Chapter 6: Consumer Purchasing Strategies and Wise Buying of Motor Vehicles

The unit price of a 64 ounce carton of orange juice that costs $3.20 is

$0.05 per ounce

The unit price of a 2 pound (32 ounces) box of brown sugar that costs $3.20 is

$0.10 per ounce

The average used car costs about ______ less than the average new car.

$10,000

Choosing the payment method is part of the ____ phase of the decision-making process.

Selection and purchase

Negotiation activities are part of the ____ phase of the decision-making process.

Selection and purchase

If you have a problem whose remedy will be $1500 - $3000, the appropriate tool to use would be (a)

Small claims court

A standard measurement used to compare packages of different sizes is

Unit pricing

Which of the following sources would be the LEAST helpful when purchasing a vehicle?

Your cousin who has never purchased a car

Which of the following costs will directly increase with the number of miles driven?

Gasoline

When purchasing a used vehicle, it is a good idea to

Have a trained and trusted mechanic of your choice check out the vehicle

Paul bought some bad gasoline that damaged the gas tank of his vehicle.

He should provide the gas station with documentation of his purchase and all repair costs.

Using the following information, what is the cost to lease a car? Security deposit $250 Monthly lease $300 per month for a 4-year lease Opportunity cost of down payment $250 loan period in years 2% interest End-of-lease charges $800

$13,870

Using the following information, what is the cost to buy a car? Down payment $2000 Monthly loan payment $300 per month for a 5-year loan Opportunity cost of down payment $2000 loan period in years 2% interest Estimated value of vehicle at end of ownership period $2000

$18,200

Which of the following is a disadvantage of a car lease?

At the end of the lease, you have no ownership interest int he vehicle

The price of a leased vehicle is known as the

Capitalized cost

Sally has a major problem with a product and thinks that many others have had the same problem. Which of the following is the best way to resolve the problem?

Class-action lawsuit

Jacob drives by a Big Box home improvement center on his way home from work. He usually stops and buys something because it makes him feel good. Jacob is

Compulsive shopping

Tamra went to a restaurant and had an unpleasant experience that sent her to the hospital. The problems at the restaurant should be handled by

County health department

This type of promotion provides an immediate savings for consumers.

Coupons

Think about consumer complaints. Which of the following is correct?

If you don't get satisfaction from working with headquarters, you may get assistance form a mediator in order to avoid legal action.

Steven needs to write a will. His best resource is (a)

Lawyer

Adolph has a low income and needs legal assistance. He should make use of (a)

Legal aid society

Which of the following is not a legal option for upper-income consumers?

Legal aid society

Karen bought a mixer. She received a warranty that covers only certain aspects of the product. If the product fails, she may required to pay part of the costs for shipping or repairs. Which of the following warranties does Frank have?

Limited warranty

A process used to settle grievances using a nonbinding process is called a(n)

Mediation

A vehicle lease has several costs. Which of the following is the interest rate used to calculate the monthly cost?

Money factor

If you want to pay a set fee to receive unlimited or reduced-fee assistance, you should use (a)

Prepaid legal services

The partial refund of the price of a product is called

Rebates

A clear statement of a problem is: "I need to have a car."

false

A convenience option that consumers may look for in a vehicle specials trim.

false

A lease for a car or SUV is typically for three to five years.

true

A service contract is frequently called an extended warranty even though service contracts are not warranties.

true

One of the best places to find a qualified lawyer who will meet your specific needs is referrals from friends.

true

People should be prepared for problems with purchases.

true

A fixed operating cost for a vehicle is

Depreciation

All of the following are variable operating costs for a vehicle except

Depreciation

Mike bought a new car. His new car warranty probably included all except

Extended coverage for air conditionins

Most products come with some guarantee of quality. This type of warranty covers the product's intended use or other basic understandings that are not in writing.

Implied warranty

While Paul was shopping for a new chainsaw, he found a great deal on new drill and bought it. This an example of

Impulse shopping

The dealer's cost is also known as the

Invoice price

All of the following are appropriate questions you could ask before making a major purchase except

Is it possible to delay the purchase or to do without the item?, Should I pay for the item with cash or buy it on credit?, Which brands should I consider?, How do the price, quality, and service compare at different stores?

Comparison shopping will be beneficial for buying

Items that can be researched easily with advertisements

Most products come with some guarantee of quality. This type of warranty covers only certain aspects of the product, such as parts.

Limited warranty

Which of the following NOT a strategy for wise buying?

Buying items on impulse

The largest fixed expense associated with a new automobile is

Depreciation

Most products come with some guarantee of quality. This type of warranty states that a defective product can be fixed or replaced during a reasonable amount of time.

Full warranty

Steve bought a laptop that was defective. This laptop will be fixed or replaced by the manufacturer as long as he returns it in a reasonable amount of time. What type of warranty does he have on his laptop?

Full warranty

Helga plans to purchase a pick-up truck. She should begin her price negotiation at the

Invoice price

Tracy went to a local restaurant and became ill from the meal she ate. She can contact her city or county health department to handle problems with the restaurant.

true

An example of a "preshopping activity" is negotiating the price of a product.

false

If you are somewhat interested in a specific vehicle, you should provide a small deposit so the car seller will hold the vehicle for you.

false

A vehicle lease has several costs. Which of the following is the price of the vehicle?

Capitalized cost

Izzy is thinking about leasing a sports car. She will make monthly payments based on a money factor and the

Capitalized cost

Which of the following is a cost associated with a vehicle lease?

