Business Law, 8e (Cheeseman)
Chapter 44 Consumer Protection and Product Safety
1) The U.S. Food and Drug Administration promotes the principle of caveat emptor in sale
transactions involving food and drugs.
2) The Consumer Product Safety Commission, created in 1972, has the authority to recall unsafe
toys.
3) The U.S. Department of Agriculture is the federal administrative agency that is primarily
responsible for regulating meat, poultry, and other food products.
4) The Consumer Product Safety Commission is the federal administrative agency empowered to
enforce the FDCA.
5) FDA approval is not mandatory for medical devices to be legally sold in the U.S.
6) A manufacturer can be held liable for deceptive labeling or packaging under the Health Care
Reform Act.
7) The NLEA applies to packaged foods and other foods regulated by the Food and Drug
Administration.
8) Sellers of raw fruits and vegetables can adopt a voluntary approach when it comes to labeling
requirements.
9) Section 4205 of the Patient Protection and Affordable Health Care Act of 2010 requires
restaurants and retail food establishments with 20 or more locations to disclose calorie counts of
their food items.
10) The Biosafety Protocol label is used to identify certain food products that have been
genetically modified.
11) The Drug Amendment to the FDCA gives the FDA broad powers to license new drugs in the
United States.
12) The FDA cannot withdraw approval of any previously licensed drug.
13) The FDA labels ordinary household soap as a cosmetic product.
14) The FDA cannot recall any cosmetics that contain unsubstantiated claims of preserving
youth or increasing virility from the market.
15) The FDA places a complete ban on the use of animal testing in the production of cosmetic
goods.
16) The FDA mandates a label of “NOT TESTED ON ANIMALS” on all cosmetic products.
17) The mislabeling of medicinal devices is prohibited under the Nutrition Labeling and
Education Act.
18) Kidney dialysis machines are scrutinized for attainment of quality standards under the Drug
Amendment to the FDCA.
19) The CPSC is an independent federal administrative agency empowered to regulate
potentially dangerous consumer products and issue product safety standards.
20) Under the Consumer Product Safety Act, a private party can sue for an injunction to prevent
violations of the act or of CPSC rules and regulations
21) If a model of a car has faulty airbag deployment, the Consumer Product Safety Commission
has the power to recall that model on receiving complaint.
22) Firearms represent an example of consumer products which do not come under the CPSC
rules.
23) The Family Smoking Prevention and Tobacco Control Act, which requires mandatory
warnings to be placed on cigarette packages, is enforced by the Health Care Reform Act.
24) The goal of the Health Reform Act is to increase the number of persons who have health care
insurance in the United States.
25) Under the Health Care Reform Act, persons who do not obtain health coverage will be
provided free health insurance by the government.
26) The Health Care Reform Act provides special subsidies to “Cadillac” health insurance
programs that provide health care benefits that cost above a certain level.
27) The Health Care Reform Act extends health care coverage to illegal immigrants.
28) The Health Care Reform Act prohibits insurers from establishing an annual spending cap for
benefit payments.
29) The FTC can sue in either the state or federal courts to obtain compensation on behalf of
consumers.
30) Proof of actual deception is required for an advertising to be considered false under Section 5
of the FTC.
31) Bait and switch is a type of deceptive advertising under Section 5 of the FTC Act.
32) In the bait and switch advertising model, the bait involves pressuring customers in a store
into buying unadvertised or more expensive products.
33) Sales made by door-to-door salespersons are not regulated by the FTC.
34) The consumer must send a required notice of cancellation to the seller of a door-to-door sales
contract within three days to rescind an order.
35) The Do-Not-Call Registry allows consumers to designate specific companies not to call
them.
36) The U.S. Supreme Court has deemed the Do-Not-Call Registry service as an unconstitutional
violation of commercial speech.
37) ________ laws are federal and state statutes and regulations that promote product safety and
prohibit abusive, unfair, and deceptive business practices.
A) Profit-à-prendre
B) Canon
C) Consumer protection
D) Caveat emptor
38) The ________ is a federal administrative agency that is primarily responsible for regulating
the safety of meat, poultry, and other food products.
