Deck 8: Consumer Purchasing Strategies and Legal Protection

Question 1

________ are nonprofit organizations organized by member-owners to save money on various products and services.Their prices are usually lower than at other retailers.

A)Cooperatives
B)Warehouse stores
C)Factory outlets
D)Catalog showrooms
E)Hypermarkets

Answer 1

Cooperatives

Question 2

An example of an economic factor that influences buying decisions would be:

A)family size.
B)inflation.
C)advertising.
D)hobbies.
E)lifestyle.

Answer 2

inflation.

Question 3

Open dating information provides consumers with information about the freshness of a perishable product.

Answer 3

True

Question 4

A limited warranty covers all aspects of the product and does not require the buyer to incur any of the costs for shipping and repairs.

Question 5

The first phase of the consumer buying process involves:

A)comparing alternatives.
B)evaluating alternatives.
C)identifying the problem.
D)researching alternatives.
E)selecting the buying location.

Question 6

Which one of the following is the best example of a personal opportunity cost associated with a consumer purchase?

A)Enjoyment derived from owning an item
B)Taxes paid on purchases
C)Money spent by stores on advertising
D)Time and effort spent on comparison shopping
E)Efforts by the government to prevent consumer fraud

Question 7

Representation by a lawyer is usually required in small claims court.

Question 8

A class-action suit is a legal action taken by a few individuals on behalf of all the people who have suffered the same alleged injustice.

Question 9

Mediation involves a legally binding decision by a third party to solve a consumer complaint.

Question 10

Cooperatives are commonly organized to sell:

A)service contracts.
B)furniture.
C)auto repair service.
D)food.
E)information processing service.

Question 11

Which organization tests products for electrical and fire safety to assure items meet safety standards?

A)Consumers Watch
B)Better Business Bureau
C)Consumer Product Safety Commission
D)Underwriters Laboratories
E)Federal Trade Commission

Question 12

The first phase in the buying process involves information gathering.

Question 13

The main purpose of Consumers Union is to:

A)report the quality of products and services.
B)reduce fire hazards of home appliances.
C)handle consumer complaints from government workers.
D)represent the government in consumer complaint hearings.
E)provide environmental information on automobiles.

Question 14

Advertising is a type of consumer information commonly provided by business organizations.

Question 15

The most consistent quality is usually found with national-brand products.

Question 16

Government agencies provide education programs and complaint hotlines to assist consumers in gathering information to make wise buying decisions.

Question 17

Service contracts are usually free and included in the cost of appliances and other high-priced items.

Question 18

One way to gather information about a product is to use an independent testing organization like Underwriters Laboratories (UL).

Question 19

A cooperative is designed to:

A)solve consumer complaints.
B)test consumer products for quality.
C)sell products or services to members at reduced prices.
D)obtain brand-name items for less than wholesale cost.
E)lobby for changes in consumer protection laws.

Question 20

Unit pricing uses a standard unit of measurement to compare the prices of packages of different sizes.

Question 21

The purpose of small claims court is to:

A)regulate fair business activities.
B)provide hearings on proposed consumer protection laws.
C)allow consumers with similar complaints to take action as a group.
D)handle legal disputes involving minor amounts.
E)assist low-income consumers who need legal help.

Question 22

________ is the settlement of a difference by a third party whose decision is legally binding.

A)Negotiation
B)Mediation
C)Arbitration
D)Servicing
E)Cooperative action

Question 23

Small claims courts:

A)hear only class-action suits.
B)are located in every state.
C)have no minimum dollar limit on claims.
D)require the use of an attorney.
E)require that claims be in excess of $100,000.

Question 24

Arbitration differs from mediation in that arbitration:

A)involves government officials.
B)requires the use of a lawyer.
C)is only available in certain states.
D)allows compromise through negotiation.
E)is legally binding.

Question 25

Private label products are those that:

A)are sold as government surplus.
B)require nutritional labeling information.
C)provide freshness information on the package.
D)are distributed by all national chain stores.
E)are sold by one chain of stores.

Question 26

Howard Ramsell recently became aware of implied warranties that exist for consumer purchases.An implied warranty exists as a result of:

A)a stated intent of the seller.
B)actions by consumers.
C)the intended use of a product.
D)rulings of federal consumer agencies.
E)a written statement from the manufacturer.

Question 27

Which one of these statements best describes a criticism of automobile service contracts?

A)Repair companies provide poor service.
B)Service contracts are included in the initial price of the product and thus are not optional.
C)The government regulation of service contract companies is weak.
D)The contracts do not always include everything you might expect.
E)There are a limited number of authorized repair facilities.

