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Chapters 1 Through 9
LAW & ETHICS IN THE BUSINESS ENVIRONMENT
CHAPTER 1
Law, Ethics, Business: An Introduction
Questions
1. Select the best definition of ethics:
a. a set of rules for behavior.
b. a menu of options regarding what we must do.
c. a menu of options regarding what we should do.
d. standards that must be met to avoid penalty.
2. Laws must be static and unyielding in order to provide stability for a society.
a. True
b. False
3. Choose the statement regarding duty to rescue that is false:
a. There is no general duty to rescue an individual.
b. Individual freedom of dictates that a person should not be forced to act.
c. Under a liberal–communitarian approach, citizens owe a duty to the state to
rescue other citizens.
d. When one taunts another person who then puts themselves in danger in
response to the teasing, the teaser has a duty to rescue the person teased.
4. All of the following are considered exceptions to the general rule that there is no
duty to rescue except:

2. a. Pre-existing duty: For example, lifeguards have signed contracts agreeing to
rescue people in exchange for pay and benefits.
b. Witnessing an accident: This creates a duty to step in and help the injured.
c. Employer: A duty exists to help an employee injured while working for that
employer.
d. Endangerment: If one puts another in danger, they are obligated to rescue the
person put in danger.
5. Which of the following views would be consistent with the free market ethics
approach advocated by Milton Friedman?
a. Outsourcing to other countries is wrong because it is detrimental to the overall
US economy.
b. When making decisions, corporate managers should consider the interests of
all the corporation’s stakeholders.
c. The only social responsibility of business is to increase profits in a legal and
ethical manner.
d. Automating processes and replacing workers is unethical since it does not
serve a greater good.
6. Which of the following statements best illustrates the view of “utilitarianism”?
I. From each according to his abilities, to each according to his needs.
II. The risk reasonably to be perceived defines the duty to be obeyed and
risks imports relation; it is risk to another or to others within the range
of apprehension.
III. An action is right when maximizing welfare and total well-being.
IV. Individuals should pursue his or her own self-interest, even at the
expense of others.
a. I only
b. III only
c. I and II
d. I, II, and III
7. According to deontological thinker Kant:

3. I. It is only acceptable to lie when done to protect an innocent person.
II. The level of respect owed to another is based on one’s relationship to
that person.
III. It is wrong to use another person unless mutual benefit is attached.
IV. Once chosen, actions will be repeated whenever the same situation
arises.
a. I and III
b. II and IV
c. III and IV
d. I, III, and IV
8. Virtue ethics:
a. focuses on what human beings are capable of being.
b. develop from learning how to make choices in difficult situations.
c. accepts that individuals rarely reach moral excellence.
d. are based on the concept that a person’s ethical beliefs are developed in
childhood and do not change.
9. The Ethic of Care is:
a. A set of rules that explain how to prioritize those people affected by a
decision so that a utilitarian analysis can be done successfully.
b. A set of universal principles, which applied evenly to all decisions will
result in fairness and equity in ethical decisions.
c. The idea that we should all make decisions under the assumption that we
don’t know our station in life, that we could be the person most negatively
impacted by the decision.
d. A set of principles that encourage decision makers to look at human
relationships as a primary motivator for a decision.
10. Assuming a business ethical dilemma, which statement best illustrates Gilligan
approach suggested in her theory of “The Ethics of Care”?
a. individual rights and justice for all
b. applies only to women and not men

4. c. care and responsibility to others
d. obedience to independent moral rules or duties
11. Which of the following statements is INCORRECT regarding the rights of
shareholders?
I. voting power on major issues and ownership in a portion of the
company
II. right to transfer ownership and dividend entitlement
III. hire and fire management and select and appoint a chief executive
a. I and II
b. I, II, and III
c. I only
d. III only
12. According to Citizens United v. Federal Election Commission, which of the
following is not a reason to allow corporations the right to spend money and
advertise for political candidates?
a. Political speech is the most important, and most protected, speech that
exists. It is crucial to the democratic process that political speech be
encouraged and heard.
b. The immense wealth of a corporation allows it to be the most accurate
in providing messages to people.
c. Independent expenditure by corporations do not give rise to corruption
or the appearance of corruption.
d. Rapid changes in technology suggest laws restricting political speech
should not be upheld.
13. Corporate director or officer decisions to dedicate corporate funds for social
causes is called:
a. Corporate Social Responsibility (CSR)
b. Social Activism (SA)
c. Business Engagement in Environmental Situations (BEES)

