Deck 15: Consumer Protection

Question 1

Consumer advocacy groups in the United States actively promote and speak for the interests of millions of consumers.

Answer 1

True

Question 2

Which organization brings together 300 nonprofit groups to espouse the consumer viewpoint?

A) Consumers Union.
B) Consumer Federation of America.
C) National Consumer League.
D) Public Citizen.

Answer 2

B

Question 3

The Environmental Protection Agency's mission is to assure the safety and effectiveness of a wide range of consumer products including pharmaceutical drugs and foods.

Answer 3

False

Question 4

As business firms grow in size and market power, they have increasingly lost the ability to dominate marketplace transactions with their customers.

Question 5

Which of the following statements is not true about the organization Consumers Union (the publisher of Consumer Reports magazine)?

A) It is involved in activities promoting the interests of consumers.
B) It conducts extensive tests on selected consumer products and services.
C) It is supported by the federal government.
D) It publishes the results of tests, with ratings on brand-name basis, in its magazine.

Question 6

Quality management emphasizes high quality and customer satisfaction through continuous improvement of a company's product or service at the final stages of the production process.

Question 7

The consumer's right to privacy assures that information disclosed in the course of a commercial transaction is not shared with others unless authorized.

Question 8

One reason for business efforts to reform product liability laws is the increasing cost of insuring against liability suits.

Question 9

Deceptive advertising is still legal in most countries.

Question 10

The doctrine of strict liability extends only to the retailer who is involved in selling the product, not the manufacturer.

Question 11

The Department of Agriculture has authority over genetically modified food and some chemicals that may affect consumers.

Question 12

Under the "right to be heard" protection, the consumer is to be assured satisfactory quality and service at fair prices.

Question 13

Consumers have become more dependent on businesses for product quality because:

A) The complexity of products makes choices complicated for consumers.
B) Instructions for use or care of product are provided in clear and simple language.
C) Their technical competence allows them to inspect the products thoroughly.
D) Competition has forced manufacturers to market lower-quality goods.

Question 14

The Children's Online Privacy Protection Act limits the collection of information online from and about children under the age of 13.

Question 15

A goal of the consumer movement is to make consumer power:

A) Exceed the rights and powers of firms that sell goods and services.
B) Exceed the rights and powers of the Food and Drug Administration.
C) An effective counterbalance to the rights and powers of firms that sell goods and services.
D) An effective counterbalance to the rights and powers of the Food and Drug Administration.

Question 16

Consumers make less rational choices when they have accurate information about a product.

Question 17

A prime social responsibility of business is to safeguard consumers:

A) While continuing to supply them with goods and services they want.
B) While maintaining high profit margins.
C) Interests by supplying consumers with products at the lowest possible cost.
D) With better health by providing new technology.

Question 18

In the "consumer self-help" approach to protecting consumer privacy rights, new government regulations will protect the consumer online.

Question 19

The Latin phrase, caveat emptor, meaning "let the seller beware" has put sellers on alert to look after their own interests.

Question 20

Managing for product quality is an attempt by business to address its suppliers' needs.

Question 21

Which of the following is (are) core rights of consumers?

A) The right to safety.
B) The right to be represented.
C) The right to purchase.
D) All of the above.

Question 22

According to the doctrine of strict liability, which of the following statements is not true?

A) It is not necessary for consumers to prove negligence or breach of warranty by the producer.
B) The consumer's own negligence is not an acceptable defense by the manufacturer.
C) Manufacturers can be held liable if a product is inherently dangerous.
D) This doctrine extends only to those involved in supplying parts for the final product.

Question 23

The "right to be heard" assures that consumers' interests will:

A) Receive full and sympathetic consideration.
B) Be protected against fraudulent or misleading information.
C) Be assured satisfactory quality and service at a fair price.
D) Be given all the facts to make an informed choice.

Question 24

The major federal consumer protection agencies are authorized by law to:

A) Intervene directly into the very center of free market activities, if that is considered necessary to protect consumers.
B) Substitute government-mandated standards for decision making by private buyers and sellers.
C) Intervene in the market by influencing consumers to buy one product or service rather than another.
D) Both A and B, but not C

Question 25

Online shoppers have always been concerned that:

A) They receive online ads for products similar to the ones they bought earlier on the Web.
B) Their favorite Web sites provide a large variety of products and services.
C) The government might become overly involved in protecting consumer privacy.
D) Information they reveal in the course of a sales transaction might be misused.

Question 26

The burden of responsibility for product performance has shifted to the producer, under the legal doctrine of:

A) Strict liability.
B) Product liability.
C) Consumer liability.
D) Supplier liability.

Question 27

Which of the following limits the collection of information online from and about children under the age of 13?

A) Federal Juvenile Safety Bill.
B) Parents for the Safety of Children Act 2000.
C) The "Do Not Collect" Bill of 2003.
D) The Children's Online Privacy Protection Act.

Question 28

Manufacturers making false or misleading claims about a competitor's product is:

A) Illegal but ethical.
B) Illegal and unethical.
C) Legal but unethical.
D) Legal and unethical.