Question 28

The items produced for a specific retail chain of stores are commonly sold under a ________ brand.

A)store
B)government
C)regional
D)local
E)national

Question 29

The process of resolving conflicts between a customer and a business with the use of a third party whose recommendations are nonbinding is called:

A)mediation.
B)arbitration.
C)a class action suit.
D)a product lawsuit.
E)a small claims court hearing.

Question 30

Which of the following statements about a legal aid society is not true?

A)It provides legal assistance to people who cannot afford their own attorney.
B)It is part of a network of community law offices.
C)It provides legal assistance at minimal cost or without charge.
D)It is a branch of the American Bar Association.
E)It is a publicly supported organization.

Question 31

What type of warranty indicates that the seller has the right to sell a product?

A)Express warranty
B)Full warranty
C)Implied warranty of title
D)Warranty of merchantability
E)Limited warranty

Question 32

Recently,Jim Walker was on a bus tour in a mountainous area.The bus broke down forcing the group to stay overnight.Group members had to pay for their own hotel bills.Jim believes that the hotel cost for the group should be paid by the tour company.Which legal action would be most appropriate?

A)Small claims court
B)Mediation
C)Legal aid society
D)Arbitration
E)Class-action suit

Question 33

A 64-ounce package selling for $3.20 would have a unit price of:

A)$3.20 per ounce.
B)$2.00 per pound.
C)$0.05 per ounce.
D)$20.00 per quart.
E)$20.48 per ounce.

Question 34

For a situation to qualify as a class-action suit,it must:

A)involve several people who have suffered the same problem.
B)involve a national retail store.
C)be a case that would not be handled by an attorney.
D)involve low-income individuals.
E)be a legal problem against a government agency.

Question 35

The purpose of a service contract is to:

A)prevent legal action due to a defective product.
B)protect a product owner from the high costs of certain repairs.
C)reduce the chance of needing repairs.
D)obtain regular maintenance on a product.
E)have legal assistance for consumer complaints.

Question 36

Pam McNally is planning to use the services of the Better Business Bureau.A major purpose of the BBB is to help:

A)recommend reputable companies in an area.
B)resolve consumer complaints with local merchants.
C)lobby for improved consumer protection laws.
D)evaluate products and services for quality.
E)represent business in government hearings.

Question 37

Impulse buying refers to:

A)evaluating alternatives.
B)gathering information.
C)comparison shopping.
D)selecting the least desirable alternative.
E)unplanned purchasing.

Question 38

Most consumer complaints are resolved by:

A)legal action.
B)assistance from a government agency.
C)contacting a company's headquarters.
D)returning to the original sales location.
E)obtaining help from an action line.

Question 39

Which of the following information is required on food labels?

A)Ingredients
B)Unit pricing
C)Generic name
D)Common product name
E)Brand name

Question 40

Open dating provides information on:

A)freshness.
B)pricing.
C)nutrition.
D)common product use.
E)government inspection.

Question 41

A Whirlpool dishwasher is an example of a:

A)national brand.
B)store brand.
C)generic brand.
D)local brand.
E)regional brand.

Question 42

An implied warranty that comes with a used car is that:

A)major repairs are the responsibility of the seller.
B)government agencies will repair safety defects.
C)the vehicle is guaranteed to run for a while.
D)hidden defects will be repaired at no cost to the buyer.
E)the vehicle will be serviced free of charge for one year.

Question 43

Mike Jacobs is planning to lease an automobile.In an effort to minimize the price of the vehicle being leased,Mike should compare the ________ at different leasing companies.

A)down payment
B)capitalized cost
C)money factor
D)residual value
E)number of payments

Question 44

A disadvantage of leasing an automobile would be the:

A)relatively high cost of the security deposit.
B)the higher monthly payment as compared to a purchase.
C)poor expense records for tax purposes.
D)additional costs for turning the car in early.
E)responsibility for fuel expenses.

Question 45

Brian Williams has a piece of paper that he gives to the cashier when he purchases a grocery item that saves him a dollar off the cost of that item.What is he most likely using?

A)Coupon
B)Rebate
C)Warranty
D)Receipt
E)Promissory note

Question 46

Brad Hayden has a piece of paper that guarantees the conditions,under which he can return,replace,or repair an item that he has purchased.What is it he most likely has?

A)Coupon
B)Rebate
C)Warranty
D)Rain check
E)Class action suit

Question 47

Greg Rossman likes to play golf.This hobby would be an example of a(n)________ factor that influences his purchasing decision.

