Deck 3: The Economic, Social, and Regulatory Aspects of Advertising

Question 1

Proponents of advertising say advertised products are unsafe because it doesn't put company's name and reputation on the line.

Answer 1

False

Question 2

Advertisers today do not perpetuate male and female stereotypes in their ads.
Many advertisers are just not aware of the externalities that their ads can create,and some may perpetuate male and female stereotypes without even realizing it.

Answer 2

False

Question 3

The importance of advertising is best demonstrated by the principle of complete information.

Answer 3

False

Question 4

Deceptive advertising occurs when a consumer is "unjustifiably injured" or there is a "violation of public policy".

Question 5

The FTC can request a company use corrective advertising,but it cannot legally require a company to do so.

Question 6

Most people tolerate advertising clutter because it is the price they must pay for free TV,freedom of the press,and a high standard of living.

Question 7

Critics claim advertising is so powerful that consumers are helpless to defend themselves against it.

Question 8

Adherence to ethical and socially responsible principles is the legal obligation of advertisers.

Question 9

Intense competition tends to increase the number of businesses in an industry.

Question 10

The FTC's Standards for Advertising Motor Vehicles prohibits companies from advertising that prices are equal to or lower than a competitor's,or are the lowest; that the advertiser will match or beat any price; or that the advertiser will offer compensation if it cannot offer an equal or lower price.

Question 11

Children and their parents are treated by advertisers as joint consumers.

Question 12

Legal discussions in the last two decades suggest that truthful commercial speech is also entitled to significant,if not full,protection under the First Amendment.

Question 13

The economic effect of advertising is like the opening break in billiards.

Question 14

When a bakery advertises that it bakes and sells the "the best cinnamon rolls in the world" it is using puffery.

Question 15

CARU is a legal body constituted to safeguard the interests of the advertising industry.

Question 16

Advertising adds value to a brand by educating customers about new uses for a product.

Question 17

The largest of the U.S.business-monitoring organizations is the Better Business Bureau.

Question 18

The chief function of the consumer protection agencies found in many cities and counties is to protect local consumers.

Question 19

A patent is a form of protection provided to the authors of "original works of authorship," including literary,dramatic,musical,artistic,and certain other "intellectual works."

Question 20

Proponents of advertising say it fosters employment and gives consumers a wider variety of product choices.

Question 21

In an economy where there is an abundance of goods and services,advertising serves two purposes:

A) Complete information and self-interest.
B) Selective demand and primary demand.
C) Complete information and absence of externalities.
D) Deceptive advertising and comparative advertising.
E) Deceptive advertising and corrective advertising.

Question 22

The _____ is derived from the goal of society to promote behaviors that foster the greatest good for the most people.

A) egalitarian model
B) utilitarian framework
C) socio cultural framework
D) humanitarian framework
E) acculturated model

Question 23

Of all media,television networks are the most open to controversial advertising.

Question 24

The American Advertising Federation helped to establish the FTC.

Question 25

Which of the following statements about the effects of advertising on the business cycle is true?

A) Historically, when business cycles dip, advertising expenditures remain high.
B) The increased advertising expenditures that occur during business cycle dips always produce an increase in personal consumption expenditures.
C) When business cycles are down; advertising may act as a stabilizing force.
D) The effect of advertising on business cycles is easily determined.
E) Businesses that continue to advertise during a recession lose market share due to puffery and overexposure.

Question 26

Which of the following statements does NOT describe how advertising influences the value of products?

A) Advertising adds value to a product by educating consumers about new uses for a product.
B) The positive image conveyed by advertising often implies product quality.
C) Advertising contributes to self-interest for both the consumer and the advertiser.
D) Advertising adds value to brand names.
E) Advertising allows marketers to choose the values they want consumers to purchase through their products.

Question 27

How does advertising affect the value of a product?

A) Advertising cannot add value to a product if the advertising is needed to educate consumers about a new product use.
B) By monopolizing a product, advertising eliminates competition, which also serves consumer's self-interest.
C) By simply making the product better known, advertising can make the product more desirable to the consumer.
D) Advertising always gives added value to generic brands.
E) Advertising has no effect on the value of a brand or product.

Question 28

The Association of National Advertisers (ANA)comprises 470 major manufacturing and service companies that are clients of member agencies of the AAAA.