A) U.S. Department of Agriculture
B) Consumer Product Safety Commission
C) Food and Drug Administration
D) Federal Trade Commission
39) Jones & Hilton Co. owned a large cold storage warehouse where they stored and processed
meat and meat products. An insider revealed to the media that the cold storage failed to meet
numerous safety standards, encountered repeated rodent attacks, and sold potentially harmful and
infected meat in the market without notifying authorities. The ________ has the authority to
conduct inspections of the cold storage warehouse and initiate legal proceedings against the
owners for endangering the health of consumers.
A) Food and Drug Administration
B) Consumer Product Safety Commission
C) Federal Healthcare Commission
D) U.S. Department of Agriculture
40) In which of the following cases of consumer safety violations will the U.S. Department of
Agriculture be required to take action?
A) A new drug was released into the market without adequate testing and this lead to adverse
side effects among users.
B) A brand of soft toys for infants was produced with low grade foam and fabrics that are
harmful for children when ingested.
C) A batch of sausages and cold cuts from a particular vendor was found to have high levels of
salmonella and other pathogenic organisms.
D) A fleet of cars released into the market by famous company was found to have a defective
braking system which could prove fatal for owners.
41) The Food, Drug, and Cosmetic Act is a federal statute that ________.
A) covers all food products including poultry and processed meat
B) grants approval for food additives, drugs, cosmetics, and medicinal devices
C) implements the Federal Meat Inspection Act enacted in 1906
D) protects the public by providing greater medical coverage from food-related illnesses
42) Ajax, a pharmaceutical company, has designed a new medicine for morning sickness among
pregnant women. Testing at their R&D center showed the drug to be highly reliable. Ajax has to
approach a U.S. federal administrative agency called ________ for the drug to be deemed legal
for sale to the public.
A) Medicines and Healthcare products Regulatory Agency
B) Consumer Product Safety Commission
C) Federal Trade Commission
D) Food and Drug Administration
43) The Food and Drug Administration is empowered to ________.
A) recall unsafe toys, appliances, and other consumer products which are harmful to users
B) regulate the safety of meat, poultry, and other food products
C) prosecute violators directly by imposing fines and pronouncing sentences
D) obtain orders for the seizure, recall, and condemnation of harmful products
44) The ________ is a federal statute passed in 1990 that requires food manufacturers and
processors to provide nutrition information on many foods and prohibits them from making
scientifically unsubstantiated health claims.
A) Food, Drug, and Cosmetic Act
B) Health Care and Education Reconciliation Act
C) Nutrition Labeling and Education Act
D) Patient Protection and Affordable Care Act
45) The NLEA applies to packaged foods and other foods regulated by the ________.
A) U.S. Department of Agriculture
B) Consumer Product Safety Commission
C) Patient Protection and Affordable Care Act
D) Food and Drug Administration
46) Which of the following is true of the Nutrition Labeling and Education Act?
A) The NLEA is a state law and its implementation is not federally regulated.
B) The NLEA applies to packaged foods and other foods regulated by the Food and Drug
Administration.
C) The NLEA mandates compulsory labeling for all kinds of raw and processed food with any
exceptions.
D) The NLEA specifically eliminates the practice of providing point-of-purchase nutrition
information by sellers.
47) “Rapid Rise” is a health drink for teenagers that was advertised with the claim that the
continuous consumption of the drink over a two-month period would lead to a four-inch rise in
height. This claim was not grounded in laboratory research or seen in most of its users. This act
of making scientifically unsubstantiated health claims about this product is likely to be a
violation of the ________.
A) Health Care Reform Act
B) Nutrition Labeling and Education Act
C) Consumer Product Safety Act
D) Patient Protection and Affordable Care Act
48) If the food product is released with this new preservative, which of the following provisions
of the NLEA would help consumers identify the banned preservative prior to consumption?
A) condemnation of unfit food products
B) disclosure of information on food labels
C) inspection of the storage facilities
D) initiating legal proceedings against violators
49) Which of the following agencies has the power to enact the statutes that govern such a
violation?
A) the Medicines and Healthcare products Regulatory Agency
B) the U.S. Department of Agriculture
C) the Federal Trade Commission
D) the Food and Drug Administration
50) The U.S. Department of Agriculture places mandatory and consistent labeling requirements
on ________.