A)economic
B)social
C)personal
D)global
E)financial

Question 48

Which of the following is the largest fixed expense associated with a new automobile?

A)Insurance
B)Gasoline
C)Registration,license,and fees
D)Parking
E)Depreciation

Question 49

The sticker price of a car refers to:

A)the amount of government taxes on a new car.
B)the cost of repairing a used car which is for sale.
C)the list of optional equipment that may be added to a car.
D)the suggested retail price of a new car.
E)a comparison of costs and performance of comparable cars.

Question 50

The purpose of the invoice price is to inform customers of the:

A)sales tax on the vehicle.
B)suggested retail price.
C)sticker price.
D)charge for optional extras.
E)dealer's cost.

Question 51

A used car sold "as is" has:

A)a limited warranty.
B)an implied warranty of merchantability
C)a 30-day guarantee.
D)a full warranty on parts but not labor.
E)a 90-day guarantee.

Question 52

The Sears Kenmore dishwasher is an example of a:

A)national brand.
B)store brand.
C)generic brand.
D)local brand.
E)regional brand.

Question 53

Margaret Wilson has a piece of paper that she can mail in to the manufacturer of the product that she just purchased.It allows her to get part of her purchase price back.What is she most likely using?

A)Coupon
B)Rebate
C)Warranty
D)Indenture
E)Service contract

Question 54

The main purpose of the Edmund's Used Car Prices is to:

A)monitor safety problems of existing vehicles.
B)provide current used-car prices.
C)reduce sales of stolen vehicles.
D)list cars available for sale from government agencies.
E)provide VIN numbers for vehicles.

Question 55

Most used cars bought from private owners have:

A)no implied warranties.
B)a 30-day return privilege.
C)a limited warranty.
D)no express warranty.
E)a government-supported repair guarantee.

Question 56

Federal Trade Commission (FTC)regulations require that:

A)all used cars be sold with a warranty.
B)used car buyers be informed of whether or not the vehicle comes with a warranty.
C)used cars with over 100,000 miles be sold only by the individual owner,not by a dealer.
D)major repairs must be made on all used cars prior to being offered for sale.
E)the seller of a defective used car pay half the cost of the required repairs.

Question 57

Paul Spoon has noticed that interest rates have risen in recent months.He is worried that this may make it more difficult for him to finance the purchase of a car.This would be an example of a(n)________ factor that influences his purchasing decision.

A)economic
B)social
C)personal
D)global
E)career

Question 58

An automobile service contract can:

A)reduce operating costs of the vehicle.
B)cover regular maintenance.
C)provide automobile insurance at a discount.
D)cover repairs not included in the manufacturer's warranty.
E)help the buyer stay informed of government safety recalls.

Question 59

________ is considered a variable operating cost of an automobile.

A)Depreciation
B)Interest on auto loan
C)Insurance
D)Registration fee
E)Repairs and maintenance

Question 60

Stephanie Johns is a member in a store that is a nonprofit organization that buys grocery items in bulk.The savings on these bulk purchases are passed on to the members in the form of lower food prices.Stephanie is most likely shopping in which type of store?

A)Department store
B)Specialty store
C)Discount store
D)Convenience store
E)Cooperative

Question 61

The price that is paid for a vehicle in a lease is called the:

A)residual value.
B)unit price.
C)capitalized cost.
D)deductible.
E)premium.

Question 62

Sally Nash has decided she needs a new car.After doing some research,she has settled on a midsized four door sedan.She likes the Honda Accord and is exploring the features she needs and wants on this car.She is also trying to decide whether she would be better off purchasing a new car,a used car,or leasing a car.She knows that if she purchases it new it would likely last her for many,many years.On the other hand a used car would be a lot cheaper.She is not sure a lease is for her because of the mileage requirements.What step in the purchasing process is Sally carrying out?

A)Problem identification
B)Information gathering
C)Evaluating alternatives
D)Determining the purchase price
E)Post-purchase activities

Question 63

Sloane owes $2,450 on her car loan.According to Edmund's Used Car Prices,her car is valued at $1,850.The term used to refer to this situation is:

A)residual value.
B)pre-approval.
C)capitalized cost.
D)upside-down.
E)money factor.

Question 64

Lorenzo Cunningham has settled on purchasing a new Honda Accord and has found that the suggested retail price is $23,600 and that the dealer's invoice price is $21,500.It is time for him to go to a dealer and negotiate the price he will pay for his new car.What step in the purchasing process is Lorenzo carrying out?

