertisements are truthful and substantiated.
c) To make the advertisements as flashy and attention-grabbing as possible.
d) To follow the trends set by competitors.
Answer: b) To ensure that the claims made in advertisements are truthful and substantiated.

22. Which of the following best describes the ethical issue of manipulation in advertising?
a) Advertising that targets consumers with false or misleading information.
b) Creating advertisements that encourage healthy behavior.
c) Using advertising to foster a positive image for a company.
d) Using truthful and transparent information to market a product.
Answer: a) Advertising that targets consumers with false or misleading information.

23. Which of the following is an example of coercion in advertising?

a) Using celebrity endorsements to influence consumer decisions.
b) Offering discounts to customers who refer friends to buy a product.
c) Pressuring consumers into making purchases by creating a sense of urgency.
d) Offering clear and honest product comparisons in advertisements.
Answer: c) Pressuring consumers into making purchases by creating a sense of urgency.

24. Which law primarily governs truth in advertising in the United States?
a) The Sherman Antitrust Act b) The Federal Trade Commission (FTC) Act
c) The Securities Exchange Act d) The Clayton Act
Answer: b) The Federal Trade Commission (FTC) Act

25. Which of the following is an example of manipulation in advertising?

a) Using a misleading statistic to exaggerate a product's effectiveness.
b) Disclosing all terms and conditions clearly to consumers.
c) Offering a full refund on unsatisfactory products.
d) Displaying accurate customer reviews in advertisements.
Answer: a) Using a misleading statistic to exaggerate a product's effectiveness.

26. What is considered a trade secret in business?

a) A legally protected formula, practice, or process that gives a business a competitive edge.
b) A business’s sales data made available to shareholders.
c) A marketing strategy shared publicly with competitors.
d) A product patent filed with the government.
Answer: a) A legally protected formula, practice, or process that gives a business a competitive edge.

27. Which of the following is true about the protection of trade secrets?
a) Trade secrets do not need to be registered with the government to be protected.
b) Trade secrets must be made public for them to be protected.
c) Trade secrets are only protected if they are patented.
d) A trade secret is no longer protected once it is disclosed in an advertisement.
 Answer: a) Trade secrets do not need to be registered with the government to be protected.
28. Which of the following actions would be considered a violation of trade secret protection?
a) A competitor discovering a trade secret through reverse engineering.
b) A company properly disclosing its intellectual property in an annual report.
c) A company using a patent to publicly disclose its innovation.
d) A business sharing its proprietary information with its employees under a non-disclosure
agreement (NDA).
Answer: a) A competitor discovering a trade secret through reverse engineering.

29. Which of the following best describes corporate disclosure in business ethics?
a) A company’s effort to conceal financial information from the public.
b) Providing information to shareholders and the public in a truthful and timely manner.
c) Reporting the financial performance of competitors.
d) Making business decisions based on confidential or non-public information.
Answer: b) Providing information to shareholders and the public in a truthful and timely manner.

30. Which of the following is an ethical issue with corporate disclosure?

a) Disclosing financial information that misrepresents the company’s true performance.
b) Making public financial statements only when it is legally required.
c) Following regulations regarding public reporting.
d) Ensuring that all employees have access to internal financial reports.
Answer: a) Disclosing financial information that misrepresents the company’s true performance.

31. What is insider trading?

a) Trading stocks based on information that is publicly available.
b) Trading stocks based on confidential or non-public information about a company.
c) Trading stocks on the open market after a public announcement.
d) Trading stocks with the sole purpose of increasing stock value.
Answer: b) Trading stocks based on confidential or non-public information about a company.

32. Why is insider trading considered unethical?

a) It benefits those with access to private information over regular investors, giving them an
unfair advantage.
b) It prevents shareholders from making informed decisions.
c) It encourages market competition.
d) It leads to better market prices.
Answer: a) It benefits those with access to private information over regular investors, giving them an
unfair advantage.

33. Which of the following is an example of insider trading?

a) Buying stocks of a company after reading its quarterly earnings report.
b) A CEO buying stocks based on a private financial report before the public release.
c) Investing in stocks based on publicly available market analysis.
d) Purchasing stocks after a company’s stock price drops due to a market-wide correction.
Answer: b) A CEO buying stocks based on a private financial report before the public release.