5. d. Strategic Investment in Stakeholder Issues (SISI)
14. Which of the following statements regarding Benefit Corporations is true?
a. Benefit corporations are required to identify one or more specific benefit
purposes.
b. Directors of benefit corporations are protected from all lawsuits from both
shareholders and beneficiaries of the corporation’s public benefit purpose.
c. Benefit corporations are incorporated under state law with the intent to be
profitable.
d. All of these statements regarding benefit corporations are true.
Essay Questions
15. Describe the difference between the law and ethics.
16. From where do ethical preferences originate?
17. Discuss how multinational corporations can be both a benefit and a detriment to
society.
18. Explain why laws exist that do not impose a duty to rescue.
19. Describe the philosophy of noted economist, Milton Friedman, on the issue of
“free market ethics.”
20. Discuss the differences in utilitarianism and virtue ethics in making a decision.
21. Discuss the similarities and differences between a traditional corporation and a
benefit corporation.
CHAPTER 2
The Duty of Loyalty: Whistleblowing
Questions
22. Select the best definition of whistleblower:
e. the sole goal of modern ethics training

6. f. originated from the Latin "qui tam pro domino rege quam pro sic ipso in hoc
parte sequitur" meaning "who as well for the king as for himself sues in this
matter."
g. a narrow exception under the general rule of at-will employment
h. people who report unethical or illegal activities under the control of their
employers
23. Under the legal doctrine of “employment at will” an employee can be lawfully
terminated from her job for:
V. wearing a shirt that clashes with her suit
VI. any non-discriminatory reason
VII. complaining about illegal activity in the workplace
VIII. only for good cause
a. a. I only
b. b. II only
c. c. I and II
d. d. III and IV
24. Exceptions to the rule of employment-at-will include which of the following?
I. organization of unions
II. passage of Sarbanes Oxley Act
III. raising of public policy issues
IV. promise of implied-contract or covenant-of-good-faith
a. I only
b. II only
c. I and II
d. I, II, III, IV
25. The Food Safety Modernization Act:
I. offers some protections for whistleblowers

7. II. covers vegetables, seafood and dairy
III. covers eggs and poultry
IV. gives the FDA power to make mandatory recalls
a. I and II only
b. I, III and IV only
c. I, II and IV only
d. I, II, III, IV
26. Ag Gag would criminalize:
a. undercover video recordings showing animal cruelty
b. recordings of public health violations occurring in agricultural facilities
c. Both a. and b.
d. Neither a. nor b.
27. The National Labor Relations Board has stated that the right to discuss working
conditions freely and without fear of retaliation should exist at the work site.
However, the Board believes the same right does not exist online.
a. True
b. False
28. The Constitution does not always protect free-speech rights for what public
employees say on the job. Which of the following is true?
a. When a citizen enters government service, the citizen need not accept certain
limitations on his or her freedom.
b. Public employees may speak out on matters of public concern and have First
Amendment protection but not when they speak out in the course of their
official duties.
c. As public employees speak out and receive First Amendment protection, there
is an acceptable chilling of the speech of all potential whistleblowers.
d. None of the above

8. 29. To determine whether a public employee receives First Amendment protection
from speech (and therefore cannot be fired for it), the Supreme Court has stated
that all of the following are important except:
a. The employer must have a justification for treating the employee
differently than it would treat a member of the general public.
b. The speech cannot be about political topics.
c. The speech must be about something of great public concern.
d. The speech cannot be made as part of the employment (such as an internal
memorandum).
30. When Qui Tam whistleblowers against the pharmaceutical industry were
questioned about their motivation, several reasons were mentioned. Which of the
following was NOT given as a reason?
a. Potential risk to public health.
b. Unfair employment practices.
c. Financial reward.
d. Self-preservation.
Essay Questions
31. According to research, what are the characteristics of the typical whistleblower?
32. According to the Montana Wrongful Discharge from Employment Act, what are
the three elements of a wrongful discharge?
33. How was Ken Kendrick of The Peanut Corporation of America a typical
whistleblower? An atypical whistleblower?
34. Explain what happened in the 1968 Supreme Court’s re-interpretation of the First
Amendment to the U.S. Constitution regarding public employees’ limited speech
protections.
35. Describe at least two other times since the Pickering decision in which the
Supreme Court revisited the ruling. What were the outcomes?

