Finance Smartbook - Chapter 6

A ____ (full/limited) warranty states that a defective product can be fixed or replaced during a reasonable amount of time.

Full

When comparing the cost to buy versus the cost to lease an automobile, the ______ cost of the security deposit should be considered.

Opportunity

Select all that apply Which of the following are examples of groups of people that might qualify for a class-action suit?

People injured by a defective product Customers overcharged for a service Auto owners charged for unneeded replacement parts for their vehicles

A wide variety of economic, social, and personal factors affect daily buying habits

True

Dealing with the person who has the ____ to give you a lower price is a vital factor of negotiations.

Authority, Power, or Ability

Which of the following is NOT a guideline for avoiding being taken by deceptive business practices?

Do not hesitate to act quickly if a deal seems just too good to pass up

Which of the following automobile costs are variable costs?

Gas Repairs Parking costs and tolls Oil

Which of the following is the first phase in a planned decision-making process?

Preshopping activities

Lemon laws require a(n) ____ for the vehicle after the owner has made repeated unsuccessful attempts to get the car fixed by the dealer.

Refund

Select all that apply Which of the following automobile costs are fixed ownership costs?

Registration fees Depreciation Interest on car loans Insurance

Well-maintained and certain high-quality vehicles, such as BMW, depreciate at ____(higher/slower) rates.

Slower

The range available for negotiation for a new car is the difference between the ____ price and the ____ cost.

Sticker Dealer's, Seller's, Dealer, Dealers, or Sellers

Which is the final step in the process of resolving consumer complaints?

Take legal action

Select all that apply Which items below are used in determining the cost of an automobile lease?

The monthly payments and the number of months Residual value - the projected value at the end of the lease Money factor----the interest rate paid on the capitalized cost Capitalized cost

A car with a total purchase price of $12,000 is available while a comparable model can be leased for $350 a month for 36 months with end-of-lease costs of $800. Which arrangement should you choose?

The outright purchase because its cost is lower.

Product labels on appliances include information on operating X to assist you in selecting the most energy-efficient models.

costs, expense, expenses, or cost

The small claims court process usually takes place without which of the following?

A lawyer

A network of community law offices that provide legal assistance to people who cannot afford their own attorney is called:

A legal aid society

Which of the following is NOT true?

A limited warranty states that a defective product can be fixed or replaced within a certain time.

One possible _____ (advantage/drawback) of leasing an automobile is the smaller upfront cash outlay (i.e., security deposit).

Advantage

A legal _____ society is one of a network of publicly supported community law offices that provide legal assistance to consumers who cannot afford their own attorney.

Aid

If a 10 pound bag of dog food sells for $6.99, what is the per unit cost of the dog food?

Almost $0.70 per pound

In ____, a third party tries to settle a grievance through a legally-binding process.

Arbitration

Select all that apply Which of the following are techniques that you should avoid when purchasing a vehicle?

Asking how much can you afford per month Highballing Leaving a deposit to hold the vehicle Low balling

If you cannot resolve a complaint at the local level, then you should next express your concern to customer service where?

At the corporate level

Most consumer complaints are resolved:

At the original location

Which of the following is a guideline for avoiding being taken by deceptive business practices?

Be cautious of offerings that seem too good to be true

Select all that apply Which of the institutions are used for auto loans?

Consumer finance companies Credit unions Banks

Select all that apply Which of the following are drawbacks of leasing an automobile?

Costs incurred for extra mileage No ownership interest in the vehicle Costs incurred for certain repairs

Which of the following is NOT a sales technique to avoid when shopping for vehicles?

Deal with a person at the dealership who has authority to give you a lower price

The difference between the sticker price and the _____ is the range available for negotiation.

Dealer's Cost

The loss of a vehicle's value due to time and use and the largest fixed expense of a new car is called ____.

Depreciation

The information on the label of some food products includes X dating that helps the consumer determine freshness or shelf life of a perishable product.

Expiration

At the end of a car lease, if the market value of the car is less than the residual value, you may be able to sell the car for a profit.

False

True or false: A full warranty covers only certain aspects of the product and requires the buyer to share in the cost of repairs or shipping.

False

True or false: One of the factors that influences the price of buying a used car is capitalized cost.

False

True or false: Social factors that affect your buying habits include peer pressure, culture, and inflation.

False

True or false: The first step in the consumer complaint process is litigation.

False

True or false: You should begin the consumer complaint process at the corporate headquarters of the store where the problem began.

False

Select all that apply The factors that influence the price of a used car include:

Features and options Number of miles Condition Demand for the model

Depreciation is the largest ______ cost of a new vehicle.

Fixed

When selecting a lawyer, questions about legal costs should focus on the way charges will be calculated, such as _____ fee, ______ rate, or contingency basis.

Flat Hourly, Hour, Day or Daily

Select all that apply Which of the following questions are considered when selecting a lawyer?

Is the lawyer experienced in similar types of cases? How will charges be set? When is payment due?

The two key sources of current used-car prices in the United States are Edmund's Used Car Prices and ____ Blue Book.

Kelley

Owners of new cars are protected by the ____ laws when repeated attempts have been made to have the car fixed without success.

Lemon

In _____, a third party tries to settle a grievance. However, the process is non-binding.

Mediation

Which of the following would be included in Phase 3, Selection and Purchase, of the decision-making process for making major buying decisions?

Negotiation activities to obtain a lower price

One of the most useful sources of information regarding products during the preshopping phase is _____ that provide buying guidance and shopping suggestions.

Online Reviews

It is important to have all the necessary information about the product and buying situation when using negotiation to determine the purchase price of cars or real estate. (Enter one word per blank.)

Price

Which of the following items is NOT a factor in the cost of a lease of an automobile?

Price of accessories

Select all that apply An individual would benefit from comparison shopping when wanting to purchase which of the following types of products and/or in which of the following situations?

Products that are sold by many different sellers at various prices Products where quality differs greatly among sellers Expensive or complex products

Which of the following is an example of a limited warranty?

The parts for your air conditioner will be replaced during the warranty period if damaged, but you will pay for the labor.

A unit price of a box of cereal is found by dividing the price of the product by the number of ounces in the product box or container.

True

As per the book, at the end of the lease, if the residual value of the vehicle is greater than its market value, then you should return the car to the leasing company.

True

Lease payments are often less than loan payments.

True

Most consumer complaints are resolved at the original sales location.

True

True or false: A person could choose not to participate in a class-action suit and instead file an individual lawsuit.

True

True or false: The drawbacks of leasing an automobile include no ownership in the vehicle and costs for extra mileage, for certain repairs, and for turning the car in early.

True

True or false: Well-maintained and certain high-quality vehicles depreciate at slower rates than vehicles not receiving the same level of care or not consisting of the same high quality.

True

Two important sources of used car prices are Edmund's Used Car Prices and the Kelley Blue Book.

True

Banks, credit ____, and consumer finance companies are all sources of car loans.

Unions or Union

Which of the following is true regarding comparison shopping for used vehicles?

Warranties offered by used-car dealers are usually limited

Which of the following is NOT true concerning small claims court?

You can generally sue for as much as $100,000 in small claims court.

The common sources of information regarding products during the preshopping phase include personal ____ , business organizations, media, and independent testing agencies such as Consumer Reports.

contacts

An warranty, usually in writing, is created by the seller or manufacturer and has two forms: the full warranty and the limited warranty. Use one word per blank.

express

A limited warranty covers only certain aspects of the product and requires the buyer to pay part of the costs for:

shipping or repairs