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POLYTECHNIC OF NAMIBIA

SCHOOL MANAGEMENT SCIENCES DEPARTMENT OF MANAGEMENT

1ST OPPORTUNITY EXAMINATION QUESTION PAPER

SUBJECT: BUSINESS ETHICS SUBJECT CODE: BBE612S Date: November 2015 Duration: 3 HOURS TOTAL MARKS: 100

List of Examiners: Ms. B Kahurumba

Ms. 0 Kangandjo

Mr. B Zealand

Ms. E Olivier

Ms. D Carballo

Ms. J Hambabi

Moderator: Mr. J Ojo

(This Question Paper consists of 9 pages including this cover page)

Instructions: 1. All questions are compulsory. 2. This Question Paper consists of Two Sections (A, Band C). 3. Answer all questions on the answer book provided, except question 1 section A.

Question 1 section A should be answered on the answer sheet provided on page 9 of this question paper. Detach the answer sheet and submit it with your answer book before you leave the exam hall. NOTE: Do not forget to fill in your details on question 1 section A answer sheet.

4. Number your answers correctly and clearly. Failure to do so will attract penalty. 5. Write as neatly and clearly as possible. Start each question on a new page. 6. Calculators are NOT allowed.

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!SECTIONAl Question 1 [2x 20=40 marks]

Multiple choice questions from 1 - 20. Shade or Cross in the appropriate box on the Answer Sheet provided for this question. The answer sheet is attached on pages nine and ten of this question paper. Please submit your answer sheet with your answer book.

1.1 Under the pre-conventional level of moral development, the following are the two stages found under this level: a. Instrumental and interpersonal orientation b. Law and order and Punishment c. Social contract and Universal orientation d. None ofthe above

1.2 Which choice is not one of the five characteristics that distinguish moral standards a. They are preferred to other values such as self-interest b. They are concerned with law c. They are based on impartial considerations d. They deal with matters that can injure or benefit humans

1.3 The most fascinating argument for bringing ethics into business is the prisoner's dilemma a. If both choose not to cooperate, neither gets the benefit b. If one cooperates while the other chooses not to cooperate, the one who cooperates

suffers a loss while the one who chooses not to cooperate gains a benefit. c. All of the above d. None of the above

1.4 Moral reasoning should be: a. Be logical b. Rely on evidence or information that is accurate c. Be consistent d. All of the above

1.5 The following is not a form of discrimination a. Isolated and intentional discrimination b. Unintentional and isolated discrimination c. Isolated and institutional discrimination d. Institutional and unintentional discrimination

1.6 The public policy view that advocates breaking large firms up into smaller units (each controlling not more than 3-5% of the market) is called a. "the Chicago school view." b. "the do-nothing view." c. "the anti-trust view." d. "the regulation view."

I. 7 Select the statement that represents a situation where informed consent is not operative: a. The complexity of a product has been fully explained to a consumer b. The customer is not clear about the calculation of the interest rate on a leased

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product transaction. c. The extended warranty conditions on a product have been fully disclosed to a consumer. d. Warning labels on a product have pointed out any potential hazards associated with

operating it.

1.8 Which one of the following is the principal Utilitarian remedy for product injuries under The Social Cost View? a. To internalize the external cost of injuries as a cost of bringing the product to the

market b. To externalize the internal costs of injuries as a cost of bringing the product to the market

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c. To minimize the total social cost of injuries as a cost of bringing the product to the market

d. To maximize the total social cost of production

Which of the following theory assumes that the manufacturer can discover the entire risk associated with using a product before it is actually used? a. The liability theory b. The due care theory c. The contractual theory d. The social cost theory

Moral rights are: a. An entitlement that derives from a legal system that permits or empowers a person to act

in a specified way. b. Not to be wronged by others. c. Rights that all human beings everywhere possess to an equal extent simply by virtue

of being human being. d. Passing judgement fairly upon peers.

Choose the right types of Justice a. Capitalist and puritan b. Justice, fairness and socialism c. Distributive, retributive and compensatory d. Distributive, compensatory and fairness

......... .is a system of normative beliefs shared by members of same social group. a. Economic System b. Tradition - based societies c. Free market d. Ideology

The real purpose of Government according to Marx is: a. To protect the interest of all individuals. b. To protect the interest of the ruling class. c. To protect society's rules and norms. d. To protect freedom and equality.

Types of comparisons to provide evidence of discrimination are: a. Comparisons of average benefits given to various groups b. Comparisons of the proportion of a group found in the lowest levels of the

institution

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c. Comparisons of the proportion of a group found in the most advantageous positions in the institution

d. All the above

1.15 Competition fosters efficiency because a. the government regulates prices b. producers have to offer the best products at reasonable prices c. supply depresses prices d. businesses can set whatever prices they want.

1.16 Which of the following questions are addressed by all economic systems? a. What goods and services should be produced? b. How much of each good and service should be produced? c. How should the goods and services be distributed? d. All of the above.

1.17 Which of the following refers to the ability of a person or a country to produce a particular good at a lower opportunity cost than another country? Select correct option: a. Absolute advantage b. Comparative advantage c. Resource efficiency d. Natural advantage

1.18 Which of the following economist has the harshest and most influential critics of the inequalities that private property institutions and free markets are accused of creating? a. John Maynard Keynes b. Karl Marx c. Adam Smith d. David Ricardo

1.19 If Toyota raises the prices of its new models of pickup trucks by 4 percent and General Motors and Ford follow by raising prices by a similar amount, then this is evidence of: a. a monopoly. b. an oligopoly c. pure competition d. monopolistic competition.