Question 29

For a snack on a cold day,Teresa wants a cup of soup,and Johanna wants a cup of brand-name chicken noodle soup.Teresa is illustrating _____ demand,and Johanna is illustrating _____ demand.

A) secondary; kinked
B) elastic; inelastic
C) external; internal
D) primary; selective
E) selective; primary

Question 30

When the city of Pensacola,Florida,advertises itself as "the perfect place for the perfect Florida vacation," it is using:

A) unfair advertising.
B) demarketing.
C) deceptive advertising.
D) puffery in advertising.
E) exploitative advertising.

Question 31

Which of the following statements about how advertising affects competition is true?

A) Some observers believe that advertising actually restricts competition.
B) Advertising is not a barrier to competition.
C) Advertising is regulated so that it does not impede competition.
D) Intense advertising often encourages the entry of new brands and manufacturers into the marketplace.
E) Nonadvertised products cannot compete with advertised products.

Question 32

Consumer advocate groups investigate advertising complaints received from the public and those that grow out of their own research.

Question 33

_____ refers to exaggerated,subjective claims that can't be proven true or false.

A) Covert advertising
B) Skepticism
C) Invectiveness
D) Demarketing
E) Puffery

Question 34

The only effect advertising influencing selective demand will have in declining markets is:

A) creating trade barriers that prevent new competitors from entering the marketplace.
B) slowing the rate of decline.
C) moving the product quickly to the point in the product life cycle where advertising can be replaced by more IMC.
D) reducing the diffusion process.
E) creating a pioneering advantage.

Question 35

Which of the following statements about how advertising affects price is true?

A) Advertising has a strong effect on the price of agricultural products such as leaf tobacco, soybeans, and wheat.
B) Advertising always increases the price of a product-never lowers it.
C) The consumer who buys the product pays for the advertising.
D) Advertising has had a significant impact on the prices charged by utilities.
E) The amount typically spent on advertising is large compared with total sales.

Question 36

Ben and Bernice are going to the mall.Ben wants to buy a regular pair of jeans,and Bernice wants to buy a pair of boot-cut jeans.Ben illustrates _____ demand while Bernice illustrates _____ demand.

A) selective; primary
B) essential; desired
C) external; internal
D) economic; luxurious
E) primary; selective

Question 37

Which of the following is not considered one of the controversies of advertising?

A) How does advertising affect the value of products?
B) Does advertising make us more materialistic?
C) Does advertising affect us subliminally in ways we can't control?
D) What is the proper role for participants in the marketing process?
E) How does advertising affect families?

Question 38

The abundance principle states that in an economy that produces more goods and services than can be consumed,advertising:

A) maintains high prices.
B) keeps consumers informed of their selection alternatives.
C) contributes to the earth's waste disposal problem.
D) prevents companies from successfully competing for consumer dollars.
E) acts as a stabilizing factor during a business cycle downturn.

Question 39

Advertising apologists point out that of all the advertising reviewed by the Federal Trade Commission in a typical year,97 percent is found to be satisfactory.

Question 40

A complaint against advertising based on how signage obstructs the view of the natural environment along interstates is an example of a(n):

A) flawed communications linkage.
B) absence of externalities.
C) deceptive micro argument.
D) long-term macro argument.
E) acquisitiveness of consumers.

Question 41

Socially responsible advertisers:

A) are always mindful of man's need for open communication.
B) do what the government and federal agencies want.
C) do what society views as best for the welfare of people in general.
D) do what ethical societies have prescribed for businesses.
E) realize their primary responsibility is to provide the greatest good for the largest number of people.

Question 42

_____ means doing what is morally right in a given situation.

A) Subliminal advertising
B) Ethical advertising
C) Truth-in-advertising
D) Ethical
E) Covert advertising

Question 43

A ladder is advertised as "The strongest,safest most versatile ladder in the world." The advertiser is using:

A) unfair advertising.
B) covert advertising.
C) deceptive advertising.
D) puffery in advertising.
E) exploitative advertising.

Question 44

How has the U.S.Supreme Court defined the rights of advertisers under the First Amendment?

A) It has supported the ban against professional advertising.
B) It has established strict control over packaged-goods advertising.
C) It has banned all cigarette advertisements from the broadcast media.
D) It has suggested that truthful commercial speech is entitled to significant, if not full protection under the Act.
E) It has made social responsibility mandatory for publicly traded firms.

