Chapter 3

choice

consumer control over profiling

True or false: Since a single advertiser is rarely large enough to dominate the whole country, small businesses are only affected in a limited way by advertising by big businesses.

True

rue or false: Since a single advertiser is rarely large enough to dominate the whole country, small businesses are only affected in a limited way by advertising by big businesses.

True

The document issued by the Federal Trade Commission, which is signed by an advertiser, who agrees to halt an objectionable advertisement but does not admit to any wrongdoing, is known as a(n) ______.

consent decree

Advertisers track customers' Web-surfing habits by saving files called ______ on users computers.

cookies

Critics of advertising argue that it ______.

creates externalities that interfere with free press

Historically, what have companies done during hard times?

cut promotional expenditures

Which question critiques the economic role that advertising plays?

Does advertising promote competition or discourage it?

True or false: All states have the same regulations governing what can be advertised.

False

Which of he following has jurisdiction over the radio, television, telephone, satellite, Internet, and cable TV industries?

Federal Communications Commission

The mission of ensuring that the nation's markets function competitively and are vigorous, efficient, and free of undue restrictions is the responsibility of the ______.

Federal Trade Commission

Which of the following is the federal agency that regulates advertising in the United States?

Federal Trade Commission

Which of the following organizations has authority over the labeling, packaging, and branding of packaged foods and therapeutic devices?

Food and Drug Administration

Which questions examine the economic effects of advertising?

How does advertising affect consumer choice and the overall business cycle? Does advertising increase prices?

This is a question about the societal effects of advertising.

How does advertising affect the art and culture of a society? Does advertising violate consumers' privacy?

Which country has the highest level of advertising expenditures per capita?

United States

Sellers, in a market economy, can always find customers interested in their unique products because of ______.

a wide range of buyers

The freedom to advertise ______.

improves old brands and creates new ones

Advertising tends to ______ when business cycles are up.

increase economic activity

The second level of ethics deals with the ______.

individual beliefs that add up to a personal value system

An advertisement is deceptive if it ______.

is likely to convey a false impression

The criticisms that focus on the social or environmental impact of advertising are called _____ criticisms.

long-term macro

For a manufacturer to beat competition, one of its best bets is to ______.

make a unique product

Among such countries as the United States, production and consumption is determined by a ______.

market economy

Many broadcast networks still do not air condom commercials during the day because they are considered ______.

offensive

In a market economy, more products are available and at more competitive prices because of ______.

open competition between sellers

What have states done to address the growing threat of consumer data breaches?

passed laws requiring that consumers be notified when their personal data has been exposed

Doing what society sees as promoting the welfare of people in general or for a specific community is known as social ______.

responsibility

The element of Fair Information Practice Principles that requires reasonable efforts from advertisers to protect the data they collect is called ______.

security

Advertising tends to ______ in countries where consumers satisfy their physical needs and are left with more income to spend.

stimulate innovation

Short-term manipulative criticism of advertising focuses on the ______ of advertising.

style

Which of the following does the Federal Trade Commission ask for while investing suspected violators who cite surveys or scientific studies in their ads?

substantiation

What are the three types of information the Federal Trade Commission looks for when investigating advertisers who are suspected to have violated advertising laws?

substantiation affirmative disclosures endorsements

Which of the following must the government show in order to legally regulate commercial speech?

that stopping the commercial speech would effectively solve an important problem

Which of the following is a true statement about advertising in Europe?

Coupons and free tie-in offers are banned in many countries. Advertisers often need to receive government approval before running a sale ad.

The element of Fair Information Practice Principles that requires independent third parties to monitor industry members to ensure compliance with the Fair Information Practice Principles is ______.

enforcement

One of the responsibilities of the Food and Drug Administration is to ______.

ensure that the cosmetics on the market are safe to use

Doing what is morally correct in a given situation is referred to as being ______.

ethical

In a market economy, the availability of market-responsive products is due primarily to the ______.

existence of multiple sellers

Carrion Electronics produces mobile devices. Although the company's latest mobile phone is popular with consumers, mining the metals used in its manufacturing has caused significant water pollution in several impoverished communities. What is this an example of?

externalities

What is it called when the sale or consumption of a product or service causes harm to individuals who were not involved in the transaction?

externalities

A market economy, according to Harvard economist N. Gregory Mankiw, is defined as an economy in which ______.

firms decide whom to hire and what to make

Consumer advocates contend that people's value systems are degraded by advertising that ______.

promotes a materialistic way of life

security

protection of consumer data

In advertising, the use of exaggerated or subjective claims that cannot be proven true or false is called ______.

puffery

The word "_____" designates the ownership of a trademark in advertising or on a label, package, or letterhead.

registered

How does the Council of Better Business Bureaus contribute to the self regulation of the advertising industry?

-It issues a monthly publication covering recent regulations and court rulings that affect advertising. -It publishes guidelines on advertising to children. -It helps new industries develop ethical standards based on the BBB Code.

In the United States, comparative ads are legal if the comparisons are ______. (Select all that apply.)

-based on objectively measurable characteristics -truthful

What are some strategies used by the Food and Drug Administration to give consumers more complete information? (Select all that apply.)

-restricting the use of words such as giant or family on product packaging -compelling manufacturers to disclose ingredients on product labels -requiring that pharmaceutical advertisements mention possible side effects

National advertisers have become more sensitive to the concerns of minorities and women because _____. (Select all that apply.)

-they represent sizable target markets -of pressure from watchdog groups

Traditionally, what percentage of United States GDP comes from advertising expenditures?

