Deck 8: Consumer Purchasing Strategies and Legal Protection

Question 1

One way to gather information about a product is to use an independent testing organization like Consumers Union.

Answer 1

True

Question 2

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

Answer 2

False

Question 3

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) Discount received for paying cash
C) Money spent by stores on advertising
D) Time spent comparing prices
E) Efforts by the government to prevent consumer fraud

Answer 3

Time spent comparing prices

Question 4

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

Question 5

Open dating information provides consumers with information about product freshness.

Question 6

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 7

The first phase in the buying process involves information gathering.

Question 8

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

Question 9

Near-field communications (NFC) allows consumers to make purchases by waving their smartphones in front of a sensor when paying.

Question 10

The most reliable source of product information is likely to come from:

A) an advertisement.
B) salespeople in a store.
C) friends and relatives.
D) a food product ingredient label.
E) a mail order catalog.

Question 11

Several federal government agencies publish materials to assist consumers with buying decisions and financial planning.

Question 12

A social factor that would influence a consumer's buying decision would be the hobbies and interests they have.

Question 13

In most states, third-party debt collectors are permitted to call you during days, nights, weekends, and holidays until the debts you owe are repaid.

Question 14

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

Question 15

An implied warranty is usually in written form.

Question 16

A class action suit allows many people with the same complaint to take action as a group.

Question 17

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

Question 18

The first phase of the consumer buying process is:

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

Question 19

An example of an economic buying influence would be:

A) family size.
B) inflation.
C) advertising.
D) hobbies.
E) place of residence.

Question 20

The most consistent quality is usually found with nationally known, brand-name products.

Question 21

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 place of purchase.
E) obtaining help from an action line.

Question 22

Impulse buying refers to:

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

Question 23

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

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

Question 24

Which of the following information is required on food labels?

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

Question 25

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 26

The items produced for a single retail chain are commonly sold under a ____________ brand.

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

Question 27

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 28

The purpose of a service contract is to:

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

Question 29

The process of resolving consumer complaints with the use of a third party whose recommendations are non-binding is called:

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

Question 30

Which organization specializes in the testing of products for electrical and fire safety?

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

Question 31

Which one of the following is not a common consumer myth?

A) "An auto lease is like a rental; if I have problems with the car or paying, I can just bring it back."
B) "Automotive service contracts can cover repairs not included in the manufacturer's warranty."
C) "I can return my car within 3 days of purchase."
D) "You can't repossess my car; it's on private property."
E) "My creditors can't call me at work."

Question 32

A 32-ounce package selling for $1.60 would have a unit price of:

A) $1.60.
B) $2.00 a pound.
C) 5′ an ounce.
D) 80′ a quart.
E) 12′ an ounce.

Question 33

The main purpose of Consumers Union is to:

A) evaluate 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 34

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 35

Open dating provides information on:

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

Question 36

____________ 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 37

____________ are non-profit stores created by people in a neighborhood to serve their customers, who are also called members. Prices at this type of store are usually lower than at other retailers.

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

Question 38

Cooperatives are most commonly organized to sell:

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

Question 39

Which one of these statements best describes the major criticism of 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 are expensive and contain a lot of exclusions.
E) There are a limited number of authorized repair facilities.

Question 40

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

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

Question 41

For a class action suit to be valid, it must:

A) involve several people with 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 42

Recently, Jim Dahl 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 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

____________ is considered a variable operating expense of an automobile.

A) Depreciation
B) Interest on auto loan
C) Insurance
D) Registration fee
E) Maintenance

Question 45

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 46

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 in operating condition.
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 47

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 48

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 49

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) limited mileage in the lease agreement.
E) responsibility for fuel expenses.

Question 50

When buying an automobile, the best warranties are usually offered by a(n):

A) auction company.
B) private party.
C) used car dealer.
D) fleet sales company.
E) new car dealer.

Question 51

Federal Trade Commission 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 52

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 53

Which of the following is usually the largest fixed expense for a new vehicle?

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

Question 54

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

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

Question 55

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 for-profit organization.
E) It is a publicly supported organization.

Question 56

Most cars bought from private parties 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 57

A vehicle sold "as is" has:

A) a limited warranty.
B) no express warranty.
C) a 30-day guarantee.
D) a full warranty on parts but not labor.
E) a 90-day guarantee.

Question 58

The main purpose of the Edmund's Guide is to:

A) monitor safety problems of existing vehicles.
B) provide price data.
C) reduce sales of stolen vehicles.
D) list cars available for sale from government agencies.
E) provide VIN numbers for vehicles.

Question 59

The purpose of an automobile service contract is to:

A) reduce operating costs of the vehicle.
B) cover regular maintenance.
C) provide automobile insurance at a discount.
D) repair major problems after the warranty expires.
E) stay informed of government safety recalls.

Question 60

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) resolve minor consumer complaints.
E) assist low-income consumers who need legal help.

Question 61

Stephanie Johns is a member in a store that is a nonprofit organization that buys grocery items in bulk. Members can save a considerable amount on the groceries they purchase in the store. 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 62

A motor vehicle has annual depreciation of $2,000; oil changes cost $120, automobile insurance $500 annually, and license plates costs $100. What is the annual amount of the total fixed operating cost for this vehicle?

A) $2,000
B) $2,120
C) $2,500
D) $2,600
E) $2,720

Question 63

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 64

Margaret Wilson has a piece of paper that she can mail in to the manufacturer of the product she just purchased that 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 65

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 web sites on the internet as well. What step in the purchasing process is Hector carrying out?

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

Question 66

A Whirlpool dishwasher is an example of a:

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

Question 67

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 68

Lorenzo Clowder has settled on purchasing a new Honda Accord and has found that the suggested retail price is $22,200 and that the dealer's invoice price is $19,980. 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 69

A credit purchase with 24 monthly payments of $78 and a down payment of $120 would have a total cost of:

A) $1,632.
B) $1,752.
C) $1,872.
D) $1,992.
E) $2,120.

Question 70

Brian Williams has a piece of paper that he gives to the cashier when he purchases a particular item that allows him to get 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 71

An online buying club requires an annual fee of $60 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) $60
C) $165
D) $400
E) $600

Question 72

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 73

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 74

Isabel would spend $200 per week on groceries for her family if she did not use coupons. Her coupons save her 10 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) $240
B) $200
C) $2,040
D) $1,040
E) $10,400

Question 75

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) All of these are advantages.

Question 76

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 77

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 78

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) Information gathering
C) Evaluating alternatives
D) Determining the purchase price
E) Post purchase activities

Question 79

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) Estimated value of vehicle at end of lease period
E) Mileage overage charges

Question 80

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.