Final answer:
Students exchanging homework to avoid breaking rules and gain social approval are likely at the conventional level of Kohlberg's moral development, abiding by group norms rather than abstract moral principles.
Step-by-step explanation:
Students who believe that exchanging homework is not cheating are likely in the conventional level of Lawrence Kohlberg's theory of moral development. At this stage, individuals are aware of societal norms and what is perceived as 'good' or 'bad' within their social circles.
They follow rules to gain social approval or maintain social order. This contrasts with the preconventional level, where behavior is guided by consequences, and the postconventional level, where morality is based on abstract principles that can transcend laws and social norms.
In the scenario described, the students are conforming to a set of group norms that benefit each other within their social group and might believe that as long as they are not getting caught, it is socially acceptable. They might not yet have reached the level of considering the wider implications of their actions in terms of abstract ethical principles, which is characteristic of the postconventional level.