Question 45

With respect to offensiveness in advertising,some ads frequently come under attack for their usage of nudity and sexual innuendo.Professionals indicate that the ultimate regulator of such ads is the fact that:

A) the government is currently forming policy that will completely control this form of advertising.
B) companies such as this will never be able to successfully expand worldwide where moral standards are higher than in the United States.
C) trends will eventually change and the problem will take care of itself.
D) companies like this one will eventually run out of money and the advertising will cease.
E) if the ads don't pull in the audience, the campaign will falter and die because the marketplace has the ultimate veto power.

Question 46

When an ad for paints says,"We'll go to the ends of the earth to make the finest acrylic paint," it is an example of:

A) deceptive advertising.
B) a nonproduct fact.
C) unfair advertising.
D) puffery in advertising.
E) covert advertising.

Question 47

.Recently,a car company and a designer teamed to create and market scarves.Ten dollars from the sale of each scarf was donated to the Susan G.Komen Breast Cancer Foundation.By helping find a cure for breast cancer,the car company is:

A)manipulating the consumer.
B)behaving in a socially responsible fashion.
C)perpetuating a materialistic viewpoint.
D)complying with federal regulations.
E)initiating a market development strategy.

Question 48

Which of the following statements about deceptive advertising is true?

A) Puffery can be called deceptive advertising when consumers believe it to be true.
B) Deceptive advertising is sometimes used because it establishes long-term consumer confidence in the product being advertised.
C) To be labeled as deceptive, ads must contain some false or misleading statement.
D) Deceptive ads serve the best interests of the advertisers.
E) There are no regulations governing deceptive advertising.

Question 49

An ad for a soda company uses the tagline "life is good" is using:

A) nonproduct facts.
B) advocacy information.
C) comparative facts.
D) misleading information.
E) environmental information.

Question 50

The basic premise of _____ is that advertisers intentionally create ads with messages that are hidden in the illustrations just below the limen (the threshold of perception).

A) suggestive selling
B) hidden attribution communication
C) subliminal advertising
D) peripheral communication
E) faux marketing

Question 51

Under current law,the only product claims that are considered deceptive are those that:

A) have messages about the social context in which the consumer can use the brand.
B) can unjustifiably injure a consumer.
C) violate public policy.
D) have the potential to deceive or mislead reasonable people.
E) exploit vulnerable groups.

Question 52

According to the owner of Maryland's largest African-American-owned ad agency,"If you were to come from another planet and watch American television,you would think that all black people did was play basketball and hang out on street corners and do rap music." He is accusing advertising of:

A) making consumers too materialistic.
B) being excessive.
C) manipulating people into buying things they don't need.
D) being deliberately deceptive.
E) perpetuating stereotypes.

Question 53

Ever since the Napoleonic Wars,the British have used the derogatory terms "frogs" to refer to the French.When the London-based Institute Francais advertised French language courses at all levels from beginners to advanced students,it pictured the development of a frog in stages from egg through tadpole to full maturity.This would be an example of:

A) deliberate deception.
B) advertising manipulation.
C) faux marketing.
D) stereotype perpetuation.
E) cultural malfeasance.

Question 54

The manufacturer of pancake mixes and syrups replaced her old "mammy" look with a stylishly dressed,grandmotherly figure.This change was an effective way for the manufacturer to:

A) make its advertisements less deceptive about product contents.
B) protect the English language.
C) distribute the products.
D) stop the perpetuation of a stereotype.
E) be deceptive.

Question 55

To promote responsible children's advertising and to respond to public concerns,the Council of Better Business Bureaus established the:

A) Children's Protection Agency to raise money for ethical children's advertising.
B) Children's Advertising Review Unit.
C) Children's Board of Information to review all children's advertising.
D) Board of Advertising Review to rate ads in the same manner that movies are rated.
E) Code for Ethical Children's Advertising.

Question 56

For business people who believe that freedom of commercial speech should be afforded equal protection under the First Amendment,the _____ is ominous.

A) banning of puffery
B) legislation against tobacco advertising
C) establishment of the Children's Advertising Review Unit that wants to ban all advertising targeted to children
D) need to avoid any semblance of stereotyping
E) concern with political correctness

Question 57

When a manufacturer of kitchen appliances runs a commercial asking people to donate their time,money,and energies to Habitat for Humanity,it is an example of:

A) puffery because there is no way to prove the sincerity of the request.
B) a socially responsible act for the welfare of a specific community.
C) deceptive advertising because the company donates appliances to the organization.
D) a tying agreement because it makes consumers feel as if they should only buy this company's appliances.
E) product advertising because it features the company's appliances.

