Deck 2: The Environment of Advertising

Question 1

Despite the increasing number of women in executive positions in the work force, most modern advertisers have not changed their stereotypical depictions of women as subservient housewives and sex objects.

Answer 1

False

Question 2

When an ad states that chicken soup made with Swanson chicken broth "tastes as good as grandma's," the advertiser is using puffery.

Answer 2

True

Question 3

The U.S. Supreme Court does not differentiate between "speech" and "commercial speech."

Answer 3

False

Question 4

The NLEA sets strict legal definitions for terms such as light and low fat as used in advertising food products. The Nutritional Labeling and Education Act (NLEA), which went into effect in 1994, gave the FDA additional muscle by setting stringent legal definitions for terms such as fresh, light, low fat, and reduced calories.

Question 5

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

Question 6

Critics argue there is too much advertising due to the proliferation of new media.

Question 7

According to advertising supporters, advertising promotes a higher standard of living, subsidizes the arts, and supports freedom of the press.

Question 8

The importance of advertising is best demonstrated by the iceberg principle.

Question 9

While most children and parents are still joint consumers, more and more children are becoming sole decision makers.

Question 10

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

Question 11

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

Question 12

The economic effect of advertising triggers a chain reaction of hard to predict economic events.
The economic effect of advertising is like the break shot in billiards or pool. The moment a company begins to advertise, it sets off a chain reaction of economic events. The extent of the chain reaction, although hard to predict, is related to the force of the shot and the economic environment in which it occurred.

Question 13

When State Farm insurance uses advertising to show that it has lower rates than Progressive insurance, it is using comparative advertising.

Question 14

The uniform nature of advertising regulation in the U.S. ensures that advertisers understand what is required to comply with regulations.

Question 15

Intense competition rarely reduces the number of businesses in an industry.

Question 16

Uniform newspaper advertising codes make it easy for advertisers to make sure that their ads meet all legal and ethical requirements.

Question 17

A criticism of advertising is that ads are so powerful that consumers are helpless to defend themselves against the temptations and appeals of ads.

Question 18

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

Question 19

The chief function of the consumer protection agencies found in many cities and counties is to act as a watchdog for federal regulators.
Many cities and counties also have consumer protection agencies to enforce laws regulating local advertising practices. The chief function of these agencies is to protect local consumers against unfair and misleading practices by area merchants.

Question 20

The big cursive G that appears in all ads for General Mills cereals is an example of a trademark.

Question 21

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

A) The increased advertising expenditures that occur during business cycle dips always produce an increase in personal consumption expenditures.
B) The effect of advertising on business cycles is easily determined and monitored.
C) When business cycles are down, advertising may act as a stabilizing force.
D) Historically, when business cycles dip, advertising expenditures increase.
E) Advertising does not affect the business cycle according to most experts.

Question 22

The Better Business Bureau investigates advertisements for possible violations of accuracy, and it works with law enforcement to prosecute fraudulent advertisers.

Question 23

The broadcast standards department at a network or affiliated station approves and rejects commercials.

Question 24

How does advertising most likely affect the value of a product?

A) Advertised products meet higher quality standards than non-advertised products.
B) Advertising eliminates all perceptual barriers to purchase a product or service.
C) Advertising educates customers about new uses for a product.
D) Advertising provides a predictable increase in product sales.
E) Advertising decreases both competition and prices.

Question 25

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

A) unfair advertising.
B) niche marketing.
C) deceptive advertising.
D) puffery.
E) exploitation.

Question 26

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

A) Advertising has a strong effect on the price of agricultural products such as soybeans.
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 27

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

A) Misleading advertising
B) Hyperbole
C) Advertising manipulation
D) Exploitative advertising
E) Puffery

Question 28

The basic premise of _____ is that advertisers intentionally create ads with sexual messages that are hidden in the illustrations.

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

Question 29

Externalities are best described as:

A) social costs.
B) unseen opportunity costs.
C) factors used to increase advertising reach.
D) tangible factors that hinder communication.
E) inexpensive ways to increase perceptual value to a product.

Question 30

The Better Business Bureau operates primarily at the national level and is funded by the dues of media groups.

Question 31

Which theory states that advertising allows companies to compete more effectively for consumer dollars and keeps consumers informed of their selection alternatives if the economy produces more goods and services than can be consumed?