1-2%

U.S. advertising professionals have met the challenges of social responsibility by forming local advertising clubs like the ______.

Ad Council

Which of the following is true about the impact of the amount of advertising in the United States?

Ad clutter is on the rise in the United States.

What has the Food and Drug Administration required of pharmaceutical advertisers since the rule change in 1997?

Advertisements must mention major side effects and tell consumers where to find more information.

Which of the following statements is true about endorsements?

An endorser cannot make claims that cannot be substantiated by an advertiser.

Which of the following organizations is the largest business-monitoring group in the United Sates?

Better Business Bureau

The Council of Better Business Bureaus established the ______ to promote responsible children's advertising and to respond to public concerns.

Children's Advertising Review Unit

Which of the following reasons best describes why the Federal Communications Commission (FCC) deregulated both radio and TV stations in the 1980s?

It felt that the broadcast media could be adequately controlled by marketplace buyers.

Which of the following are reasons why marketing professionals believe in the benefits of advertising?

It fosters employment. It supports freedom of the press.

Which of the following is true of puffery?

It may become deceptive.

Which of the following is true of advertising in the United States?

Regulation is performed by several agencies, including the Food and Drug Administration and the Library of Congress.

Which of the following statements about consumer taste are true?

Taste varies geographically. Taste is highly subjective.

access

ability of consumers to edit collected information

Which two of the following principles of free-market economics are central to the social aspect of advertising?

absence of externalities complete information

Advertisements used to educate customers about new uses for a product ______.

add value to the brand

One of the inferences about advertising's effect on prices is that ______.

advertising helps lower prices by engaging manufacturers in mass production

A product's limitations or deficiencies that may be hazardous to one's health must be divulged by an advertiser. This requirement is known as ______.

affirmative disclosure

The Federal Trade Commission can issue a(n) ______ order to prohibit an advertiser from airing an objectionable ad if the advertiser will not sign a consent decree.

cease-and-desist

Comparative advertising is used by advertisers to ______.

claim some sort of superiority to competitors

Cars For All, a new automobile dealer, published advertisements saying that it would match or beat any competitor's price. This is an example of ______ advertising.

comparative

The competition for each other's shares in a mature, static, or declining market is called _____.

conquest sales

Critics of of advertising say that it replaces our "citizen democracy" with a ______ democracy.

consumer

By providing information about the products they sell, sellers are able to ______.

efficiently find consumers for their goods

Advertising for products sold in interstate commerce is mostly regulated by the ______.

Federal Trade Commission

Which of the following is a true statement about data collection in Europe?

Retailers are not allowed to ask for shoppers' phone numbers at checkout.

True or false: An externality is created for both consumers and advertisers by too much advertising.

True

Besides reputable companies, which groups represent a significant threat to consumer privacy? (Select all that apply.)

foreign states criminal organizations

By conveying a positive image of a product, advertising can imply that the product ______, even if the advertising does not explicitly discuss quality.

has inherent quality

Consumers are able to make better decisions about which products to buy when they ______.

have more information about them

The changing image of women, who were historically depicted as ______, is owed to the growing number of women in executive positions.

homemakers

Which of the following are issued by the government to encourage innovation and protect intellectual property?

patents

Which of the following are components of the first level of ethics of advertising?

principles customs

notice

privacy policy of websites

Which of the following deals with the right of people to protect their personal information when using the Internet?

privacy rights

Which organization was founded by the Council of Better Business Bureaus, the American Association of Advertising Agencies, the American Advertising Federation, and the Association of National Advertisers to promote and enforce standards of truth, accuracy, taste, morality, and social responsibility in advertising?

the Advertising Self-Regulatory Council

Advertising serves two important purposes, complete information and self-interest, in an economy that produces more goods and services than can be consumed. What is this principle called?

the abundance principle

In marketing, primary demand refers to the demand for _____.

the entire product class

One of the consequences of intense competition is that ______.

the number of businesses in an industry can decrease

enforcement

third party monitoring of industry members

When the Children's Advertising Review Unit (CARU) finds that children's advertising is incompatible with CARU's Self-Regulatory Guidelines for Children's Advertising, it seeks changes ______.

through voluntary cooperation of the advertisers

What is the purpose of the question "Does the commercial speech at issue concern a lawful activity?" in the four-pronged Central Hudson test?

to determine whether the ad in question is for a legal product and is free of misleading claims

Which of the following are the social responsibilities of an advertiser?

to participate in civic events to support local enterprises

Any word, name, symbol, or device or any combination thereof adopted and used by a manufacturer or merchant to identify his goods and distinguish them from those manufactured or sold by others, according to the Lanham Trade-Mark Act, is a _____.

trademark

Which statute holds that any maker of an ad found to contain "untrue, deceptive, or misleading" material is guilty of a misdemeanor?

truth-in-advertising

According to the Federal Trade Commission, an advertisement that violates a public policy or causes unjustified injury to a consumer is said to be ______.

unfair

When a consumer is "unjustifiably injured" or there is a "violation of public policy" this is considered ______ advertising.

unfair

Whenever industries have been deregulated by the government in an effort to restore free-market competition, advertising has ______.

usually, but not always, decreased prices

In a market economy, people and companies ______.

work for their own self-interest

Which of the following is a form of intellectual property?

writings

According to the Federal Trade Commission, any ad that can mislead a significant number of reasonable consumers to their detriment because it contains a misrepresentation, omission, or other practice is considered ______.

deceptive advertising