A)Problem identification
B)Information gathering
C)Evaluating alternatives
D)Determining the purchase price
E)Post-purchase activities

Question 65

Isabel would spend $200 per week on groceries for her family if she did not use coupons.Her coupons save her 8 percent of that amount.She puts the amount saved into her savings account.How much will she have in her savings account at the end of the first year? Ignore interest earnings.

A)$16
B)$200
C)$416
D)$832
E)$10,400

Question 66

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

A)residual value.
B)unit price.
C)sticker price.
D)capitalized cost.
E)money factor.

Question 67

Which of the following would be an advantage of leasing a vehicle?

A)Automatic ownership interest in the car
B)Unlimited mileage on the car
C)No need to meet credit requirements
D)Lease payments are likely to be lower than loan payments
E)Additional costs to turn the car in early.

Question 68

A scam that uses e-mail spam or pop-up messages to deceive you into revealing your credit card number,bank account information,social security number,passwords,or other personal information is called:

A)pharming.
B)phishing.
C)Internet pyramid scheme.
D)bogus "campus card" scheme.
E)foreign scam.

Question 69

Proper vehicle maintenance is essential to extending the life of your car.Regular oil changes should occur every ________ miles,depending on recommendations for the vehicle.

A)6,000
B)3,000 - 5,000
C)6,000 - 10,000
D)2,000 - 3,000
E)10,000

Question 70

Damian Walker just purchased a new vehicle.He is reading his owner's manual to know when he needs to take it in for its regular servicing at the dealer.He wants to make sure this car lasts a while.What step in the purchasing process is Damian carrying out?

A)Problem identification
B)Information gathering
C)Evaluating alternatives
D)Determining the purchase price
E)Post-purchase activities

Question 71

Gina Raffetto's car broke down on the way to work,and her mechanic has told her that the car cannot be fixed.Gina drives 30 miles one way to work each day.There is no reliable bus or train transportation that goes anywhere near her work.Gina decides she needs a car for reliable transportation to work.What step in the purchasing process is Gina carrying out?

A)Problem identification
B)Comparing financing alternatives
C)Evaluating alternatives
D)Determining the purchase price
E)Post-purchase activities

Question 72

A motor vehicle has annual depreciation of $1,600; oil changes cost $140,automobile insurance $700 annually,and license plates costs $100.What is the annual amount of the total fixed operating cost for this vehicle?

A)$1,600
B)$1,740
C)$2,300
D)$2,400
E)$2,540

Question 73

Hector Ramirez has decided he needs a new car so that he has reliable transportation to work.He is getting recommendations from his friends as to what might be a good car to purchase.He is also looking at the Consumer Reports magazine to determine what they recommend as a safe,low maintenance car,and he has searched some websites on the internet as well.What step in the purchasing process is Hector carrying out?

A)Problem identification
B)Information gathering
C)Selecting vehicle options
D)Determining the purchase price
E)Post-purchase activities

Question 74

Tiffany Parrish has purchased a new car.Since then she has had to make six trips to the dealer in four weeks to fix several major problems without much luck.She knows that she is entitled to a refund.What type of law gives her the right to ask for a refund?

A)Lemon Law
B)Truth in Lending
C)Truth in Saving
D)Fair reporting
E)Consumer Credit Act

Question 75

A credit purchase with 24 monthly payments of $87 and a down payment of $120 would have a total cost of:

A)$1,200.
B)$1,287.
C)$2,088.
D)$2,208.
E)$2,880.

Question 76

Emily is trying to decide whether to lease or buy a car.Which one of the following is not a factor necessary in making the comparison?

A)Down payment
B)Monthly lease payments
C)Gasoline costs
D)Residual value
E)Mileage overage charges

Question 77

An online buying club requires an annual fee of $45 in order to qualify for a 15 percent discount on purchases.What amount would a person have to buy in order to save enough to cover the cost of the membership?

A)$15
B)$67
C)$165
D)$300
E)$450

Question 78

Which of the following is least likely to assist you in timing purchases to help you obtain bargains?

A)Changing economic conditions
B)Time zones
C)Weather reports
D)Political conflicts around the world
E)Crop failures

Question 79

A scam that involves malicious software or an e-mail attachment that places a virus or worm in the user's computer or in a server that directs traffic on the Internet is called:

A)a foreign scam.
B)a bogus campus card scheme.
C)pharming.
D)an internet pyramid scheme.
E)phishing.

Question 80

Which of the following is not a social factor that would influence a consumer buyer's decision?

A)Lifestyle
B)Hobbies
C)Marital status
D)Culture
E)Peer group