Business Ethics and Social Responsibility
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Questions and Answers

Revenue is the total amount of money a business earns during a given period of time by offering services to the market.

True (A)

Nonprofit organizations are primarily formed for the purpose of generating profits for their owners.

False (B)

In a partnership, only one individual shares the profits and liabilities of the business venture.

False (B)

A sole proprietorship is a business owned by multiple people.

<p>False (B)</p> Signup and view all the answers

A corporation's continued existence is independent of the corporate statutes of the state in which it is incorporated.

<p>False (B)</p> Signup and view all the answers

Business ethics primarily focuses on what is morally and ethically correct in the workplace.

<p>True (A)</p> Signup and view all the answers

The macro level of business ethics is concerned with how individual employees interpret industry standards.

<p>False (B)</p> Signup and view all the answers

The individual level of ethics is primarily shaped by a company's interpretation of industry rules.

<p>False (B)</p> Signup and view all the answers

All businesses globally produced over $40 trillion in goods and services in the year 2002.

<p>True (A)</p> Signup and view all the answers

The United States is the largest consumer but is not the largest producer of goods and services worldwide.

<p>True (A)</p> Signup and view all the answers

A business is defined as an activity where resources are converted into goods or services for customers.

<p>True (A)</p> Signup and view all the answers

The concept of profit refers to the total amount earned by a business before any expenses are deducted.

<p>False (B)</p> Signup and view all the answers

Businesses typically involve simple activities like selling and accounting, without the complexities of manufacturing or marketing.

<p>False (B)</p> Signup and view all the answers

A sole proprietorship is characterized by shared authority in business decisions.

<p>False (B)</p> Signup and view all the answers

In a partnership, the actions of one partner can legally bind all other partners.

<p>True (A)</p> Signup and view all the answers

Corporations have unlimited liability for their shareholders.

<p>False (B)</p> Signup and view all the answers

A major factor distinguishing corporations from other business types is their capacity for continuous life.

<p>True (A)</p> Signup and view all the answers

Partnerships have the advantage of ease in raising capital though the sale of stock, similar to a corporation.

<p>False (B)</p> Signup and view all the answers

Double taxation of earnings is a characteristic of sole proprietorships.

<p>False (B)</p> Signup and view all the answers

Economics primarily focuses on individuals' personal financial resources.

<p>False (B)</p> Signup and view all the answers

An economic system outlines how societies allocate resources for production and consumption.

<p>True (A)</p> Signup and view all the answers

In a pure capitalist system, the government plays an active role in regulating businesses.

<p>False (B)</p> Signup and view all the answers

According to Karl Marx, communism is a system where people's contributions are based on their wealth.

<p>False (B)</p> Signup and view all the answers

Socialism is characterized by the government control of all businesses.

<p>False (B)</p> Signup and view all the answers

A key feature of capitalism is the private ownership and operation of businesses.

<p>True (A)</p> Signup and view all the answers

In communism, businesses are owned and managed by individuals.

<p>False (B)</p> Signup and view all the answers

Socialism aims to ensure social equality through centralized planning and government ownership of major industries.

<p>True (A)</p> Signup and view all the answers

Capitalism is also known as a controlled market system.

<p>False (B)</p> Signup and view all the answers

In modified capitalism, the government never interferes with business activities.

<p>False (B)</p> Signup and view all the answers

In a socialist economic system, all businesses are owned by the government.

<p>False (B)</p> Signup and view all the answers

Under capitalism, profits from government-owned enterprises go directly to the government.

<p>False (B)</p> Signup and view all the answers

A communist economic system prioritizes market forces and competition to determine product prices.

<p>False (B)</p> Signup and view all the answers

In a socialist system, consumers have a wide selection of products available.

<p>True (A)</p> Signup and view all the answers

In a capitalist system, there is no government regulation of businesses.

<p>False (B)</p> Signup and view all the answers

Prices in a capitalist system are determined solely by supply and demand, without any government influence.