9. 36. As discussed in the text, False Claims Act or qui tam suits have been successful in
the health care industry. The text mentions several things that all these successful
claims have in common. Discuss those things.
CHAPTER 3
Privacy and Technology
Questions
1. In considering the legality of employer interception of employee e-mails at
work, pick the correct statement.
IX. Employees have complete expectation of privacy since they can select
their password for in-house and remote access of e-mails.
X. A subpoena is required by the employer to read any e-mail that is
clearly marked “confidential” by the employee.
XI. No expectation of privacy exists over an employer-owned computer
system at work.
XII. Statement by the employer that e-mails are confidential and privileged
cannot be later used by an employer to defeat an employee’s claim of
privacy
a. I only
b. II only
c. III only
d. I and IV
2. It is perfectly legal for employers to secretly and intrusively spy on their
employees.
a. True
b. False
c.
3. Which of the following are ways businesses justify electronic surveillance of
employees?
I. It measures and encourages efficiency.
II. It uncovers employee disloyalty.

10. III. It enhances the fairness of personnel evaluations.
IV. It prevents employees from sending personal emails on company time.
a. I and II only
b. I, II and III only
c. I, II and IV only
d. I, II, III and IV
4. The Electronic Communications Privacy Act of 1986 (ECPA):
i. supplements the Omnibus Federal Employee Workplace Privacy Rights
Law of 2008.
j. has been an effective law because employee privacy intrusions are less
common and steadily declining since 2000.
k. restricts employer access to public chat room interactions.
l. fails to protect employees in most situations involving e-mail monitoring
by public and private employers.
5. According to the article excerpted in the text entitled, The Functions of
Privacy, by Alan Westin, privacy has several functions in today’s society.
These include:
a. Total freedom in the private life with no consequences to the work life.
b. The ability to vent anger at authority without being held responsible.
c. The ability to post critical information on the Internet without
consequences at work.
d. The ability to spend time quietly analyzing the actions and reactions of
other people.
6. It is illegal to increase a specific employee’s health insurance premiums based
on the employee’s lifestyle.
a. True
b. False
7. A majority of states have enacted off-the-job privacy protection laws. What is
the LEAST effective argument by an employer to regulate off-the-clock
activities in a state that has not enacted such lifestyle rights legislation?

11. a. It will provide a healthy work force.
b. Unregulated employees are less productive.
c. There is no invasion of privacy since the employee is “at will.”
d. It will prevent higher health care and insurance costs.
8. According to the article, Can They Do That? By Lew Maltby:
a. A job candidate who has been arrested will probably not be disqualified
unless the candidate was found guilty.
b. Psychological tests are a good way to determine a job candidate’s honesty.
c. Employees who are being treated unfairly can protect themselves by
joining a union.
d. Credit score can keep you from getting a job, even if it doesn’t involve
handling money.
9. Which of the following is NOT one of the three privacy rights created by the
Supreme Court through its interpretation of various constitutional
amendments?
a. The government cannot interfere with the choices adults make about
their private family and sexual life.
b. An individual’s medical history cannot be publicized by the
government.
c. Individuals are protected against unwarranted invasion of privacy by
private corporations.
d. Corporations are protected against unreasonable government searches
or seizures.
10. Privacy rights are triggered under the Fourth Amendment:
a. when a corporation has authorized an agent with direct authority to
perform an electronic search of an employee’s e-mail account.
b. upon issuance of a subpoena duces tecum to bring electronic data (e-mails,
files, etc.) including electronic metadata such as headers, directional
information, and other such useful tracking data.
c. when the government is conducting a search.

