Business Ethics Final Exam Chapters 6-11

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What is strict product liability?

Manufacturer is liable for product injuries regardless of negligence.

What does caveat emptor mean?

“Let the buyer beware”

What is the doctrine of due care?

Manufacturers have a moral obligation to protect consumers from defects.

According to Galbraith’s “dependence effect,” what shapes consumer demand?

Consumer demand is shaped by the production process.

What did Congress create in 1972 for consumer protection?

The Consumer Product Safety Commission (CPSC).

Which media most influence children through advertising?

Television or Internet.

What consumer standard does the FTC now follow?

The modified-ignorant consumer rule.

What is a psychological appeal in advertising?

Persuades by appealing to emotions rather than reason.

What are “weasel words”?

Words that evade or retreat from a clear, direct statement.

Is business correct that accidents occur only due to product misuse?

No. False — manufacturers still hold responsibility.

What is the tragedy of the commons?

When individuals pursue self-interest and collectively worsen outcomes.

What is the free-rider problem?

Benefiting without contributing.

Define ecology.

he science of relationships between organisms and environments.

Define ecosystem.

The total system of relationships among organisms and their environment.

What does William T. Blackstone argue about environmental rights?

A livable environment is a fundamental human right.

What is Baxter’s (people-oriented) view?

Environmental judgments should focus on human benefits.

Does Baxter believe we protect nature for its own sake?

No — only when it benefits humans.

What does Holmes Rolston III argue?

Nature has intrinsic value; natural objects deserve moral consideration.

What does Joel Feinberg argue about future generations?

They have interests we can affect today; they can hold rights.

Is regulation always the most effective way to allocate environmental costs?

False. Market and incentive-based solutions can be effective.

Do naturalistic ethicists think penguins matter only because humans like them?

False — nature has intrinsic value.

Has the EPA eliminated all pesticide/chemical residue issues?

False — residues remain though regulated.

What does ecological economics measure?

The value of ecosystem services based on replacement cost.

The value of ecosystem services based on replacement cost.

Value judgments and factual uncertainty.

Historically, business has viewed the environment as what?

Costly.

What is employment-at-will?

Employer can fire for any reason or none (unless illegal).

What is just cause?

Termination based on performance-related reasons.

Which is common law: at-will or just cause?

Employment-at-will.

What makes personnel policies fair?

Clear, job-related, impartial (not partial toward friends).

Why are workplaces authoritarian, per David Ewing?

• Professional management/HR control

• Employment-at-will doctrine

Is a strike the same as a boycott?

A: No.
Strike = stop working.
Boycott = stop buying.

Are job performance and fair contracts relevant to fair wages?

Yes — True.

What is test reliability?

Producing consistent results.

Is dignity and fairness at work compatible with business goals?

Yes — it improves morale and productivity.

What does hiring typically include?

Screening, testing, interviewing.

Factual precept concerning wages?

A fair wage presupposes a fair contract.

Hawthorne Effect (short)?

Productivity rises because workers know they’re being observed.

Employee right to privacy:

May conflict with a company’s legitimate interests.

Main causes of worker dissatisfaction (Work in America Report)?

– Emphasis on quantity over quality
– Rigid, repetitive work
– Lack of autonomy; organizational “bigness”

Is privacy widely recognized as a fundamental right?

False.

Do new responsibilities only benefit the CEO?

False — benefits employees and company.

Future OSHA concern?

Musculoskeletal disorders.

Purpose of QWL programs?

Involve workers more fully; seek their input.

What employee monitoring is legal?

Monitoring keystrokes (but not private communications).

Main source of workplace dissatisfaction?

Lack of autonomy (“being one’s own boss”).

Documented discrimination evidence shows…

Few women/minorities reach top positions.

Civil Rights Act bans discrimination based on?

A: Race, color, sex, religion, national origin.
(True)

Do anti-discrimination laws eliminate past discrimination effects?

False.
Support: Anti-discrimination laws stop current bias, but they can’t undo long-term effects of past discrimination—like historic gaps in education, income, and opportunity.

U.S. v. O'Hagan (1997) ruled what?

He misappropriated confidential information (insider trading).

Major advancement of Sarbanes-Oxley?

Protects whistleblowers from retaliation.

Most important factor in evaluating a business gift?

Whether it influences judgment.

Ethical decision-making two-step process?

• Identify obligations, ideals, effects

• Prioritize among them
  (True)

Types of bribes?

Money, entertainment, gifts, preferential treatment, kickbacks.

Can companies stop employees from moving to another job?

False — except limited non-competes.

Is “trade secret” precisely defined by law?

No — unlike patents and copyrights.

What does the FCPA outlaw?

Bribes and grease payments to foreign officials.