34. Which of the following entities primarily regulates and enforces laws against insider trading in the
United States?
a) The Federal Reserve b) The Federal Trade Commission (FTC)
c) The Securities and Exchange Commission (SEC) d) The Department of Justice
Answer: c) The Securities and Exchange Commission (SEC)
35. Which of the following is a legal consequence of engaging in insider trading?
a) A fine and potential jail time. b) A loss of reputation, but no legal penalty.
c) Increased financial success. d) A warning and a requirement to repay profits.
Answer: a) A fine and potential jail time.

36. Which of the following is a violation of ethical advertising?

a) Advertising a product’s benefits clearly and accurately.
b) Advertising a product with exaggerated claims that are not supported by evidence.
c) Providing a full disclosure of terms and conditions.
d) Using testimonials from satisfied customers.
Answer: b) Advertising a product with exaggerated claims that are not supported by evidence.

37. What is the primary ethical issue with coercion in advertising?

a) It creates emotional appeal.
b) It uses undue pressure to force consumers into making decisions they might not have
otherwise made.
c) It encourages consumer awareness.
d) It relies on product quality to persuade consumers.
Answer: b) It uses undue pressure to force consumers into making decisions they might not have
otherwise made.

38. Which of the following best describes an ethical issue in corporate disclosure?
a) Withholding material information from investors that could influence their decisions.
b) Sharing accurate and timely financial reports with investors.
c) Following the legal requirements for quarterly earnings reports.
d) Ensuring that all employees are informed of company performance.
Answer: a) Withholding material information from investors that could influence their decisions.

39. In the context of truth in advertising, which of the following is considered unethical?
a) Providing clear and truthful information about a product’s benefits.
b) Using misleading or deceptive language to attract customers.
c) Disclosing the risks associated with a product.
d) Making sure advertisements are honest and accurate.
Answer: b) Using misleading or deceptive language to attract customers.

40. Which of the following could be a consequence of unethical advertising practices?

a) Increased consumer trust. b) Regulatory fines or legal action.
c) Higher customer retention rates. d) Improved brand loyalty.
Answer: b) Regulatory fines or legal action.

41. What is the purpose of insider trading laws?

a) To prevent manipulation of stock prices by insiders.
b) To ensure that insiders can profit from confidential company information.
c) To ensure that all market participants have access to the same information.
d) To allow insiders to profit by using non-public information.
Answer: c) To ensure that all market participants have access to the same information.

42. Which of the following is the most ethical way for companies to handle their trade secrets?
a) Keep them secret without any protection.
b) Publicly disclose them to gain a competitive edge.
c) Protect them using non-disclosure agreements and secure systems.
d) Share them freely with all employees without restrictions.
Answer: c) Protect them using non-disclosure agreements and secure systems.
43. Which of the following is an example of a coercive advertising tactic?
a) Advertising a sale with a limited-time offer to encourage quick decisions.
b) Offering free trials for a product.
c) Using a celebrity endorsement to build trust.
d) Providing clear product information to consumers.
Answer: a) Advertising a sale with a limited-time offer to encourage quick decisions.

44. Which of the following is an ethical concern in advertising to children?

a) Creating advertisements that are fun and engaging.
b) Marketing products that are unhealthy or unsuitable for children.
c) Using cartoon characters in advertisements.
d) Providing information on how to use products safely.
Answer: b) Marketing products that are unhealthy or unsuitable for children.

45. Which of the following is an example of ethical manipulation in advertising?

a) Using misleading emotional appeals to sway consumer decisions.
b) Highlighting real, verifiable benefits of a product.
c) Exaggerating the results a product can provide.
d) Omitting key product details to make it more attractive.
Answer: b) Highlighting real, verifiable benefits of a product

46. Which of the following best describes fairness in a financial market?

a) Ensuring that all traders have access to the same information.
b) Maximizing profits for large investors.
c) Allowing traders to act based on personal interests.
d) Prioritizing market efficiency over regulation.
Answer: a) Ensuring that all traders have access to the same information.