12. d. during an archival search of e-mails on a corporation’s server.
11. When it comes to employment and social media:
I. Every U.S. law dealing with employee privacy grants significant deference
to an employer’s legitimate business interest.
II. U.S employers may legally canvass social media sites for information on
employees and potential employees and act upon the information found.
III. When an employer finds and uses social media information to reprimand
or fire an employee, the employer is obligated to disclose the method of
gaining that information to the employee.
IV. Statutes that specially govern the intersection of social media and
workplace privacy were enacted in 2013.
a. I and II only
b. I, II and III only.
c. I, II and IV only
d. I, II, III and IV
12. The 2004 Heath Information and Portability and Accountability Act (HIPPA):
a. requires consent for medical information to be accessed and shared.
b. prohibits discriminatory use of pre-employment medical tests.
c. prohibits employers from requesting genetic information as part of a post-
offer medical exam.
d. All of these statements are true.
13. Since a corporation is a “person” in the eyes of the law, a corporation’s
constitutional right to privacy is identical to a natural person’s rights.
a. True
b. False
Essay Questions
14. Discuss the employee claims that counter businesses’ justification of
electronic surveillance.

13. 15. Name the two main factors that most courts use in determining whether or not
electronic monitoring of employees is an invasion of privacy.
16. Briefly describe what Alan Westin believes are the “functions of privacy.”
17. Discuss Lewis Maltby’s proposition that employers should not do drug testing
(or other testing related to off-work conduct) but should instead focus on
impairment testing when an employee is entering the workplace.
18. The term “privacy” does not appear anywhere in the Constitution of the
United States. Discuss (meaning share your opinion and support it with
anecdotes or evidence) whether or not the Supreme Court was correct in
“finding” privacy in the Constitution.
19. Discuss the privacy expectations of millennial employees.
20. Under the Genetic Information Nondiscrimination Act of 2008 (GINA) it is
unlawful for an employer to request, require or purchase genetic information
related to employees of their families. List at least three exceptions to this rule.
CHAPTER 4
Valuing Diversity: Stereotyping v. Inclusion
Questions
1. Equal protection is the constitutional guarantee:
a. that empowers Congress to regulate equally distributed commerce with
foreign Nations, and among the several States, and with the Indian Tribes.
b. that laws made in pursuance of the Constitution and all treaties made under the
authority of the United States shall be the equally protected as the “supreme
law of the land.”
c. embodied in the Fourteenth Amendment to the U.S. Constitution.
d. that grants and distributes power and responsibilities to national and state
governments.

14. 2. A mayor serving in a major metropolitan area receives an internal memorandum
indicating personnel at many police stations are single-race. At the time of the
report, thirty percent of the police force was black or Hispanic. She immediately
calls a press conference and orders transfers of police officers to achieve racial
balance across the city. The transferred police officers sue on constitutional
grounds. Assuming just these facts, what is the strongest argument that might be
advanced by the transferred officers based on constitutional grounds?
a. Executive action by the mayor is unconstitutional because there was no
rational relationship to a valid governmental purpose.
b. The action is “void for vagueness” since transferred police officers must
unnecessarily guess at the underlying public policy of the transfer process.
c. The mayor’s policy used race as the basis for transfers, and assignments are
subject to strict scrutiny.
d. The transfer can be set aside based on intermediate or heightened level of
scrutiny.
3. Title VII specifically addresses the issues of affirmative action, sexual
harassment, and same-sex marriage.
a. True
b. False
4. Which of the following federal government agencies is charged with enforcing
Title VII of the Civil Rights Act of 1964?
m. U.S. Department of Labor
n. Merit Systems Protection Board
o. Office of Personnel Management
p. Equal Employment Opportunity Commission
5. To establish a prima facie case of religious discrimination, the employee has to
show all of the following except which one:
a. That religion has been a significant part of the employee’s life for a significant
amount of time.
b. That the employee has a sincerely held religious belief.

15. c. That the employer was on notice that the religious belief was in conflict with
the employer’s request.
d. That there was a negative employment action based on a conflict between the
religious belief and the employment requirement.
6. The Equal Employment Opportunity Commission (EEOC) favors English-only
rules because they decrease the ability for people to stereotype based on national
origin or ethnicity and thus decrease illegal workplace discrimination.
a. True
b. False
7. Employment practices without business justification applied to all employees that
result in a less favorable effect for one group than for another group may state a
claim for:
a. disparate treatment
b. disparate impact
c. inclusion
d. reasonable accommodation
8. John Smith was assaulted on the loading dock by a coworker, Jim Jones, at the
Acme Widget Company. The attack was unprovoked by Smith. After the physical
assault, there was an angry verbal exchange between the parties. The incident
ended when Jones yelled that Smith was a “sissy” and “everybody knows you're
queer as a three dollar bill." Which of the following statements best describes the
outcome of the harassment lawsuit filed by Smith under The Civil Right Act of
1964?
XIII. Sex discrimination is prohibited by federal law (The Civil Right Act of
1964).
XIV. Sexual orientation discrimination is prohibited by federal law (The
Civil Right Act of 1964).
XV. Suits based on harassment due to sexual orientation cannot prevail
when based on local or state laws.
XVI. Sexual orientation discrimination is not prohibited by federal law (Title
VII).
a. I only