A) Abundance principle
B) Macroeconomic theory of supply and demand
C) Economic principle of normalization
D) Utilitarian principle of advertising
E) Normative theory of supply and demand

Question 32

What effect does advertising have on consumer demand?

A) Advertising creates trade barriers.
B) Advertising slows the rate of product decline.
C) Advertising moves products quickly through the product life cycle.
D) Advertising slows the adoption process and lengthens the product life cycle.
E) Advertising hinders the development of new products and decreases consumer demand.

Question 33

Which of the following statements is most likely true about deceptive advertising?

A) Puffery can be called deceptive advertising when reasonable people 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 claims which have not been previously substantiated.
D) Deceptive ads serve the best interests of the advertisers.
E) There are no regulations governing deceptive advertising.

Question 34

One of the most effective tools for regulating American advertising is the Advertising Self-Regulatory Council. In some cases, the ASRC is more effective than the court system in handling advertising disputes.

Question 35

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

A) maintains high prices across the board.
B) keeps consumers informed of their alternatives.
C) contributes to the global waste disposal problem.
D) prevents firms from successfully competing for consumer dollars.
E) acts as a stabilizing factor during a long-term business cycle downturn.

Question 36

Most advertisers appreciate attention from consumer advocate groups, which rarely succeed in having ads pulled.

Question 37

Mike and Lou are going to the mall. Mike wants to buy a pair of jeans and Lou wants to buy a pair of Levi boot-cut jeans. Mike illustrates _____ demand while Lou illustrates _____ demand.

A) secondary; kinked
B) longitudinal; circular
C) external; internal
D) primary; selective
E) selective; primary

Question 38

Which of the following images best describes the chain reaction of economic events that takes place once a company begins to advertise?

A) The opening break shot in billiards
B) A beautiful woman entering a room
C) A car speeding up as it goes downhill
D) A dart hitting the center of a bull's eye
E) A line of dominoes being knocked over

Question 39

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

A) unjustifiably injure the consumer.
B) contain inadequate information.
C) violate public policy.
D) are factually False.
E) use subliminal images.

Question 40

Which statement about how advertising affects competition is most likely true?

A) Advertising by large firms tends to have a limited effect on small firms.
B) Most single advertisers are large enough to dominate the entire nation.
C) Advertising is highly regulated so that it does not impede competition.
D) Intense competition tends to increase the number of businesses in an industry.
E) Non-advertised products are unable to compete with advertised, branded products.

Question 41

Ever since the Napoleonic Wars, the British have used the derogatory term 'frogs' to refer to the French. When the London-based Institute Français 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 42

Two companies, Le Shuttle and P&O European Ferries, provide Europeans with the ability to cross the English Channel. An advertisement for Le Shuttle claimed it was more popular with travelers than P&O European Ferries. This is an example of _____ advertising.

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

Question 43

How do advertisers most likely show their social responsibility?

A) By refraining from the use of advertising clutter
B) By providing pro bono work to nonprofit groups
C) By obeying most FTC regulations
D) By creating markets for new products
E) By joining self-regulatory agencies

Question 44

The Federal Trade Commission (FTC) regulates:

A) advertising for products sold in interstate commerce.
B) marketing of hazardous products and services.
C) food and alcohol safety.
D) packaged food products and their labels.
E) the television and radio industries.

Question 45

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) professional
C) comparative
D) cease-desist
E) consent

Question 46

Nike's Air Jordan XX3, the 23^rd edition of the series of shoes endorsed by retired basketball star Michael Jordan, differs from its predecessors because it is the first basketball shoe shaped by what Nike calls "Nike Considered," an approach to design that favors environmentally-preferable materials, reduces toxic chemicals, and curbs waste. By adopting such environmentally-supportive standards to make its products, Nike 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 47

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 48

According to the owner of NPC & Associates, 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." The speaker is most likely 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 49

A complaint was filed with the Federal Trade Commission (FTC) that accused the film industry of regularly advertising R-rated movies during television shows most popular with children. The FTC most likely investigated to see if the film industry was guilty of:

A) hazardous advertising.
B) unfair advertising.
C) deceptive advertising.
D) False demonstrations.
E) partial disclosure.