A) ready-to-eat meals
B) raw fruits and vegetables
C) raw seafood
D) meat and poultry products
51) The ________ requires food manufacturers and processors to disclosure uniform information
about serving sizes and nutrients, and establishes standard definitions for the various terms like
“low fat,” “lean” or “organic” which are indiscriminately used by food processors.
A) Consumer Product Safety Act
B) Nutrition Labeling and Education Act
C) Patient Protection and Affordable Care Act
D) Health Care Reform Act
52) Section 4205 of the Patient Protection and Affordable Health Care Act requires restaurants
and retail food establishments with 20 or more locations to disclose calorie counts of their food
items and supply information on how many calories a healthy person should eat in a day. The
provisions of this legislation are enforced by the ________.
A) Federal Food and Drug Administration
B) United Nations
C) Federal Trade Commission
D) Consumer Product Safety Commission
53) Biosafety Protocol is a United Nations-sponsored protocol that requires signatory countries
to place the label ________ on all genetically engineered foods.
A) “Warning—unnatural food particles”
B) “May contain living modified organisms”
C) “FDA tested and approved food”
D) “WHO tested and approved food”
54) What is the importance of the Biosafety Protocol prescribed by the UN?
A) It dictates the terms and conditions for production of genetically modified food.
B) It prevents people from differentiating between normal and organic food.
C) It notifies people of the presence of genetically modified food in the market.
D) It assures people of the quality of the food by providing details of its testing process.
55) The ________ is a federal law that gives the FDA broad powers to license new drugs in the
United States.
A) Drug Amendment of the FDCA
B) Food Labeling and Education Act
C) Health Care Reform Act
D) Patient Protection and Affordable Health Care Act
56) Which of the following is true of the FDA’s role in the introduction of a new drug in the
market?
A) The FDA bases its approval of a new drug on the rule of caveat emptor.
B) The FDA limits itself to providing relevant suggestions to improve the drug.
C) The FDA possesses the power to implement a complete ban on a questionable drug.
D) The FDA prosecutes producers of questionable medicines directly by the powers vested in it
by the U.S. Department of Justice.
57) The new line of fairness-enhancing products marketed by Radiance has allegedly been
developed after using large-scale animal testing procedures. Insiders revealed that the high levels
of lead present in the cosmetics have proven to be fatal for many of the animals used in the
laboratories. Radiance is likely to be inspected for suspected criminal violations of the
________.
A) Food, Drug, and Cosmetic Act
B) Consumer Product Safety Act
C) Health Care Reform Act
D) Federal Trade Commission Act
58) In which of the following ways does the FDA regulate cosmetics?
A) by adding warnings for potential carcinogens
B) by regulating the sale of cosmetics through exclusive FDA-approved stores
C) by placing a complete ban on animal testing in the cosmetic industry
D) by autonomously undertaking criminal proceedings against nonconforming cosmetic
companies
59) Which of the following statements is true with regard to the FDA?
A) It places a complete ban on animal testing.
B) It allows animal testing for only certain kinds of cosmetics like household soaps.
C) It provides tax exemptions to companies that avoid animal testing.
D) It recommends animal testing only if it increases product safety.
60) Which of the following is true with regard to FDA regulations for cosmetics?
A) There is no law in the United States against animal testing for cosmetics.
B) All substances and preparations for cosmetic use are chemically proven to be free from
carcinogens before sale by the FDA.
C) Ordinary household soap is also evaluated in terms of its quality and safety as a cosmetic
good under the FDA.
D) New cosmetics are released in the market only if they have the “CRUELTY-FREE” label on
their package.
61) Which of the following would come under the purview of the Medicinal Device Amendment
to the FDCA?
A) a new oral medication for depression
B) a new range of cosmetics to reduce signs of aging
C) a new and compact heart pacemaker
D) a revolutionary drug therapy for cancer
62) Which of the following consumer products comes under the purview of the CPSC?
A) aircrafts
B) motor vehicles
C) firearms
D) children’s toys
63) The Consumer Product Safety Commission is ________.
A) a communion of two state-funded regulatory bodies working together to ensure consumer
safety
B) a federal body created to ensure the safety of few consumer products like motor vehicles,
boats, aircraft, and firearms
C) an independent federal administrative agency that regulates potentially dangerous consumer
products
D) a federal agency working to ensure product safety standards for food, poultry, medicines, and
medical devices
64) Which of the following is true of seeking injunctions on consumer products under the CPSC?