16. b. II only
c. III only
d. I and IV
9. Federal courts have consistently held that the Civil Rights Act’s ban on
‘discrimination on the basis of sex’ does not include discrimination based on
one’s sexual orientation or affiliation.
a. True
b. False
10. All of the following are true statements regarding the Family and Medical Leave
Act (FMLA, 29 U.S.C. §§ 2601, et seq.), EXCEPT which of the following?
a. An eligible employee is entitled to take 12 weeks of unpaid leave in any 12-
month period.
b. Every personal or family emergency qualifies for FMLA leave.
c. Under most circumstances, the employer must reinstate employees when they
return from leave.
d. An eligible employee is entitled to take paid leave because of the birth of a son
or daughter.
11. In order to be covered by the ADA (Americans with Disabilities Act), a disability
must be ongoing and permanent for the foreseeable future.
a. True
b. False
Essay Questions
12. Describe the term heightened scrutiny. What do the courts use to determine which
type of scrutiny to use?
13. What is the EEOC guideline on English-only workplace rules? What are two
reasons given for the rules?

17. 14. What must a plaintiff show to make a prima facie case of hostile environment
sexual harassment?
15. According to sociologists, what is society’s image of a good mother? A good
father? How do those images impact how parents who chose to balance their work
life with family (i.e. work part time) are viewed?
CHAPTER 5
Workers Rights as Human Rights: Health and Safety in the Global Workplace
Questions
16. The Fair Labor Standards Act (FLSA) of 1938:
I. sets maximum hours
II. requires minimum wages
III. requires compliance with child labor standards
IV. covers farmer workers
a. I. and II only
b. III and IV only
c. I, II and III only
d. I, II, III and IV
17. With the adoption of the ____________, the U.S. began to address the need to
prevent, or minimize, workplace accidents and health hazards.
q. Securities Act
r. Occupational Safety and Health Act
s. Environmental Protection Agency
t. National Insurance Act
18. OSHA has a wide range of tools available to address the risks that workers face.
a. True

18. b. False
19. Typically individual stockholders are not held responsible for the actions of a
corporation. Exceptions usually relate to comingling of funds, underinsuring, or
similar actions by the corporate leadership. This is called:
a. risking liability
b. piercing the corporate veil
c. the privilege of the stockholders
d. free market trading of stocks
20. Almost all of the hazards that workers face are known and visible.
c. True
d. False
21. The ADA direct threat provision permits an employer to impose a:
a. “requirement that an individual shall not pose a direct threat to the health or
safety of other individuals in the workplace.”
b. “requirement that an individual shall not pose a direct threat to the health or
safety of themselves in the workplace.”
c. Both a. and b.
d. Neither a. nor b.
22. According to Henry Shue, firms are not in the business of protecting the interests
of their workers, except when this is a means to accomplish the organizational
objectives.
a. True
b. False
23. When an employee files a worker’s compensation claim:
a. The employee must prove the company was negligent.
b. The employer has the right to raise traditional defenses to negligence to defeat
the claim.

19. c. Both a. and b.
d. Neither a. not b.
24. The Workers Rights Consortium:
I. Combats sweatshops by monitoring and investigating working
conditions in factories around the world.
II. Is a U.S. government organization.
III. Covers contractors, subcontractors and manufacturers.
a. I. only
b. I and II only
c. I and III only
d. I, II, and III
25. According to Guy Mundlak and Issi Rosen-Zvi, hypotheses for the existence of
CSR reports include:
I. They have instrumental value to governments.
II. They are a focal point for persuading the corporate world that a new
ethical discourse is emerging.
III. They are created to persuade competitors to adopt similar measures and
standards of responsibility.
IV. They are created in an attempt to persuade managers and employees that
they should be proud of their workplace.
a. III and IV only
b. I, II and III only
c. II, III and IV only
d. I, II, III and IV
Essay Questions
26. According to Dr. Michael Silverstein, what are the types of risks workers find on
the job today?