Question 29

When businesses adopt voluntary policies for protecting the privacy of individuals' information disclosed during electronic transaction, this is called:

A) Industry self-regulation.
B) Privacy legislation.
C) Consumer self-help.
D) Business privacy regulation.

Question 30

Many companies have argued that the evolution of strict liability has:

A) Unfairly burdened them with excess costs.
B) Decreased liability insurance rates.
C) Increased corporate revenues and dividends.
D) Changed top management's attitude about the consumer.

Question 31

Which agency(ies) was (were) created during the great wave of consumer regulations in the 1960s and early 1970s?

A) Consumer Product Safety Commission.
B) National Highway Traffic Safety Administration.
C) National Transportation Safety Board.
D) All of the above.

Question 32

The main responsibility of the National Highway Traffic Safety Administration is to:

A) Set a uniform national speed limit.
B) Set airline safety standards.
C) Set motor vehicle safety standards.
D) Safeguard consumers from altered odometers.

Question 33

An identifying marker placed on a user's computer hard drive during visits to some Web sites is called a:

A) Spy.
B) Virus.
C) Cookie.
D) Firewall.

Question 34

Which of the following is a mission of the Food and Drug Administration?

A) To assure the safety and effectiveness of a wide range of consumer products.
B) To prohibit unfair or deceptive advertising.
C) To ensure that packaging and labels contain all the necessary information.
D) Inspection of meat, poultry, seafood, and produce.

Question 35

Which of the following departments was established in 1914 and has been given additional powers to protect consumers over the years, including in the area of online privacy?

A) Federal Trade Commission.
B) Food and Drug Administration.
C) Consumer Product Safety Commission.
D) Antitrust Division of the Department of Justice.

Question 36

Which of the following is not a goal of consumer protection laws?

A) Encourage competitive pricing.
B) Facilitate consumers' getting extended credit when making purchases.
C) Provide consumers with better information when making purchases.
D) Protect consumers against possible hazards from products purchased.

Question 37

The act that requires lenders to inform borrowers of the annual rate of interest to be charged, plus related fees and services charges is called:

A) The Consumer Protection Act.
B) The Product Safety Act.
C) The Predatory Mortgage Act.
D) The Truth in Lending Act.

Question 38

In the United States, which of the following agencies enforces the laws prohibiting deceptive advertising?

A) Congress.
B) Consumer Product Safety Commission
C) Federal Trade Commission
D) Department of Justice.

Question 39

The law requiring that toys and infant products be tested before sale is called the:

A) Child Safety Act.
B) Strong Product Safety Bill.
C) Consumer Product Safety Improvement Act.
D) Uniform Safety Testing Bill.

Question 40

Before deregulation, government agencies frequently:

A) Held prices artificially high, shielding businesses from competition.
B) Held prices artificially low, shielding consumers from selection.
C) Encouraged overseas trade, shielding businesses from competition.
D) Discouraged overseas trade, shielding consumers from selection.

Question 41

One alternative to product liability lawsuits is called:

A) Limited resolution.
B) Punitive damages reform.
C) Alternative dispute resolution.
D) Consumerism.

Question 42

In some cases, businesses have banded together to agree on how they will treat their customers. This is called:

A) Code of regulation.
B) Consumer affairs doctrine.
C) Voluntary industry codes of conduct.
D) Industry action standards.

Question 43

Businesses can take a number of measures to respond voluntarily to consumer demands. Which of the following is an example of such a measure?

A) Product liability law reform.
B) Consumer call centers.
C) Consumer advocacy groups.
D) Alternative dispute resolution policies.

Question 44

The consumer movement exists because consumers want to be treated fairly and honestly in the marketplace. Outline and explain the additional reasons for the existence of the consumer movement.

Question 45

Because of the movement towards quality management, companies are now focusing on the customer. How does this occur? How could a specific industry be even more socially responsible to its customers? Explain.

Question 46

Consumer advocates argue that consumers are entitled to five core rights. What are they? Explain each.

Question 47

Consumer groups have generally opposed the idea of product liability reform using which of the following arguments?

A) Punitive damages should be limited.
B) Strict liability should be retained.
C) The burden of proof should be shifted to consumers.
D) Losers should be made to pay some of the other side's legal bills.

Question 48

Outline some of the major government agencies responsible for consumer related issues. What is the major mission of each?

Question 49

Under proposals to establish uniform federal standards for determining liability:

A) Plaintiffs would be discouraged from proceeding to trial.
B) Companies would not have to go through repeated trials on the same charges in different states.
C) Judges rather than juries would determine the original amount of punitive damages.
D) Consumers would have to prove that a manufacturer knew or should have known that a product design was defective.

Question 50

In your opinion, do U.S. product liability laws need to be changed? If so, how? If not, why not? Investigate proposed changes in product liability laws over the last several years and evaluate them.

Question 51

How do new technologies increasingly enable businesses to collect and use vast amounts of personal data about their customers and potential customers? Explain. Do you think these trends benefit consumers or not, and why?