A) The CPSC can only seek an injunction once a private party has lodged a compliant with it.
B) Only the CPSC can sue for an injunction when CPSC rules are violated.
C) A private party can sue for an injunction to prevent violations of the act or of CPSC rules and
regulations.
D) Injunctions cannot be pursued on products that have not yet been sold or marketed.
65) Which of the following is a function that the Consumer Product Safety Commission is
empowered to execute?
A) collecting data regarding injuries caused by consumer products
B) regulating the distribution of genetically modified food products
C) recalling drugs that have been found to be harmful from the market
D) accepting petitions from consumers on wrongly labeled food products
66) Which of the following federal agencies is authorized to adopt and enforce the Family
Smoking Prevention and Tobacco Control Act?
A) the Consumer Product Safety Commission
B) the Federal Trade Commission
C) the Food and Drug Administration
D) the Agency for Healthcare Research and Quality
67) Which of the following is a requirement of the Family Smoking Prevention and Tobacco
Control Act?
A) a 2 percent increase in excise tax per cigarette package
B) a warning on the top 50 percent of both the front and back of each cigarette package
C) a tax exemption for companies that voluntarily display warning labels on their packages
D) a hotline number to the FDA for apparent violations of the provisions of this Act
68) Which of the following is true of the Health Care Reform Act?
A) Excise taxes for pharmaceuticals are reduced.
B) Employers of big corporations are given subsidies for providing health insurance to their
employees.
C) All employers are mandatorily required to provide health insurance coverage to their
employees.
D) Persons who do not obtain coverage will be required to pay a tax penalty to the federal
government.
69) The Health Care Reform Act is an amendment of the ________ Act.
A) Consumer Product Safety
B) Patient Protection and Affordable Care
C) Medical Device Amendment
D) Federal Trade Commission
70) Which of the following is a new protection provided by the Health Care Reform Act for
people seeking health coverage?
A) imposition upon the insurers to provide a lifetime limit on health benefits to all legal citizens
B) continuation of medical insurance for people who have developed a terminal disease
C) prevention of insurance companies from providing health care insurance to individuals with
preexisting health conditions
D) provision of mandatory medical insurance for health coverage for illegal immigrants
71) The ________ prohibits health insurance companies from terminating health insurance
coverage when a person gets sick.
A) Health Care Reform Act
B) Drug Amendment of the FDCA Act
C) Medical Device Amendment Act
D) Food, Drug, and Cosmetic Act
72) Which of the following is true of the FTC?
A) The FTC can only sue in state courts.
B) The FTC’s decision can be appealed in a state court.
C) The FTC can sue to obtain compensation on behalf of the consumer.
D) The FTC is not allowed to directly disclose its findings to the public.
73) Which of the following would constitute a false advertising according to the Federal Trade
Commission?
A) sales talk
B) unsubstantiated claims
C) minimal commercial speech
D) statements of opinion
74) The FTC states that a bait and switch occurs if ________.
A) the buyer comes to the store to buy unadvertised merchandise
B) the buyer is not aware of the discounted merchandise in the store
C) the seller shows the customer only the advertised merchandise that is on discount sale
D) the seller refuses to show consumers the advertised merchandise
75) The Do-Not-Call Registry was provided by the ________ to protect consumers from
unsolicited commercial telephone calls.
A) Federal Trade Commission
B) Food and Drug Administration
C) Consumer Product Safety Commission
D) Federal Communications Commission
76) Which of the following is true of the do-not-call registry for consumers?
A) The registration is valid for the lifetime of the customer who opted for it.
B) Telemarketers have three days to remove the customer’s name upon registry.
C) Charitable and political organizations are exempted from the registry.
D) Customers cannot choose the companies that they do not wish to receive calls from.
77) What is the United Nation’s Biosafety Protocol for genetically altered food?
78) Give an account of the regulation of medicinal devices in the United States?
79) What are the powers of the Consumer Product Safety Commission? Name some consumer
products excluded from the purview of the CPSC.
80) List out the new protections that are available under the Health Care Reform Act of 2010.
81) What is the bait and switch advertising model?