Question 58

The FTC defines _____ as any ad that contains a misrepresentation,omission,or other practice that can mislead a significant number of reasonable consumers to their detriment.

A) hazardous IMC
B) faux marketing
C) unfair advertising
D) deceptive advertising
E) subversive advertising

Question 59

The Federal Trade Commission (FTC)regulates:

A) advertising for products sold in interstate commerce.
B) how hazardous products are packaged and advertised.
C) liquor advertisements, by prohibiting the liquor advertisement on televisions and radio.
D) the advertising, packaging, and branding of all packaged goods.
E) the competition in the market and reduces the number of competitors.

Question 60

Canadian regulation of advertising:

A) has common jurisdiction between federal and provincial governments.
B) is much more complex than in the U.S. because it is a bicultural society.
C) has complexities of regulating monoculture society.
D) is overseen by one regulatory body.
E) is basically non-existent.

Question 61

When Melissa looked at the container of weed and grass killer,she saw a notice that read,"Avoid contact with eyes.This product can cause eye irritation." This _____ would be important to all of us who wanted to take the best possible care of our eyes.

A) package requirement
B) testimonial of goodness
C) nutritional claim
D) substantiation
E) affirmative disclosure

Question 62

When David looked at the carton of healthy ice cream he saw a notice that read,"Attention Diabetics: Contains carbohydrates naturally occurring in milk,does not contain sucrose".This _____ would be important to someone who was worried about maintaining his or her blood sugar.

A) package requirement
B) testimonial of goodness
C) externality
D) substantiation
E) affirmative disclosure

Question 63

The _____ protects all copyrighted material,including advertising,in the United States.

A) Better Business Bureau
B) Federal Trade Commission
C) Library of Congress
D) Department of Commerce
E) U.S. Copyright Office

Question 64

_____ advertising occurs when a consumer is "unjustifiably injured" or there is a "violation of public policy."

A) Deceptive
B) Corrective
C) Unfair
D) Covert
E) Distracting

Question 65

Through the issuance of _____,the government provides incentives to invent,invest in,and disclose new technology worldwide.

A) trademarks
B) copyrights
C) patents
D) venture capital
E) differential advantages

Question 66

When the Federal Trade Commission determines that an ad is deceptive or unfair,it can:

A) require the advertiser to run cooperative advertising.
B) convince the advertiser to sign a consent decree.
C) require the advertiser to pay reimbursements to all consumers who bought the product.
D) force the firm that ran the deceptive ad to get "advance clearance" on all future ad campaigns.
E) place a federal representative in the deceptive firm's advertising department to oversee future ad campaigns.

Question 67

Recently,Adolph Coors Co.ran an ad which featured a purported taste test between Aspen Edge and Anheuser-Busch's Michelob Ultra.A taste-tester downed a glass of Aspen Edge and took only a sip of Michelob Ultra.A print version of the ad said,"Beer drinkers agree that Aspen Edge has more taste than Michelob Ultra." This ad is an example of _____ advertising.

A) corrective
B) unfair
C) comparative
D) cease-desist
E) consent

Question 68

Which federal agency would have the authority to deal with the fact that a brand of hotdog marked "Low Fat" contains only ten percent less fat than regular hotdogs?

A) The Library of Congress
B) The Patent and Trademark Office
C) The Food and Drug Administration
D) The United States Post Office
E) The Federal Communications Commission

Question 69

A trademark:

A) is any word, name, symbol, or device, or combination thereof, which identifies one particular product or line of products from a single source.
B) prevents the whole ad from being legally used by another.
C) is required by law to be significantly different from the trade name of the organization that owns the trademark.
D) is registered and protected by the Library of Congress.
E) grants exclusive rights to the trademarked material for the life span of its owner plus an additional 50 years.

Question 70

A(n)_____ is a document that the advertiser accused of deceptive or unfair advertising signs,in which the advertiser agrees to stop the objectionable advertising.

A) consent decree
B) product substantiation claim
C) cessation order
D) ad sanctioning agreement
E) guilt disclosure

Question 71

The _____ has indirect control over advertising through its authority to license or revoke the license of all broadcasting stations.