<p>False (B)</p> Signup and view all the answers

Under communism, individuals retain the profits they earn from their businesses.

<p>False (B)</p> Signup and view all the answers

In a socialist system, employment options are limited to government jobs only.

<p>False (B)</p> Signup and view all the answers

In a free-enterprise system, businesses that do not meet consumer demand are likely to succeed.

<p>False (B)</p> Signup and view all the answers

Individuals have the right to own private property and pass it down to their heirs in a free-enterprise system.

<p>True (A)</p> Signup and view all the answers

In a free-enterprise system, businesses are not allowed to keep the profits they earn.

<p>False (B)</p> Signup and view all the answers

Individuals can choose their careers and the goods they purchase in a free-enterprise system.

<p>True (A)</p> Signup and view all the answers

Competition is restricted in a free-enterprise system for businesses.

<p>False (B)</p> Signup and view all the answers

Flashcards

Business Ethics

The practices and principles that guide morally and ethically right conduct in business transactions.

Macro Business Ethics

The level of business ethics that reflects the values and norms of a society's political and social systems.

Corporate Business Ethics

The level of business ethics that represents how individual companies interpret industry rules and standards.

Individual Business Ethics

The level of business ethics that reflects an individual employee's personal principles.

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Business

An entity that combines resources like materials and labor to create goods and services for customers.

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Profit

The difference between a business's earnings and its operating expenses.

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Business Activities

Major activities involved in a business, such as purchasing, production, marketing, sales, and accounting.

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Profit Objective

The goal of most businesses, achieved when earnings exceed expenses.

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Revenue

The total amount of money a business makes during a certain period by selling products.

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Profit Organization

Organizations that make a profit and can use that profit as they choose, within legal limits.

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Nonprofit Organization

Organizations formed to serve the public good – not for profit.

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Sole Proprietorship

A business owned by one person. The owner is personally responsible for all debts and obligations.

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Partnership

A business owned by two or more people who share profits and losses. Partners are usually personally liable for debts.

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Corporation

A legal entity separate from its owners, with limited liability for shareholders. It's designed to last indefinitely.

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Mutual Agency

A partner's actions bind all other partners in a partnership, as long as the actions appear to be within the scope of the business.

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Capital Raising (Corporation)

The ability of a corporation to raise funds by selling shares of stock.

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Separate Legal Existence

The legal structure of a corporation allows it to exist independently of its owners, with its own rights and obligations

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Economics

The study of how resources are used to produce goods and services and how they are distributed for consumption within a society.

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Economic System

The way a society organizes its resources to produce goods and services

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Consumer Choice in Free Enterprise

Consumers in a free enterprise system have the freedom to choose which goods and services they want to buy. Businesses need to respond to this demand to succeed.

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Competition in Free Enterprise

In a free enterprise system, businesses compete with each other for customers. This competition encourages efficiency and innovation.

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Right to Private Property

A key element of a free enterprise system. Owners have the right to use their property as they wish, within legal limits.

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Right to Keep Profits

A fundamental principle of free enterprise allowing businesses to make profits and use them as they please.

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Right to Freedom of Competition

This right allows businesses to make decisions on how to operate and compete, while still following the rules.

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Capitalism

An economic system where individuals own and operate most businesses, creating goods and services. Decisions are made with minimal government interference.

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Communism

An economic system where the government controls all resources and production, aiming to distribute goods and services based on individual needs.

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Socialism

An economic system where the government owns and operates key industries like energy or transportation, while individuals own most other businesses.

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Circular Flow of Economic Activity

The process by which money, goods, and services flow between businesses, individuals, and the government in an economy.

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Free Market

A market where buyers and sellers interact freely without government intervention, determining prices based on supply and demand.

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Competition in Capitalism

The driving force behind capitalism. It encourages businesses to offer better prices and products to attract customers.