47. Which of the following is a key feature of an efficient financial market?

a) Investors are always guaranteed profits.
b) Prices reflect all available information.
c) There is little regulation or oversight.
d) Only large institutional investors can participate in trading.
Answer: b) Prices reflect all available information.

48. What is greenmail in the context of financial markets?

a) A type of environmental investment strategy.
b) A strategy where a company buys back its own stock at a premium to prevent a hostile
takeover.
c) A method for companies to sell off unwanted divisions.
d) A strategy for insider trading.
Answer: b) A strategy where a company buys back its own stock at a premium to prevent a hostile
takeover.

49. Which of the following is a criticism of the practice of greenmail?

a) It allows for the efficient allocation of corporate resources.
b) It benefits shareholders at the expense of the company’s long-term growth.
c) It encourages the growth of small businesses.
d) It results in more transparent corporate governance.
Answer: b) It benefits shareholders at the expense of the company’s long-term growth.
 50. What is a golden parachute?
a) A type of insurance policy for executives in case of company failure.
b) A contract provision that provides a large financial benefit to executives if they are
terminated or the company is acquired.
c) A retirement fund for senior managers.
d) A reward given to executives for increasing company profits.
Answer: b) A contract provision that provides a large financial benefit to executives if they are
terminated or the company is acquired.

51. Which of the following is a potential ethical issue related to golden parachutes?
a) They encourage executives to focus on short-term profits to secure large payouts.
b) They motivate executives to work harder to grow the company.
c) They reward executives who have made significant positive changes to the company.
d) They help prevent hostile takeovers.
Answer: a) They encourage executives to focus on short-term profits to secure large payouts.

52. How can fairness in financial markets be ensured?

a) By allowing insider trading among major investors.
b) By enforcing transparency and equal access to information for all market participants.
c) By promoting monopolies to stabilize the market.
d) By limiting the participation of small investors.
Answer: b) By enforcing transparency and equal access to information for all market participants.

53. Which of the following is an example of market efficiency?

a) Stock prices reacting quickly to new, publicly available information.
b) Companies making decisions based on personal preferences.
c) Only large corporations benefiting from price movements.
d) Prices being set by government regulators.
Answer: a) Stock prices reacting quickly to new, publicly available information.

54. Which of the following would violate the fairness of a financial market?
a) Insider trading, where individuals with privileged information use it for profit.
b) Companies announcing quarterly earnings reports on time.
c) Investors diversifying their portfolios.
d) Stock exchanges offering competitive fees.
Answer: a) Insider trading, where individuals with privileged information use it for profit.

55. Which of the following is considered a worker’s right?

a) The right to have their job terminated without cause.
b) The right to fair wages and benefits.
c) The right to ignore company policies.
d) The right to make decisions for the company.
Answer: b) The right to fair wages and benefits.