A) Federal Trade Commission
B) Federal Communications Commission
C) Better Business Bureau
D) National Advertising Review Council
E) Office of Consumer Affairs

Question 72

The ad for Transderm Scop patch,a remedy for motion sickness,states that it "is clinically proven more effective than Dramamine," a pill cure for motion sickness.The manufacturer of the Transderm Scop patch used _____ advertising.

A) deceptive
B) corrective
C) unethical
D) nonproduct
E) comparative

Question 73

A complaint was filed with the Federal Trade Commission that accused the film industry regularly advertised R- rated movies during television shows and in magazines most popular with children.In other words,the FTC investigated to see if the film industry was guilty of:

A) acquisitiveness.
B) unfair advertising.
C) deceptive advertising.
D) an ethical dilemma.
E) anti-competitive advertising.

Question 74

Safeway,the UK supermarket chain,was reprimanded by a government agency in the United Kingdom because it distributed a leaflet titled "More reasons NOT to shop at Morrisons." In the leaflet,Safeway depicted two shopping receipts,one for Safeway and one for Morrisons.The Safeway receipt claimed goods purchased at Safeway were much cheaper than the same goods purchased at Morrisons.Morrisons said that the goods on the imaginary receipt were not typical purchases,and that the reason they were cheaper on the Safeway receipt was because the goods were on sale in the Safeway store.The FTC would have said that Safeway was guilty of:

A) an ethical lapse.
B) puffery in advertising.
C) deceptive advertising.
D) an ethical dilemma.
E) non-competitive advertising.

Question 75

Some years ago an ad for a discount store said the retailer was selling a pair of diamond earrings that had been reduced from their regular price of $1,199 to $399.Upon investigation,it was discovered that there was no evidence that the store had ever sold the earrings at the "regular" price.This ad was an example of _____ advertising.

A) deceptive
B) corrective
C) demarketing
D) nonproduct
E) comparative

Question 76

Recently,Adolph Coors Co.ran an ad which featured a purported taste test between Aspen Edge and Anheuser-Busch's Michelob Ultra.A taste-tester downed a glass of Aspen Edge and took only a sip of Michelob Ultra.A print version of the ad said,"Beer drinkers agree that Aspen Edge has more taste than Michelob Ultra." Coors was forced to remove the television advertisements after Anheuser-Busch said it made unsubstantiated claims about consumer preferences.Anheuser-Busch:

A) was exercising its right to protect its trademark.
B) accused Coors of violating copyright laws.
C) was using laws designed to protect from gray marketing.
D) was engaging in anti-competitive behavior.
E) issued an unsupported cease-and-desist order.

Question 77

Cease-and-desist orders:

A) are voluntary statements that have no legal ramifications.
B) require that the FTC place a representative in the advertising department of the accused advertiser to monitor further campaigns.
C) prohibit further use of the offending advertisement.
D) are issued after the advertiser signs a consent decree.
E) are not issued by the FTC.

Question 78

The Federal Trade Commission has filed a complaint against the parent company of a flower company,for "false and misleading" advertising.The flower company claims that it ships inventory "directly from the fields." The ads imply that the flowers are not picked until they are ordered.The flower company actually stores flowers in refrigerated warehouses and ships from these warehouses.The FTC has ordered the flower company to run _____ and inform its customer that its flowers do not come fresh from the field.

A) consent decree
B) cooperative advertisement
C) corrective advertisement
D) cease-desist
E) nonproduct advertisement

Question 79

A magazine ran ads in an in-flight magazine offering real caviar at substantially lower prices than it typically sold for.Later,FTC investigators determined the caviar that was being sold as exotic caviar was produced in the U.S.and was actually overpriced given its quality.The magazine engaged in:

A) an ethical lapse.
B) puffery in advertising.
C) deceptive advertising.
D) an ethical dilemma.
E) anti-competitive advertising.

Question 80

Which of the following statements about the Food and Drug Administration (FDA)is true?

A) The FDA has authority over the labeling, packaging, and branding of all packaged foods and therapeutic devices.
B) The FDA regulates only food and medications.
C) The FDA does not require health food manufacturers to list the ingredients of their products on package labels.
D) The FDA has no control over promotional statements on package labels.
E) The FDA is a branch of the Federal Trade Commission (FTC).