978-0133832396 Chapter 6

Chapter 6

Velasquez Test Bank

MULTIPLE CHOICE

1. Which of the following unethical practices occurs when consumers are signed up and billed

for third-party services without their knowledge or consent?

a. Fraud and deception

b. Due care

c. Coercion

d. Cramming

2. Which of the following represents an argument for the market approach to consumer

protection?

a. More demands for safety means government should not have to interfere.

b. Sellers will provide safety even if consumers do not demand it.

c. More demand for safety encourages more safety.

d. Government intervention makes the market fair, efficient, and less coercive.

3. In terms of product safety, what is the potential result of government intervention in

consumer markets?

a. Safety is reduced to a commodity that must be provided even if unwanted.

b. Markets become unfair, inefficient, and coercive.

c. The government bears the added cost of incorporating safety.

d. Consumers will pay extra for safety if sellers provide it.

Skill Level: Analyze it

Difficulty Level: Moderate

4. Which of the following views supports the idea that when consumers use products in a

manner that is careless, and then become injured, the responsibility is on the consumer, not the

manufacturer?

a. Contractual

b. Due-care

c. Social cost

d. Irrational purchases

5. Which of the following is a common problem with the market approach to consumer

protection?

a. Consumers are often not rational about product risk or probabilities.

b. Consumers have too much information and won’t take time to understand it.

c. Government has made excess information too inexpensive and easy to find.

d. Consumers expect the government to monitor all aspects of safety.

6. According to the contractual view of the business firm’s duties to its customers, what is

created by the contractual relationship between a firm and its customers?

a. Universalized contracts

b. Moral duties

c. Social rules

d. Secondary duties

7. The most basic moral duty of a business is to provide customers with a product or service

that lives up to all claims made about that product or service by the business. This is referred to

as a(n)

a. undue influence.

b. secondary duty.

c. express warranty.

d. service life.

8. Which implied claim refers to the estimated amount of time a product will function as

effectively as a consumer is led to believe it will?

a. Reliability

b. Service life

c. Maintainability

d. Product safety

9. Which of the following represents the idea that a business has a moral responsibility to fully

explain what a buyer is purchasing and exactly what the terms of the sale are?

a. The duty not to misrepresent

b. The duty not to coerce

c. The duty to comply with express claims

d. The duty of disclosure

10. Which of the following is one of the main objections to the contractual view of a business

firm’s duties to its customers?

a. The use of indirect agreements that cover implied warranties

b. The idea that buyers and sellers are equals in the transaction

c. The assumption that sellers deal directly with buyers

d. The enforcement of the doctrine of caveat emptor

11. Which of the following is based on the idea that consumers and sellers are not equals in the

transactional relationship?

a. The doctrine of caveat emptor

b. The Uniform Commercial Code

c. The social costs view

d. The due-care view

12. Which of the following represents the responsibility of a manufacture under the due-care

view of business responsibility?

a. Consumers and sellers are equally skilled in evaluating the quality of a product, and they

must protect their own best interests.

b. Consumers depend on the expertise of the manufacturer; therefore, the manufacturer must

take due care to ensure others are not injured by the product.

c. Consumers are free to agree to buy a product with certain qualities, and they are also free to

buy products with other qualities.

d. The seller has a moral responsibility to the buyer of its product, often a wholesaler, and does

not have a due-care relationship with the end-user of the product, often a consumer.

13. Under the due-care view of moral responsibility, why do manufacturers have a greater duty

to take care to ensure that consumers’ interests are not harmed by the products they offer?

a. Manufacturers have greater knowledge and expertise that consumers lack.

b. There is a strong bond of trust between consumers and manufacturers.

c. Consumers have less time to adequately research goods and services before purchase

decisions.

d. Manufacturers have more time to consider the needs of each consumer and how they will use

a product or service.

14. How can a manufacturer practice due care in the production and manufacturing process?

a. Determine the mental capacities of all persons who will use the product.

b. Ensure compromises are not made that will affect the safety of the final product.

c. Test the product under a variety of conditions with a variety of materials.

d. Determine the effects of aging and wear based on product design.

15. Which of the following represents a major fault in the due-care view of moral responsibility?

a. It places the cost for unforeseen product injuries in the hands of the manufacturer.

b. It requires the consumers to use products in a way that minimizes risk of injury or harm.

c. It requires the manufacturer to determine how much risk is acceptable for the consumer.

d. It identifies specific formulas to determine the levels of due care required for each product.

16. Which of the following views of the manufacturers’ duties to consumers holds that the

manufacturer should pay the cost of injuries sustained through defects in the product, even when

due care has been exercised?

a. The due-care view of business responsibility

b. The contractual view of manufacturers’ responsibilities

c. The duty of disclosure

d. The social costs view of the manufacturers’ duties

17. Which of the following is the basis for the social cost view?

a. Caveat vendor

b. Cramming

c. Coercion

d. Caveat emptor

18. Which of the following criticisms of the social cost view supports the idea that the social cost

view is unjust?

a. The social cost view assumes that being required to pay for the cost of injuries will inspire

manufacturers to reduce the number of accidents.

b. The social cost view requires manufacturers to pay for unforeseeable and unpreventable

injuries.

c. The social cost view has increased the number of lawsuits under the strict liability claim.

d. The social cost view does not consider the standard utilitarian assumptions about the values

of efficiency.