20. 27. According to Henry Shue, what are the six factors required to make a cost a true
harm?
28. Discuss how corporate criminal liability has been handled by OSHA since 1970.
29. Explain how worker’s compensation in the U.S. works.
30. Explain what the Workers Rights Consortium is and what it has done to combat
sweatshops.
CHAPTER 6
Environmental Law and Justice: Responsibility and Survival
Questions
31. Which piece of legislation was passed first?
e. The Clean Water Act
f. The Resource Conservation and Recovery Act
g. The Clean Air Act
h. The Comprehensive Environmental Response, Compensation, and Liability
Act
32. Under the ___________ plan, the EPA auctions a set number of sulfur dioxide
emission allowances annually, with each allowance permitting one ton of
emissions.
e. allocation of resources
f. tradeable permit
g. green capitalism
h. shareholder activism
33. The Kyoto Protocol is an international treaty to reduce greenhouse admissions,
signed by over 200 countries including the United States.
a. True
b. False
34. According to MIT professor Layzer, the lobbyists for the energy corporations
have used which of the following tactics to avoid stricter regulation?

21. I. Portray the science of global warming as uncertain and debatable
II. Focus on the financial costs of regulation
III. Provide Senators and Representatives with financial incentives to vote
against regulation
IV. Portray the environmentalists as extremists and a vocal minority.
a. I and II
b. I, II and III
c. I and III
d. I, II and IV
35. When environmentalists recognized that politicians were not going to pass stricter
legislation and regulations, they changed their tactics to force change. According
to the Layzer article in the chapter, these new tactics included:
a. Eco-terrorism – bombing pipelines and factories.
b. Collaboration with businesses – create partnerships to improve
environmental impacts.
c. Public relations campaigns – go public with their accusations and
encourage consumers to demand change.
d. Work internally through shareholders to try to change corporate
disclosures
a. I and II
b. II and III
c. III and IV
d. II, III and IV.
36. A “green tax” uses government taxing power to benefit the environment.
a. True
b. False
37. According to John Locke, the purpose of government is to institute restraints to
protect property rights.
e. True

22. f. False
38. The power of the U.S. Government to take property from a private individual and
use it for public purposes is:
a. Due Process
b. Equal Protection
c. Eminent Domain
d. Suffrage
39. According to Alice Kaswan, environmental justice has had:
a. an extreme impact on environmental law
b. a significant impact on environmental law
c. a modest impact on environmental law
d. no impact on environmental law
40. According to Carmen G. Gonzalez, people go hungry because:
a. there is not enough food available
b. people are too poor to grow food
c. Both a. and b.
d. Neither a. nor b.
Essay Questions
41. Explain how the tradeable permit plan works.
42. Discuss the obligations of human beings to Mother Earth according to the
universal declaration of rights of Mother Earth.
43. The power of eminent domain requires the government to provide just
compensation to a property owner when taking private property for public
purposes. Discuss your thoughts on whether the following should be considered
“public purposes.”

23. a. The government taking private property to transfer to a private company for
development of a strip mall.
b. The government taking private property to build a highway.
c. The government taking private property to expand an airport.
44. The Fifth Amendment to the Constitution explicitly protects private property
owners’ economic interests. Explain how this amendment affects owners of
private property.
45. What is environmental justice? What started the movement in the United States?
46. Explain the Crisis of Agrobiodiversity as explained by Carmen G. Gonzalez.
CHAPTER 7
Marketing and Technology: Choice and Manipulation
Questions
47. Identify the true statement(s) regarding freedom of speech:
XVII. It was not until the 1920s that legal doctrines protecting speech when
offensive began to be recognized by the courts.
XVIII. In the First National Bank v. Bellotti case, the Supreme Court struck
down a state law prohibiting a corporation to advertise to influence
voters on issues that did not “materially affect” its business.
XIX. In the Virginia Board case, the U.S. Supreme Court failed to link the
“right to receive information and ideas” with the traditional values that
underlie free speech.
XX. According to the Central Hudson decision, “protected commercial
speech” cannot be regulated.
e. I & II only
f. II & III only
g. II, III and IV only
h. I, II III, and IV