1.20 The following are characteristics of monopoly market except: a. One seller b. Quantity below equilibrium c. Prices above equilibrium and supply curve d. No barriers to entry

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Question 2 [lOmarks]

Indicate whether the following statements are True or False. Answer all the questions in the answer booklet provided. Indicate true or false next to the corresponding number(s)

2.1 Affirmative action is when preferential treatment in hiring, promotion and dismissal

favouring historically disadvantaged groups in an attempt to offset lingering effects

of past discrimination and to counteract continuing unintentional and institutional discrimination: called reversed discrimination" by detractors.

2.2 The second stages of moral development are known as the conventional stages.

2.3 Marx's view on private property is it should serve the needs of all and should not be privately owned but owned by everyone.

2.4 Adam Smith developed the idea that nations can trade on the basis of an absolute advantage.

2.5 Negative rights are defined entirely in terms of the duties others have not to interfere with you.

2.6 It's morally right for lecturers to accept gifts from students. 2.7 By obeying the law you are being ethical.

2.8 Intentional discrimination is carried out unconsciously.

2.9 The extents to which mitigating circumstances can diminish an agent's responsibility depend on the lightness ofthe injury.

2.10 A video machine is an intrinsic good. Total 10 Marks

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lsECTIONBI

Question 3 [33marks]

3.1 Arguments against discrimination are generally grouped in three moral principles. Outline and

explain each group's argument against discrimination. (9)

3.2 Perfectly competitive free markets are desirable from a moral point ofview. Describe the characteristics that define such markets. (7)

3.3 What are the distinctions between traditional utilitarianism and rule utilitarianism? (4)

3.4 Why did theorists come up with rule utilitarianism? (4)

3.5 The fact that political tactics are usually covert means that they can easily become deceptive or manipulative and therefore unethical. Identify three examples of political tactics used in organizations. (6)

3.6 A dishwasher knows that the restaurant's chef typically reheats three or four day old food and serves it as fresh to customers. Since she believes that the serving of old food is injurious to the society, she reported the matter to the manager and the manager told her to forget about it. As an employee with a sense of moral responsibility, what should she do? (3)

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ISECTIONCI

Question 4 [17marks]

Read the case below and answer the questions that follow.

DIAMONDS WEREN'T ALWAYS FOREVER

Diamonds are perhaps the ultimate symbol of luxury, they have become nearly synonymous with romantic commitment. More than 80 percent of brides-to-be in the United States receive a diamond engagement ring, at an average cost of more than $3,000. Across society, they are well known for luxurious consumption. From swanky New York society to Los Angeles hip-hop stars, people use diamond jewellery to display wealth and status.

Why do diamonds carry such social status? They're expensive. People wearing diamonds show that they can afford the best. And why are diamonds expensive? You might assume it's because they are scarce and therefore precious. As it turns out, diamonds are not so rare. Tens of thousands of kilograms of diamonds are produced every year.

Why, then, do we pay so much for diamonds? The answer lies in the story of one of the most successful companies of all time: De Beers. For more than a century, De Beers used aggressive business tactics to control almost all of the international market for diamonds.

By controlling the production and sale of most ofthe world's diamonds, De Beers became the opposite of a price-taking firm in a competitive market. It had so much market power that it was effectively able to set the market price of diamonds; it did this by choosing the quantity it released into the market at any given time.

The story of De Beers starts in the 1870s, when diamonds were truly rare. Just a few diamonds were found every year, scooped out of riverbeds and jungles in India and Brazil. They were expensive and only the truly elite could afford to wear them. Then, British miners discovered enormous deposits of high quality diamonds in South Africa. This must have seemed like a fabulous opportunity to make huge amounts of money.

There was also a danger: If they flooded the market with diamonds, the quantity supplied would shoot up and the price would be forced down. Soon it would no longer be considered so prestigious to own a diamond. This change in preferences away from diamonds would shift demand, which would result in even lower prices. People would buy a lot of diamonds-but the sellers wouldn't make as much money.

A businessman named Cecil Rhodes joined with other mine owners to form a single corporation, De Beers. By controlling all ofthe newly discovered diamond mines-and almost all ofthe world's diamond production-De Beers ensured that smaller amounts of diamonds came onto the market, keeping prices high. In this way, DeBeers made much more profits than they would have done if they'd produced lots of diamonds but sold them at vastly lower prices.

Source: Karl an, D Morduch, J (20 13). Economics (1st ed), McGraw-Hill, P 3 89

4.1 Identify the type of market structure observed in the case study above? (2)

4.2 What are the two characteristics that define this type of market structure? (4)

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4.3 In your view, what could be preventing other firms from entering the diamond market? Motivate your answer. (2)

4.4 With reference to the case, what are the ethical weaknesses of the market structure identified in question 4.1. (9)

The End!

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SURNAME & INITIAL: ------------------------------STUDENTNUMBER: ______________________ __

SECTION A

Question 1 (ANSWER SHEET- Cross in the appropriate box) (2 x20 = 40)

NB: THIS ANSWER SHEET SHOULD BE SUBMITTED WITH YOUR ANSWER BOOK.

NO A B c D 1.1

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TOTAL 40 MARKS

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