Chapter 6: Consumer Purchases and Wise Buying Strategies

Which of the following is NOT a strategy for wise buying?

Buying items on impulse

A lease for a car is typically for 5 to 10 years.

False

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

False All 50 states and the District of Columbia

The price of a leased vehicle is known as the

capitalized cost

A fixed operating cost for a vehicle is:

depreciation

Properly maintaining and operating the product is part of the ____ phase of the research-based buying process.

post-purchase activities

Resolution of any purchase concerns is part of the ____ phase of the research-based buying process.

post-purchase activities

Information gathering is part of the ____ phase of the research-based buying process.

pre-shopping activities

Problem identification is part of the ____ phase of the research-based buying process.

pre-shopping activities

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

.05 per ounce

What is the unit price of a 32-ounce box of brown sugar that costs $3.20?

.10 per ounce

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

10,000

Using the following information, what is the cost to lease a car? (Assume there are no charges for damage at the end of the lease.)

18,530

Using the following information, what is the cost to buy a car?

24,560

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

A class-action lawsuit

While evaluating alternatives, comparison shopping will be beneficial for buying all of the following except:

A hot dog at the baseball park

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

A legal aid society

While evaluating alternatives, all of the following are appropriate questions you could ask before making a major purchase except:

All fo these are questions that should be asked

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

All of the options may be considered

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

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

Jennifer is thinking about leasing a sports car. She will make monthly payments based on a money factor and the price of the vehicle, which is called the:

Capitalized cost

Craig wants to get his old car repaired, but he doesn't want to spend much money. He probably will NOT want to go to the most expensive repair service. The most expensive option is typically a(n):

Car dealer

When Jane researched the brands and prices of refrigerators, she was:

Comparison shopping

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

Depreciation

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

Express Warranty

Mike bought a new car. His new car warranty probably included all of the following except:

Extended coverage for air conditioning

A lawyer is necessary when you appear in small claims court.

False

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

False

An example of a "pre-shopping activity" is negotiating the price of a product.

False

During problem identification, a clear statement of a problem is "I need to have a car".

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

If you have a problem with a product and you are talking with a customer service person, you should raise your voice and demand unreasonable action during your conversation.

False

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

False

In comparing used vehicles, a vehicle that looks rusty on the outside will have major operational problems.

False

In every state, small claims courts are available to handle legal disputes involving relatively large amounts of money.

False

In selecting vehicle options, a convenience option that consumers may look for in a vehicle is special trim.

False

In selecting vehicle options, an aesthetic feature of a vehicle is air conditioning.

False

One of the best ways to compare prices of food packages of different sizes is to use rebate pricing.

False

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

False

Prices at the local convenience store will probably be lower than at the national retail 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 repair services as one of the best consumer experiences 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 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 of your current income.

False

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

False

The settlement of a difference between two parties through discussion and negotiation by a mediator is legally binding.

False

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

To extend the life of your vehicle, you should get a tune-up every 10,000 miles.

False

The unit price of a 32-ounce jar of honey that costs $8.32 is $0.13 per ounce.

False Unit price = total cost/total number of units; thus, $8.32/32 ounces = $0.26 per ounce.

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

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

Gas

The appearance of a used car can be deceptive. 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.

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

I need transportation

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

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

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

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

Impulse shopping

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 or have been out of service for more than 30 days within 12 months of purchase or the first 12,000 miles.

While evaluating alternatives, comparison shopping will be beneficial for buying:

Items that can be researched easily with advertisements

Adolph has a low income and cannot afford his own attorney. He needs legal assistance and should make use of a:

Legal aid society

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

Limited Warranty

Most customer complaints result from the all of the following except:

Long product lives

A variable operating cost for a vehicle is:

Maintenance and repairs

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

The lowest payment does not necessarily mean the best credit plan. If your car loan is for a long period of time, you may end up owing more than the car is worth, which is called:

Negative equity

This shopping label is used primarily on perishable products to help the consumer judge freshness or shelf life.

Open dating

The text identifies several phases in the research-based buying process. The correct order of the phases is:

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

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

Prepaid legal services

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

Private-label or store brands

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

Research the dealer cost and the begin negotiations from that point.

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

True

A legal aid society is one of a network of publicly-supported community law offices that provides legal assistance to people who cannot afford their own attorney.

True

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

True

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

True

Advantages of a lease over a purchase include that the buyer can usually obtain a more expensive vehicle and the monthly lease payments are usually lower than monthly financing payments.

True

After two or three years of making loan payments on a new car, the balance owed is greater than the value of the car which is a situation referred to as upside-down.

True

All 50 states and the District of Columbia have enacted lemon laws.

True

In comparing used vehicles, a vehicle that looks rusty on the outside may hide a well-maintained engine.

True

In determining the purchase price of a new car, a trade-in vehicle should NOT be mentioned until the cost of the new car has been settled.

True

Joe bought some cheese at his local grocery store. After he brought it home, he noticed it was moldy even though the expiration date was still three weeks away. First, he should contact the original sales location. If not resolved there, then he should call the toll-free hotline number printed on the package to tell the company about the problem he encountered.

True

One of the best ways to compare prices of food packages of different sizes is to use unit pricing.

True

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

True

People do not anticipate problems with purchases but should be prepared for them.

True

The largest fixed expense associated with a new automobile is depreciation

True

The settlement by an arbitrator is legally binding.

True

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

True

Thomas bought a toaster that malfunctioned after six months. If he returned the toaster and the manufacturer accepted the return, then this demonstrates that a full warranty was likely in place.

True

To extend the life of your vehicle, you should get a tune-up every 25,000 to 30,000 miles.

True

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

A standard measurement used to compare the prices of packages of different sizes is:

Unit pricing

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

Warranty

During pre-shopping activities, 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 are associated with a vehicle lease?

all of these choices are correct

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

attorney

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

capitalized cost

This type of promotion immediately reduces the amount a family spends on groceries each week.

coupons

A service contract:

covers the repair costs of a product

The largest fixed expense associated with a new automobile is:

depreciation

Comparison of product features is part of the ____ phase of the research-based buying process.

evaluating alternatives

Price analysis is part of the ____ phase of the research-based buying process.

evaluating alternatives

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

Heidi plans to purchase a pickup truck. The range available for negotiation is the difference between the sticker price and the:

invoice price

The dealer's cost is also known as the:

invoice price

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

limited warranty

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

maintenance and repairs

A process used to settle grievances in a non-binding 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

A vehicle lease has several costs. Which of the following is the amount paid monthly and the number of payments?

payment schedule

A partial refund of the price of a product is called a(n)

rebate

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

Negotiation activities are part of the ____ phase of the research-based buying process.

selection and purchase

Payment alternatives are part of the ____ phase of the research-based buying process.

selection and purchase

A no-haggling dealer presents the price of a new car to be accepted or rejected as stated and is called a(n) ________ dealer.

set price

If you have a problem in which the remedy will be between $1,500 and $3,000, the appropriate tool to use would be a:

small claims court

The amount printed on a label with the suggested retail price that is posted on a vehicle is called the:

sticker price

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:

the county health department