24. 48. Citizens have always been afforded freedom of speech after the ratification of the
U.S. Constitution.
a. True
b. False
49. According to John Kenneth Galbraith, the theory of consumer demand is based on
the following broad assumption(s):
I. Socialism will work in all societies because consumers are willing to
share their wealth.
II. The urgency of wants does not diminish as more of them are satisfied.
III. Wants originate in the personality of the consumer.
a. I only
b. I and II
c. III only
d. II and III
50. The Lanham Act:
I. Focuses on trademark registration and protection.
II. Was passed in reaction to the Great Depression.
III. Gives competitors the right to sue for false claims a rival company
makes about the competitor’s product.
IV. Does not allow a company to sue for false claims a rival company
makes about their own products.
a. I & II only
b. II & III only
c. I, I and III only
d. I, II III, and IV

25. 51. Obesity in children has continued to rise since 1976 and approximately ¾ of all
teens and youth are overweight.
a. True
b. False
52. The “creative revolution” in advertising refers to
a. The move from black and white to color advertising.
b. The move from talking about a product to showing what a product can do.
c. The move from showing what a product can do to making the product a
status symbol.
d. The move from making a product a status symbol to using subliminal
messaging to “force” consumers to buy the product.
53. The debate over advertising fast food and other “junk foods” to kids is in effect
settled, since federal and state laws have put limits on that advertising.
a. True
b. False
54. According to the Learned Intermediary Rule, pharmaceutical manufacturers do
not have to warm consumers about drug dangers as long as they have adequately
warned physicians.
a. True
b. False
Essay Questions
55. In the case of R.J. Reynolds Tobacco Company, et al. v. FDA, what was the
majority opinion regarding the First Amendment and the graphic warning
requirements?
56. What forms can deceptive advertising claims take?

26. 57. Discuss some of the ways the FTC has curbed online marketing efforts.
58. What is the Lanham Act? To succeed in suit under the Lanham Act, what must a
plaintiff prove?
59. Discuss the standards of the Creative Code of the American Associate of
Advertising Agencies.
60. Discuss how the fast food industry’s response to the obesity epidemic in children
has changed since the publication of the Surgeon General’s report.
61. Direct-to-consumer advertising of prescription drugs began in the late 1980’s to
early 1990’s. Based on the information in the Norplant case in the text, discuss
the reasons why it should or should not be allowed.
CHAPTER 8
Allocating Risk and Responsibilities in the Global Marketplace: Products
Liability
Questions
62. The term caveat emptor means:
u. “seller take care”
v. “empty the cave of deceit”
w. “buyer beware”
x. “truth shall prevail”

27. 63. In Wyeth v. Levine, the majority rejected the idea that primary responsibility for
drug safety lies with the government and instead lies with the drug manufacturer.
a. True
b. False
64. The Food and Drug Administration, the Consumer Product Safety Commission
and the National Highway Transportation Safety Association are
a. Cabinet departments within the Executive Branch
b. Subcommittees of the Senate and House of Representatives within the
Legislative Branch
c. Judicially created organizations to implement Supreme Court mandates related
to product safety.
d. Independent agencies that report to no branch of government.
65. The organization that works with companies on recalls of unsafe products (such
as lead-paint laden Thomas the Train toys) is
a. The Consumer Protection Group (CPG)
b. The Consumer Product Safety Commission (CPSC)
c. The Product Protection People (P3)
d. The Buy American Coalition (BAC)
66. The most notable exception to caveat emptor was for
a. Food
b. Automobiles
c. Clothing
d. Shoes
67. To win a suit for negligence, a plaintiff must establish that the defendant:
a. breached its duty of care
b. created an unreasonable risk of harm
c. acted with total disregard to the harm that could result
d. behavior was the proximate cause of the plaintiff’s injuries