56. What is the primary responsibility of employers with regard to workplace safety?
a) Providing employees with competitive wages.
b) Creating a work environment free from recognized hazards.
c) Ensuring employees are treated equally.
d) Offering flexible work hours.
Answer: b) Creating a work environment free from recognized hazards.
 57. Which of the following is a legal obligation of an employer regarding workplace safety?
a) To provide employees with personal protective equipment (PPE) if necessary.
b) To give employees freedom to choose their own work hours.
c) To eliminate all competition in the workplace.
d) To only hire employees who are physically fit for the job.
Answer: a) To provide employees with personal protective equipment (PPE) if necessary.
58. Which of the following is considered sexual harassment in the workplace?
a) Making an off-hand joke about a colleague’s appearance.
b) Unwelcome advances, comments, or behavior of a sexual nature.
c) Offering constructive feedback on a colleague's performance.
d) Discussing work-related topics in a group setting.
Answer: b) Unwelcome advances, comments, or behavior of a sexual nature.
59. What is the main responsibility of employers in preventing sexual harassment in the workplace?
a) To ignore employee complaints unless there is physical evidence.
b) To provide employees with clear policies and a safe process for reporting harassment.
c) To limit employee interaction to only work-related tasks.
d) To penalize employees who speak out about sexual harassment.
Answer: b) To provide employees with clear policies and a safe process for reporting harassment.
60. What does Equal Employment Opportunity (EEO) legislation prohibit?
a) Discrimination based on age, gender, race, religion, and disability in hiring and employment.
b) Hiring employees based on their qualifications.
c) Offering equal pay for the same job.
d) Allowing women to hold leadership positions.
Answer: a) Discrimination based on age, gender, race, religion, and disability in hiring and employment.
61. Which of the following is a protected class under Equal Employment Opportunity (EEO) laws?
a) People with disabilities.
b) Only white males.
c) Only people of a certain age group.
d) People who are unmarried.
Answer: a) People with disabilities.
62. What is preferential hiring?
a) Hiring employees based on the best qualifications, regardless of other factors.
b) Giving special preference to candidates from historically underrepresented or disadvantaged
groups.
c) Hiring employees based on their familial connections to the company.
d) Hiring employees who have a strong personal connection to a company’s leadership.
Answer: b) Giving special preference to candidates from historically underrepresented or disadvantaged
groups.
63. Which of the following is a potential ethical concern with preferential hiring?
a) It may lead to hiring the most qualified candidates.
b) It may lead to reverse discrimination or resentment among other employees.
c) It ensures the workplace is diverse.
d) It reduces the need for affirmative action programs.
Answer: b) It may lead to reverse discrimination or resentment among other employees.
64. What is a primary goal of Equal Employment Opportunity policies?
a) To ensure companies prioritize hiring based on personal relationships.
b) To ensure that hiring and promotion decisions are made fairly, without discrimination.
c) To ensure that only the most qualified candidates are hired, regardless of other factors.
d) To limit hiring based on the geographic location of candidates.
Answer: b) To ensure that hiring and promotion decisions are made fairly, without discrimination.
65. Which of the following is an example of discriminatory behavior that violates EEO laws?
a) Offering equal pay for equal work.
b) Hiring a candidate based on qualifications regardless of their race or gender.
 c) Promoting a less qualified candidate based on their race or gender.
d) Encouraging employees to report incidents of discrimination.
Answer: c) Promoting a less qualified candidate based on their race or gender.

Additional Questions Related to Workplace Issues

66. What should a company do if an employee reports sexual harassment?
a) Ignore the complaint and assume it is a misunderstanding.
b) Investigate the claim thoroughly and take appropriate corrective action.
c) Allow the harasser to continue their behavior without consequences.
d) Transfer the employee who made the complaint to another department.
Answer: b) Investigate the claim thoroughly and take appropriate corrective action.
67. Which of the following best describes a hostile work environment?
a) A work environment where all employees are treated equally and fairly.
b) A work environment where an employee feels unsafe or harassed due to inappropriate behavior.
c) A work environment where employees are overly competitive with each other.
d) A work environment where only certain employees are promoted.
Answer: b) A work environment where an employee feels unsafe or harassed due to inappropriate behavior.
68. Which law prohibits discrimination in hiring, firing, and other employment practices based on race,
color, religion, sex, or national origin?
a) The Civil Rights Act of 1964 (Title VII).
b) The Family and Medical Leave Act (FMLA).
c) The Fair Labor Standards Act (FLSA).
d) The Age Discrimination in Employment Act (ADEA).
Answer: a) The Civil Rights Act of 1964 (Title VII).
69. What is the purpose of affirmative action in the context of employment?
a) To limit hiring practices to only the most qualified candidates.
b) To actively promote diversity in hiring and compensate for past discrimination.
c) To reduce the number of women and minorities in the workforce.
d) To create quotas for hiring based on race and gender.
Answer: b) To actively promote diversity in hiring and compensate for past discrimination.
70. What is one of the primary goals of workplace safety regulations?
a) To reduce the number of sick days employees take.
b) To ensure employees can work at any job without appropriate safety measures.
c) To protect employees from workplace hazards and prevent accidents.
d) To increase profits by reducing the number of safety-related regulations.
Answer: c) To protect employees from workplace hazards and prevent accidents