Philosophy 303E Ch. 6 Q's & Concepts

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What are 2 types of price fixing

1. Horizontal price fixing- when competitors agree to adhere to a set price schedule. 2. Vertical price fixing- when manufacturers and retailers (as opposed to direct competitors) agree to set prices.

Define Ambiguity

Ads that can be understood in multiple ways (not specific).

Define exaggeration (aka puffery)

Advertisers make claims unsupported by evidence.

Define concealment of facts

Advertisers that suppress information that is unflattering to their products.

Define common denominator

Because peoples taste differ, they try to run shows that a large audience would watch.

What are 1 of the 6 safety responsibilities of business?

Business must monitor the manufacturing process itself.

What are 1 of the 6 safety responsibilities of business?

Business should abandon the misconception that accidents occur exclusively as a result of product misuse and that it is thereby absolved of all responsibility.

What are 1 of the 6 safety responsibilities of business?

Business should give safety the priority warranted by the product.

Advertising & children

Children are pure consumers (believe everything they see and hear).

Define expressed warranties

Claims that sellers explicitly state

What are 1 of the 6 safety responsibilities of business?

Companies should investigate consumer complaints and do so quickly.

Define Due Care

Consumers and sellers do not meet as equals and the consumers interests are particularly vulnerable to being harmed by the manufacturer, who has knowledge and expertise.

what are the Free speech & Media Issues

Defenders view- a protected form of speech is necessary/desirable in a free market system. Ads are protected under the 1st amendment. Critics disagree.

Define labeling/packaging

Failing to tell consumers what they need to know or even exactly what they are getting.

A psychological appeal is one that aims to persuade by appealing primarily to reason and not emotion.

False

Businesses are never legally responsible for accidents that occur exclusively as a result of product misuse.

False

Customer wants are never created by advertising or sophisticated sales strategies.

False

Deceptive advertising is always legal because we have freedom of speech

False

Legal paternalism is the doctrine that laws should not be used to restrict the freedom of individuals for their own good.

False

Strict liability is the same thing as absolute liability

False

Puffery is illegal

False (not ethical, but is legal)

Define Federal Trade Commission (FTC)

Protects consumers against deceptive advertising and fraudulent commercial practices.

Define Paternalism

The gov't knows best

Define Legal Paternalism

The law may justifiably be used to restrict the freedom of individuals for their own good.

Define the dependent effect

The more money we have, the more things are created for us to want.

Define Consumers Product Safety Commission (CPSC)

This act protects the public "against unreasonable risks of injury associated with consumer products."

What are other obligations to the consumers?

Through warranties, obligations to purchasers that sellers assume.

Anti-paternalism is often defended on the assumption that individuals know their own interests better than anyone else and they are fully informed and able to advance those interests.

True

Business responsibility for understanding and providing for consumer needs arrives from the fact that citizen consumers are dependent on businesses to satisfy their needs.

True

Defenders of advertising claim that despite criticisms, advertising enjoys protection under the 1st amendment as a form of free speech.

True

Due Care is the idea that consumers and sellers do not meet as equals and the consumers interests are particularly vulnerable to being harmed by the manufacturer who has knowledge and expertise that the consumer does not have.

True

Legal does not necessarily mean moral

True

Strict product liability is the doctrine that the manufacturer of a product has legal responsibilities to compensate the user for injuries

True

Subliminal advertising is advertising that supposedly communicates a level below our conscious awareness.

True

The FTC now follows the modified ignorant person standard in manners of advertising sales and markets.

True

The Federal Trade Commission (FTC) was established in 1914 to protect consumers against deceptive advertising.

True

The controversy of legal paternalism puts the values of individual freedom and autonomy against social welfare.

True

Weasel words are words used to evade or retreat from a direct or forthright statement.

True

What are 1 of the 6 safety responsibilities of business?

When a product is ready to be marketed, companies should have their product safety staff review their market strategy and advertising for potential safety problems.

What are 1 of the 6 safety responsibilities of business?

When a product reaches the marketplace, firms should make available to consumers written info about the product's performance.

Define psychological appeal (aka subliminal)

a persuasive effort aimed primarily at emotion, not reason.

Define subliminal appeal

ads that communicate at a level beneath conscious awareness.

Define consumer sovereignty

consumers should and do control the market through their purchases.

Implied warranties

include the claim, implicit in any sale, that a product is fit for its ordinary, intended use (aka merchantability). Is passable or suitable, not guaranteed.

Define gullible-consumer standard

prohibits an ad that might mislead someone who is ill informed and naive.

Define price gouging

sellers exploiting a short-term situation in which buyers have few purchase options for a much needed project by raising prices substantially. Viewed as unethical.

Define Strict liability

the manufacturer of a product has legal responsibilities to compensate the user of that product for injuries suffered because of the product's defective condition.

Define weasel words

to evade or retreat from direct or forthright statement.

Define manipulative pricing

when consumers are mislead by prices that obscure its true cost.


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