Ethics Exam 3

Congress has now outlawed puffery. True or False.

False

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

False

Strict liability is the same thing as absolute liability. True or False.

False

The doctrine of caveat emptor means that the law may be justifiably used to restrict the freedoms of individuals for their own good. True or False.

False

When advertisers conceal facts, they suppress information that is favorable to their products. True or False.

False

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

True

Business's responsibility for understanding and providing for consumer needs derives from the fact that citizen-consumers are dependent on business to satisfy their needs. True or False.

True

Due care is the idea that consumers and sellers do not meet as equals and that the consumer's interests are particularly vulnerable to being harmed by the manufacturer, who has knowledge and expertise the consumer does not have. True or False.

True

One decisive case in the legal transition away from the reasonable-person standard in matters of advertising, sales, and marketing was FTC vs. Standard Education. True or False.

True

The case of FTC vs. Standard Education was important in the legal transition a. away from the reasonable-person standard b. that removed power from the Federal Trade Commission c. toward the reasonable-person standard d. toward the principle of caveat emptor

a. away from the reasonable-person standard

To properly protect consumers a. if a product poses a potential, serious threat, a company may need to take extraordinary measures to ensure continued safe use of it b. test of a product can safely assume that the product will be used in just the way that the manufacturer intends it to be used c. accidents occur exclusively as a result of product misuse d. only new products, not established products, need to be tested

a. if a product poses a potential, serous threat, a company may need to take extraordinary measures to ensure continued safe use of it

Which of the following is an example of price gouging? a. increasing the price of lawn mowers in the spring and summer b. a New York hotel tripling its room prices after 9/11 c. selling World Series tickets for $300 d. having to pay above the seller's original asking price for a home

b. a New York hotel tripling its room prices after 9/11

According to Galbraith's "dependence effect", a. production depends on wants b. consumer demand tends to be shaped by the production process c. advertising depends on the wants of the consumer d. advertising depends on consumerism

b. consumer demand tends to be shaped by the production process

Harvard business professor Theodore Levitt has a. proven the possibility of effective subliminal advertising b. drawn an analogy between advertising and art c. invented the concept of "puffery" d. argued that the process of production today creates the very wants it then satisfies

b. drawn an analogy between advertising and art

The consumer's main source of product information is a. testimonials of other customers b. the label and package c. billboards d. word of mouth

b. the label and package

Which statement is accurate in its description of consumer protection? a. Critics exaggerate the cost of safety regulations and product recalls b. Safety regulations permit people to choose to save money by purchasing riskier (but less expensive) product c. The Consumer Product Safety Commission has the power to order recalls, public warnings, and refunds d. Statistics show that, in fact, safety regulations rarely succeed in increasing safety

c. The Consumer Product Safety Commission has the power to order recalls, public warnings, and refunds

The terms "best, finest, and most" are examples of a. trust building statements b. truth in advertising c. puffery d. psychological appeals

c. puffery

In deciding whether an ad is deceptive, today the FTC basically follows a. the reasonable consumer standard b. the gullible consumer standard c. the "modified" gullible consumer standard d. none of these choices

c. the "modified" gullible consumer standard

In 1972 Congress created one of the most important agencies for regulating product safety. This agency is the a. Fair Packaging and Labeling Commission b. Federal Drug Administration Agency c. Securities and Exchange Commission d. Consumer Product Safety Commission

d. Consumer Product Safety Commission

Which statement is true from an ethical perspective? a. The argument for due care is basically Kantian b. The concept of due care is identical with that of caveat emptor c. Strict liability is identical with absolute liability d. The argument for strict liability is basically utilitarian

d. The argument for strict liability is basically utilitarian