Question 50

According to Wilson Bryan Key, subliminal advertising:

A) works by creating a need for previously unsought products.
B) involves providing an incomplete amount of information to consumers.
C) relies on embedded messages that seduce consumers into making purchases.
D) degrades people's value systems by promoting materialism and hedonism.
E) results in a normative demand cycle for most mature products and services.

Question 51

How has the U.S. Supreme Court intervened in 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 offered significant protection for truthful commercial speech.
E) It has made social responsibility mandatory for publicly traded firms.

Question 52

Socially responsible advertisers:

A) are mindful of the need for open communication.
B) do what the government wants and requires.
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 53

Safeway, a U.K.-based 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." (Morrisons is one of Safeway's primary competitors in the U.K.). 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 most likely found Safeway guilty of:

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

Question 54

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 (CPA).
B) Children's Advertising Review Unit (CARU).
C) Children's Board of Information.
D) Board of Advertising Review.
E) Code for Ethical Children's Advertising (CECA).

Question 55

Which of the following statements about consumer privacy issues is most likely true?

A) Consumers lack any capabilities or tools to limit the personal information gathered about them on the Internet.
B) According to the Fair Information Practice Principles, Internet companies must clearly post their privacy policies.
C) Most Internet users believe that tracking customer Internet usage is helpful and not harmful.
D) The Federal Communications Commission regulates consumer privacy rights.
E) Enabling cookies helps Internet users to safeguard their personal information.

Question 56

_____ means doing what the advertiser and the advertiser's peers believe is morally right in a given situation.

A) Principled advertising
B) Situational advertising
C) Truth-in-advertising
D) Ethical advertising
E) Responsible advertising

Question 57

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

A) Deceptive
B) Corrective
C) Unfair
D) Hazardous
E) Injurious

Question 58

With respect to offensiveness in advertising, Benetton ads frequently come under attack for the usage of nudity and sexual innuendo. Experts would most likely agree that the ultimate regulator of such ads is the fact that:

A) universal laws completely control this form of advertising.
B) moral standards are higher overseas than in the United States.
C) trends and personal tastes are objective and quantifiable metrics.
D) such companies tend to lose money and shift their marketing strategies.
E) the marketplace has the ultimate veto power on the success or failure of such ads.

Question 59

U.S. Caviar ran ads in an onboard American Airlines magazine offering real Russian caviar at substantially lower prices than it typically sold for. Later, FTC investigators determined that the caviar U.S. Caviar was selling as exotic Russian caviar was produced in the U.S. and was actually overpriced given its quality. U.S. Caviar most likely engaged in:

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

Question 60

Which of the following statements about The Social Impact Of Advertising is most likely true?

A) While consumers believe there is a potential for too much advertising, most advertisers disagree.
B) Most people tolerate ad clutter as the price for free TV and an information-rich Internet.
C) The FCC has imposed no restraints on advertising clutter in any media.
D) The Social Impact Of Advertising is purely a consumer misperception.
E) The Social Impact Of Advertising has plateaued.

Question 61

Which of the following is the largest of the U.S. business-monitoring organizations?

A) Office of Consumer Affairs
B) Better Business Bureau
C) Consumer Protection Agency
D) American Association of Consumers
E) U.S. Chamber of Commerce

Question 62

Good Housekeeping magazine places its "Seal of Approval" on all the products advertised in it. If any of the products are later found to be defective, Good Housekeeping promises to refund the money paid for the products. This kind of careful screening:

A) is required by the Federal Trade Commission.
B) is a way for a medium to monitor its advertisements.
C) was required by legislation passed during the Great Depression.
D) is used by most print media, including the tabloids.
E) is redundant given the watchfulness of federal regulatory agencies.

Question 63

The Federal Trade Commission has filed a complaint against Provide Commerce, the parent company of Pro-Flowers, for "False and misleading" advertising. Pro-Flowers claims that it ships inventory "directly from the fields." The ads imply that the flowers are not picked until they are ordered. Pro-Flowers actually stores flowers in refrigerated warehouses and ships from these warehouses. The FTC can most likely order Pro-Flowers to run _____ and inform its customers that its flowers do not come fresh from the field.

A) substantiated advertisements
B) corrective advertisements
C) cease-desist orders
D) consent orders
E) cessation orders

Question 64

An ad in Self magazine states, "Listerine mouthwash reduces germs on up to 96.7% of tissue surfaces 15 minutes after a Listerine gargle." Which federal agency would have the authority to determine if this claim was correct?