According to Norman Bowie, what motivates whistleblowers?

Public interest outweighing loyalty.

Can non-insiders be guilty of insider trading?

Yes — under misappropriation theory

What is misappropriation theory in insider trading?

It says a person commits insider trading if they misuse confidential information in violation of a duty of trust — even if they aren’t a company insider.

What disadvantages women/minorities in workplaces?

False preconceptions, stereotypes, prejudice.

Is workplace diversity a competitive advantage?

Yes — True.

Define job discrimination.

 – Harms/disadvantages workers
– Based on group membership
– Influenced by prejudice/stereotypes
– Not based on merit

Affirmative Action — Arguments FOR?

– Compensatory justice
– Fairer competition
– Break cycles of disadvantage

Affirmative Action — Arguments AGAINST?

– Unfair to white men
– Violates equality principle
– Unnecessary if nondiscrimination works

Documented discrimination shows what?

Few women/minorities in top leadership.

Does the Civil Rights Act prohibit all forms of discrimination?

True — race, color, sex, religion, national origin.

Do anti-discrimination laws erase effects of past discrimination?

False

Strict Product Liability vs. Negligence

Strict liability = no need to prove negligence.
Negligence = must show the manufacturer failed to use due care.

FTC Modified-Ignorant Consumer Standard

Ads must not be deceptive to the reasonable but not expert consumer.

Tragedy of the Commons Key Insight

When each person acts in their own self-interest, everyone ends up worse off.
(Example: if everyone dumps a little pollution, the environment becomes ruined for all.)

Baxter vs. Rolston (Helpful Contrast)

• Baxter: Human-centered; environment matters only for human benefit.

• Rolston: Nature has intrinsic value; animals and ecosystems have moral standing.

Employment-at-Will Limitations

At-will is limited by:

• discrimination laws

• public policy exceptions

• implied contracts

• whistleblower protections

Hawthorne Effect Extra Note

Shows social and psychological factors matter more than physical working conditions

Privacy at Work

Employees have privacy rights, but employers may monitor if there is a legitimate business interest (security, productivity).

OSHA Focus Areas

Current major concerns:

• musculoskeletal disorders

• chemical exposure

• workplace stress

• ergonomics

Insider Trading Theories (Great Pairing)

• Classical theory: Insider breaches duty to shareholders.

• Misappropriation theory: Outsider breaches duty to the source of information.

Trade Secrets

Protected by secrecy, not registration.
Loss of secrecy = loss of protection.

Bribes vs. Gifts

Bribe = intent to influence judgment.
Gift = acceptable when modest and non-influencing.

Affirmative Action Important Note

Not the same as quotas.
Quotas are generally illegal except by court order.

Documented Discrimination Fact

“Glass ceiling” is the term describing barriers preventing women/minorities from reaching top positions.

Cost-Benefit Analysis Critique

Often criticized because it:

• undervalues long-term environmental harms

• discounts future generations

• converts moral values into dollar values

QWL (Quality of Work Life)

Main goal: increase worker participation to improve both satisfaction and productivity.

What is the difference between disparate treatment and disparate impact?

• Treatment: Intentional discrimination.

• Impact: Neutral policy that harms a protected group unintentionally.

What is the glass ceiling?

Invisible barriers preventing women/minorities from reaching top positions.

What is whistleblowing?

Reporting wrongdoing or illegal activity within an organization to protect the public.

What two conditions make whistleblowing morally justified?

• Serious harm is likely if unreported.

• Internal channels have been tried and failed.

What is the stakeholder model of corporate responsibility?

Companies should serve all stakeholders (employees, consumers, community), not just shareholders.

What is a conflict of interest?

When personal interests could improperly influence professional decisions.

What is a kickback?

A payment given to someone who improperly helps secure a business advantage.

What are OSHA’s main functions?

Establish workplace safety standards and enforce compliance.

Why do stereotypes contribute to discrimination?

They assign traits to individuals based on group membership rather than merit.

What is puffery in advertising?

Exaggerated or vague claims that no reasonable consumer takes as literal fact.

What’s the main ethical concern with psychological appeals?

They bypass rational judgment by targeting emotions and vulnerabilities.

Why are ecosystems considered morally important by some ethicists?

Because they sustain life, maintain biodiversity, and may have intrinsic value.

What’s the difference between a gift and a bribe?

A bribe intends to influence judgment; a gift does not.

What is the “reasonable consumer” standard in advertising law?

Ads are judged by what an average, reasonable person would believe or be misled by.

What is greenwashing?

When a company falsely portrays its products/practices as environmentally friendly.

: What is sustainability in business ethics?

Meeting present needs without compromising future generations.

What is an implicit bias?

Automatic, unconscious associations that influence decision-making.