They're asking you, in a roundabout way, to explain how you go about making your own moral decisions. Kind of difficult to tell you how to answer that question, other than the fact that the underlying issue is most likely whether or not you're an absolutist or a relativist.
It would be ****ing awesome. You know, if I get an acceptance and I know I'm going there, I would just go to one of my later interview for another school to try this answer out just for the heck of it.