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

Question 65

Adolph Coors Co. ran an ad which featured a purported taste test between Coors's 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 most likely:

A) asserted that Coors used bait-and-switch offers with consumers.
B) accused Coors of violating copyright and trademark laws.
C) relied on laws designed to protect against gray marketing.
D) wanted research data that supported Coors's claim.
E) issued an unsupported cease-and-desist order.

Question 66

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

A) The FDA has authority over the labeling of cosmetics, drugs, and vitamin supplements.
B) The FDA monitors all copyrighted material published in the United States and abroad.
C) The FDA does not require health food manufacturers to list product ingredients on labels.
D) The FDA has no control over promotional statements that are included on package labels.
E) The FDA is a branch of the Federal Trade Commission (FTC) and under its jurisdiction.

Question 67

When Grace looked at the container of Round-Up weed and grass killer, she saw a notice that read, "Avoid contact with eyes. This product can cause eye irritation." Which term best describes this label information?

A) Package requirement
B) Customer testimonial
C) Nutritional claim
D) Consent decree
E) Affirmative disclosure

Question 68

Two companies, Le Shuttle and P&O European Ferries, provide Europeans with the ability to cross the English Channel. An advertisement for Le Shuttle claimed it was more popular with travelers than P&O European Ferries. P&O European Ferries lodged an objection with a European regulatory agency and pointed out that they had carried 1. 4 million cars in the previous year compared to only 1 million on Le Shuttle. P&O European Ferries most likely wanted Le Shuttle to run _____ advertising.

A) corrective
B) professional
C) comparative
D) cease-desist
E) consensual

Question 69

Consumer advocate groups are most likely to:

A) create communication barriers that make it difficult for advertisers to reach consumers.
B) submit complaints about ads to appropriate government agencies.
C) issue trademarks and copyrights.
D) sponsor competitor boycotts.
E) substantiate ads.

Question 70

Which of the following statements is true about cease-and-desist orders?

A) They are voluntary statements without legal ramification.
B) They require that the FTC monitor future ad campaigns.
C) They prohibit further use of the offending advertisement.
D) They prohibit any kind of advertisement by the offending company.
E) They are issued by the Better Business Bureau and enforced by the FTC.

Question 71

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

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

Question 72

A trademark:

A) is any word, name, or symbol that identifies one particular product or line of products from a single source.
B) protects the original work of authors and artists from being sold or plagiarized without their consent.
C) is required by law to be significantly different from the logo of an organization.
D) is registered and protected by the Library of Congress.
E) grants exclusive rights to sell a product for 50 years.

Question 73

Much of the state legislation that deals with advertising is based on the:

A) U.S. Chamber of Commerce.
B) self-regulation codes of advertising organizations.
C) "truth-in-advertising" model developed by Printer's Ink.
D) U.S. Supreme court's "code of commercial speech."
E) federal government's "General Code of Advertising Ethics."

Question 74

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) Patent and Trademark Office
C) The Food and Drug Administration
D) Office of Consumer Affairs Service
E) Federal Communications Commission

Question 75

Which of the following can most likely be copyrighted?

A) An idea for an ad campaign featuring comic characters from the 1930s
B) The dynamic ribbon used in Coca-Cola ads
C) A novel written in 1998 by Stephen King
D) The U.S. Marine Corps symbol
E) The NBC peacock

Question 76

The National Advertising Division (NAD) of the Advertising Self-Regulatory Council (ASRC):

A) promotes the benefits of advertising to the Better Business Bureau and other major critics.
B) serves as the appeal board for decisions made by the National Advertising Review Board.
C) monitors advertising practices and reviews complaints about advertising from consumers.
D) protects consumers and businesses from unfair and deceptive advertising.
E) guides new businesses in the development of ethical advertising codes.

Question 77

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 78

The primary purpose of the Advertising Self-Regulatory Council is to:

A) promote and enforce standards of truth, accuracy, taste, morality, and social responsibility in advertising.
B) supplant the Federal Trade Commission as the chief advertising regulatory agency.
C) work with the Department of Justice to prevent any one company from monopolizing a particular media.
D) protect consumers from unfair and deceptive advertising.
E) promote the benefits of advertising to its critics.

Question 79

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 reimburse 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 80

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) Advertising Self-Regulatory Council
E) Office of Consumer Affairs