19. Which of the following is a claim made by critics of the social costs view based on the idea

that an increase in consumer carelessness will lead to an increase in consumer injuries?

a. The social cost view is unjust.

b. The social cost view places undue burdens on manufacturers.

c. The social cost view is based on incorrect assumptions.

d. The social cost view places undue burdens on insurance carriers.

Topic: The Social Costs View of the Manufacturer’s Duties to Consumers

Learning Objective 6.5: Examine the broader role of manufacturer responsibility as expressed by

the social costs view

Skill Level: Analyze it

Difficulty Level: Moderate

20. Which of the following best describes the implied value of the function of commercial

advertising?

a. To provide unbiased information to the consumer

b. To distinguish a mass audience from a private, more specific audience

c. To provide objective information to the consumer

d. To sell a product to the consumer

21. Which of the following are the costs of the resources consumed in producing or improving a

product?

a. Selling costs

b. Production costs

c. Social effects costs

d. Materialistic value

22. Which of the following ethical factors are being evaluated when we look at an

advertisement’s ability to inform or persuade a consumer?

a. Effects on belief

b. Materialistic values

c. Effects on desire

d. Social effects

Difficulty Level: Moderate

23. Which of the following describes a person’s thoughts, beliefs, values, and feelings?

a. Moral rights

b. Physical privacy

c. Ethical rights

d. Psychological privacy

24. Which of the following describes an enabling function of privacy?

a. Privacy helps to keep potentially embarrassing information private.

b. Privacy helps individuals to sustain distinct social roles.

c. Privacy helps protect individual rights based on values others may not hold.

d. Privacy helps individuals from involuntarily harming their own reputation.

25. Which of the following describes the reason physical privacy is as important as

psychological privacy.

a. Inner lives cannot be intruded upon by other individuals.

b. Individuals have the moral right to substantial interests in things.

c. Inner lives are revealed by physical activities and expressions.

d. Revealing private information is an invasion of the physical person.

SHORT ANSWER

26. Explain the idea that in the market approach to consumer protection, when consumers

demand more safety from products, increased product safety is encouraged.

Sample Answer: In the market approach to consumer protection, consumer safety can be

provided efficiently through the free market because sellers must respond to consumer demand if

they are to make a profit. If consumers want products to be safer, they will buy products that are

safe and refuse to buy products that are unsafe. Manufacturers will respond to this demand by

building more safety into their products, or they will risk losing customers to competitors with

safer products. Thus, if consumers want safety, the market will provide it, and sellers will price it

according to how much it costs to provide it and how consumers think the safety features are

worth. As a result, the market will provide safety at a fair price in ways that include an efficient

use of society’s resources.

Topic: Markets and Consumer Protection

Learning Objective 6.2: Evaluate the arguments for and against consumer protection within

markets

27. Discuss the idea of limiting the government’s interference in safety of consumer products.

28. According to the contractual view of the business firm’s duties to its customers, what are the

four main moral duties a business is responsible for?

29. Discuss the relationship between the principle of non-harm and the due-care view of moral

responsibility.

perspectives, it is most clearly implied by the requirements of an ethic of care. The principle

requires that one should care for the well-being of those with whom one has a special

relationship, especially a relationship of dependence. An ethic of care requires that we should

carefully examine the needs and characteristics of the people with whom we have a special

relationship with to ensure that care for others is based on specific needs of the others.

Topic: The Due-Care View of the Manufacturer’s Duties to Consumers

Learning Objective 6.4: Describe the manufacturer’s responsibilities to consumers as presented

by the due-care view

30. Discuss the three areas of due-care responsibilities imposed on a manufacturer.

31. Discuss how the legal doctrine of strict liability will lead to a more efficient use of society’s

resources.

32. Discuss the three elements of advertising’s deceptive effects on consumer beliefs.

intent to have an audience believe something false by merely implying it is already a deception.

They also indicate that the advertiser cannot be held morally responsible for misinterpretations of

an advertisement when these are the unintended and unforeseen results of unreasonable

carelessness on the part of the audience. The “author” of an advertisement should be taken to

include not only the heads of an advertising agency but also the persons who create advertising

copy and those who “endorse” a product. By offering their positive cooperation in the making of

an advertisement, they become morally responsible for its deceptive effects as long as they knew

what they were doing and could have opted out of doing it.

Topic: Advertising Ethics

Learning Objective 6.6: Assess the ethical concerns associated with information and persuasion

in advertising

33. Identify six areas where considerations of privacy rights should recognize and respect by an

organization?