How would you react and what would you do?

How would you react and what would you do; if you were working with a group of people who were behaving in a way that was not appropriate? Please answer as if this was for a job interview.

Thank you in advance.
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Remove myself from the situation if I could and then report it to my boss. If my boss is the one doing it, then report it to his boss, making sure I have all my facts straight and by making sure it is facts only.
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I had a job for over 8 years at a place where the managers "dated" (to put it nicely) the employees and there were a lot of "favors" done for many workers there; My morals and Christianity could take it no longer and thankfully I found other employment. I am now unemployed and when the reason for leaving that job is addressed with a potential employer, I am honest and explain why I left; perhaps this has cost me to not be hired at some places, but my relationship with God is more important than lying on a job app :}
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I would tell the manager because I understand that a business tries to minimize cost. And, they only produce up the point where mr=mc and if mc increases, mr must increase. and if mr increases that means higher prices which means less QD. wow...I would tell. that's the smart thing to do.
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Depending on what position you hold. If you are a manager, I'd have a serious talk with them. If not, excuse yourself from the group, find you manager and tell her/him what's going on.