Capitalized cost, money factor, payment amount, and residual value

Craig wants to get his old car repaired, but he doesn't want to spend very much money. He probably will NOT want to go to a

Car dealer

Abigail checked out brands and prices of blue jeans at several stores. She was comparison shopping.

true

When Jane researched the brands and prices of her refrigerator, she was

Comparison shopping

One of the first steps in a car purchase negotiation should be a discussion of the trade-in vehicle.

false

Prices at the local Quick Market (convenience store) will probably be lower than the regional Big Box Retailer (grocery store).

false

Service contracts on vehicles usually are wise financial decisions.

false

Small claims court is used to take legal action by a few individuals on behalf of all who have suffered the same alleged injustice.

false

Studies of consumer problems consistently rank auto repairs as one of the best consumer services with few consumer complaints.

false

The best place to find a qualified lawyer who will meet your specific needs is a phone book.

false

The settlement of a difference by a mediator is legally binding.

false

Buying a vehicle can be a challenging process. When researching a vehicle, a consumer may want to consider all of the following except

Mechanical devices to improve performance, convenience options such as air conditioning, and aesthetic features like metallic paint

Which of the following is an advantage of a car lease?

Monthly lease payments are usually lower than monthly financing payments

These products are highly advertised and available at many stores

National-brands

A potential problem with having a long car loan is

Negative equity

George has never bought a car before. Which of the following techniques should he use to get the best deal?

Research the actual dealer cost and begin negotiations form that point

A vehicle lease has several costs. Which of the following is the expected value at the end of the lease?

Residual value

The expected value of a vehicle at the end of a lease is called the

Residual value

A no-haggling dealer will use a(n)

Set-price

The amount printed on a label that is posted on a vehicle is called

Sticker price

This is a written guarantee from the manufacturer that specifies the conditions under which the product can be returned, replaced, or repaired.

Warranty

A good time to use a lawyer is when you appear in small claims court.

false

A vehicle that looks rusty on the outside will have major operational problems.

false

Abigail checked out brands and prices of blue jeans at several stores. She was impulse shopping.

false

An aesthetic feature of a vehicle is air conditioning.

false

This shopping device is used primarily on perishable products.

Open dating

A vehicle lease ha several costs. Which of the following is the periodic cost?

Payment amount

Properly maintaining and operating the product is part of the ___ phase of the decision-making process.

Post-purchase activities

Resolving purchase concerns is part of the ___ phase of the decision-making process.

Post-purchase activities

Information gathering is part of the _____ phase of the decision-making process

Pre-shopping activities

Problem identification is part of the ______ phase of the decision-making process.

Pre-shopping activities

These products are sold by one chain of stores and are low-cost alternatives to famous-name products.

Private-label brands and Store-brands

A service contract

Covers the repair costs of a product.

Comparison of product features is part of the ____ phase of the decision-making process.

Evaluating alternatives

Price analysis is part of the ____ phase of the decision-making process.

Evaluating alternatives

Most products come with some guarantee of quality. Which of the following is usually in written form, created by the seller or manufacturer and has two forms?

Express warranty

Which of the following is the best way to state a problem?

I need transportation.

Frank bought some mini-blinds. Although he did not receive a written warranty, the blinds should be expected to open and close properly. What kind of warranty does Frank have?

Implied warranty

Which of the following is correct about the lemon law?

It applies to vehicles that have been serviced four times to correct the same problem in the first 12,000 miles.

Most customer complaints result from the following except

Long product lives

A variable operating cost for a vehicle is

Maintenance and repairs

All of the following are fixed operating costs for a vehicle except

Maintenance and repairs

If you have a problem with a product and you really want to get the attention of someone in customer service, you should raise your voice during your conversation.

false

If you have a problem with a product, the first place you should express you dissatisfaction to is the corporate headquarters.

false

Lemon laws have been enacted in 48 of the 50 states for new vehicle purchases.

false

One of the best ways to compare packaged food products is to use rebate pricing.

false

A trade-in vehicle should NOT be mentioned until the cost of the new car has been settled.

true

The largest fixed expense associated with a new automobile is depreciation.

true

Comparison shopping will be beneficial for buying all of the following except

A hot dog at the baseball park

A vehicle that looks rusty on the outside may hide a well-maintained engine.

true

An advantage of a lease over a purchase is that the buyer can usually obtain a more expensive vehicle for the same monthly payment.

true

Cam has an overwhelming desire to buy things whenever she goes shopping. One could say that he is a compulsive shopper.

true

Joe bought some cheese at his local grocery store. After he brought it home, he noticed, it was moldy even thought the expiration date was still three weeks away. He should call the toll-free hotline number printed on the package to tell the company of the problem he encountered.

true

The settlement of a difference by an arbitrator is legally binding.

true

Thomas bought a toaster that would not toast bread and returned it. The manufacturer accepted the return because it was defective and had a full warranty.

true

Thomas bought a vehicle from a used-car dealer. He returned it to the dealer because the transmission fell out 150 miles after he purchased it. The dealer refused to accept the return because the vehicle was sold 'as is.' This is an example of a limited warranty.

false

The best time to ask a lawyer about his fees is after he wins a case for you.

false

The only way that you can have long-term financial security is to not save all your current income.

false

The phases of buying are: problem identification, pre-shopping activities, evaluating alternatives, selection and purchase, post-purchase activities.

false

The text identifies several phases in the buying process. The correct order of the phases is

Pre-shopping activities, evaluating alternatives, selection and purchase, post-purchase activities