28. a. I and II only
b. II and III only
c. I, II and IV only
d. I, II, III and IV
68. The Ford Pinto exploded when rear-ended by another vehicle. The Pinto suffered
from a(an):
a. Design Defect
b. Manufacturing Defect
c. Warning Defect
d. End-user Defect
69. Absent provisions in the contract, which of the following types of damage can be
awarded to an injured party under a breach of contract?
a. General damages only
b. General and incidental damages only
c. General, incidental, and special damages only
d. General, incidental, special and punitive damages
70. According to Stephen Sugarman, performance-based regulation happens when:
a. the government sets targets for how much harm is allowed for each product
produced and the company is fined or penalized for any harm beyond the
acceptable level.
b. the government creates a reporting structure for consumers to report
corporation performance related to safety or environmental issues and then the
government imposes fines by a specific formula for companies who exceed a
certain number of negative reports.
c. consumer advocacy groups work with the independent agencies to determine
which corporations are implementing best practices for consumer safety and
then create regulations to impose those practices on other companies.
d. the government analyzes which companies make the most profit, indicating
consumer approval of their performance on safety standards and then
implement those companies’ practices as legal standards.

29. Essay Questions
71. What did the Food Safety Modernization Act (FSMA) do? Has it accomplished
what it should have? Why or why not?
72. Compare the regulation of biotechnology in the United States to that of the
European Union.
73. Explain the features of Section 402A of the Restatement of Torts (Second).
74. What are punitive damages?
75. Explain how injured parties can recover damages under the UCC.
76. Discuss Sugarman’s “Performance-based regulation.” Is this a viable means to
create safer products or is it unnecessary government interference?
CHAPTER 9
Ownership, Creativity and Innovation: Intellectual Property
Questions
77. Debora Halbert asserts in her essay that:
y. women have benefited greatly from intellectual property laws.
z. intellectual property has historically benefited men more than women.
aa. in the nineteenth century, writing poetry and novels enabled women to not
only express themselves intellectually but to reap financial rewards as well.
bb. when women knitted or quilted, they were reluctant to share their patterns with
other women.

30. 78. American copyright law creates a bundle of rights for the owner, including the
right to reproduce, distribute, perform, display, or adapt the work.
c. True
d. False
79. In a lawsuit for copyright infringement, a defendant can avoid liability by
successfully arguing _________, based on the notion that the free flow of ideas
sometimes requires quoting or borrowing from a copyrighted work.
g. collective rights
h. misappropriation
i. unlimited use
j. fair use
80. If an author owns a copyright to a non-fiction essay, then publishes that essay in
an anthology of similar essays published by a major publishing company, the
rights involved in this relationship would be referred to as ______.
i. collective work
j. public domain
k. collective bargaining
l. joint domain
81. Once the copyright on a work has expired,
a. The owner can renew it for a new term
b. The work is in the public domain
c. The work becomes the property of the government
d. The work is considered no longer creative
82. The difference between the Project Gutenberg (PG) and the Google book scanning
project is:
a. The PG limits itself to the “classics”

31. b. The PG limits itself to only works in the public domain
c. Google only digitizes full documents but the PG digitizes key segments
d. The PG limits itself to “orphan” works – those with hard-to-find authors or
owners.
83. Nike’s swoosh, McDonald’s arches, and the Xerox name are all identifiable
trademarks. Which of the following laws protect(s) them?
XXI. Lanham Trademark Act of 1946
XXII. Federal Trademark Dilution Revision Act of 2006
XXIII. Sonny Bono Act of 1998
i. I only
j. II only
k. I and II
l. II and III
84. In order to obtain a patent under U.S. Patent Law, an inventor must have an
invention that is
I. Not obvious
II. Unique
III. Useful
IV. Not a modification of any prior patents
a. I only
b. I and II
c. I, II and III
d. I, II, III and IV

32. 85. Trade secrets are registered just like trademarks.
a. True
b. False
Essay Questions
86. Discuss how intellectual property is different from other kinds of property.
87. What must a plaintiff prove to establish copyright infringement?
88. Give a brief description of the increased protection in U.S. Copyright laws starting
in 1994 and using approximate dates.
89. Discuss the Fair Use Doctrine. What are the four statutory factors used to
determine if a use is fair?
90. Why was the Digital Millennium Copyright Act passed?
91. Discuss U.S. patent law. Give examples of items that can and cannot be patented.
92. Give examples of improper ways to learning a trade secret under the Uniform
Trade Secrets Act. Give an example of a way that is not considered improper or
wrong.