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Competition in Communism

In a communist system, the government controls all businesses, eliminating competition. This can lead to limited choices for consumers.

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Competition in Socialism

In a socialist system, competition exists in some areas, like small businesses. However, major industries are controlled by the government, restricting competition.

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Profits in Capitalism

In capitalism, individuals keep profits and decide how to use them. This incentivizes innovation and growth.

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Profits in Socialism

In socialism, profits from government-owned businesses go to the government. While small businesses can reinvest profits.

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Study Notes

Business Ethics and Social Responsibility

  • Business ethics focuses on morally and ethically right conduct in the workplace, ensuring appropriate actions in all business transactions.

Levels of Business Ethics

  • Macro: This level encompasses business operations within the ethical and social frameworks of a particular society.

  • Corporate: This level reflects how individual companies interpret and apply industry ethical standards.

  • Individual: This level involves the personal ethics of employees, guiding their daily decisions.

Businesses and the Economy

  • Businesses produce the goods and services people use daily.

  • In 2002, global businesses produced over $40 trillion worth of goods and services.

  • US businesses account for nearly 29% of worldwide production.

Business and Business Organization

  • A business is an activity essential to human society, using resources (materials, labor) to create goods and services for clients.

  • Businesses typically engage in complex activities like purchasing, manufacturing, marketing, advertising, selling, and accounting.

  • The primary goal of most businesses is to make a profit (difference between income and expenses).

Defining Profits and Revenue

  • Profit: The amount of money a company has left after deducting all business expenses.

  • Revenue: The total income a business earns by selling its products or services within a given time frame.

Types of Business Organizations

  • Profit Organizations: These organizations aim to generate profits for their owners, within legal and societal limits.

  • Nonprofit Organizations: Established to serve the public good, these organizations do not prioritize profit as their primary objective but may engage in fundraising activities.

Various Forms of Business Organization

  • Sole Proprietorship: A business owned and run by one person, with complete control and lower startup costs but unlimited liability.

  • Partnership: A shared business undertaking between two or more individuals, offering shared decision-making but also including shared liability and potentially limited lifespan.

  • Corporation: A legally recognized entity separate from its owners, featuring limited liability for shareholders, flexibility in raising funds, but potentially complex structure and double taxation.

Comparing Business Structures

  • Sole Proprietorship: Offers complete control, but the owner is personally liable for all business debts. Relatively easy to set up, and often has lower startup costs.

  • Partnership: Provides shared decision-making and shared liability. Increased resources and potential for collaboration.

  • Corporation: Offers limited liability for owners, making it easier to raise capital. However, it faces more complex regulations and potentially higher taxes.

Business Organization and the Economy

  • Economics: The study of how resources are used, produced, and distributed in a societal context.

  • Economic System: The way a society organizes itself to produce and allocate goods and services.

Overview of Different Economic Systems

  • Capitalism: An economic system where individuals own and operate most businesses, fostering competition and encouraging a wide range of goods & services.
  • Communism: A system where the government manages the means of production, aiming at social equality through centralized planning. Usually lacks wide consumer choice..
  • Socialism: A system where the government owns some industries but individuals control others. The goal usually prioritizes social equality and aims to supply basic needs to all.

Overview of Economic Systems (continued)

  • Free-Enterprise System: An system where businesses succeed or fail based on consumer demand. Consumers can freely buy goods and services, and businesses which effectively meet those needs are rewarded. It supports private ownership, competition, and individual choices.

  • Key Components of Free Enterprise: Individual ownership of property, freedom to keep profits (within legal limits), and freedom of competition and choice both for consumers and business owners.

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Business Ethics and Social Responsibility ABM - 12 Lesson 1 2025 PDF

Description

This quiz explores the fundamental concepts of business ethics and social responsibility. It examines different levels of ethics in business, from individual to corporate and macro perspectives, providing insight into how ethical considerations shape business operations. Understanding these principles is crucial for conducting ethical business practices.

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