Chapter 8—Consumer Relations
MULTIPLE CHOICE
1. What is the promotion of environmentally friendly products called?
a.
Earth Day
b.
Green marketing
c.
Earth-friendly initiatives
d.
Planet protection
e.
Enviro-promotion
2. Consumers can best be described as
a.
those individuals who purchase many different products throughout their lives.
b.
customers of any given organization.
c.
every firm’s most important stakeholder.
d.
those individuals who purchase, use, and dispose of products for personal and household
use.
e.
those groups who purchase products from manufacturers and then improve the products
and sell them to others.
3. Which of the following most closely describes the relationship between consumers and businesses?
a.
They are fundamentally connected by an economic relationship that often leads to deeper
attachment.
b.
All consumers are closely affiliated with the ethical principles the companies they buy
from represent.
c.
The relationships between consumers and businesses are purely economic in nature
through the exchange of value.
d.
There really is no relationship between businesses and consumers.
e.
“Let the buyer beware” describes the power that businesses now have over consumers.
4. If a consumer staged an accident in a store and then sought damages against the store for its poor
safety standards, this customer has committed which fraudulent activity?
a.
Shoplifting
b.
Guile
c.
Duplicity
d.
Collusion
e.
Product misuse
5. Which division of the Federal Trade Commission works to protect consumers against unfair,
deceptive, and fraudulent practices?
a.
Bureau of Consumer Protection
b.
Consumer Product Safety Commission
c.
Consumer Information Bureau
d.
Deceptive Trade Practices Commission
e.
Privacy Protection Agency
6. Which government agency enforces regulations designed to protect the public from unreasonable risk
of injury from consumer products?
a.
Federal Anti-Injury Institute
b.
Consumer Product Safety Commission
c.
Consumer Information Bureau
d.
Deceptive Trade Practices Commission
e.
Privacy Protection Agency
7. In what industry did Upton Sinclair expose atrocities, inhumane labor practices, and unsanitary
conditions in his novel, The Jungle, which led the public to demand reform?
a.
Automobile
b.
Soft drink
c.
Textile
d.
Meatpacking
e.
Pharmaceutical
8. Which of the following statements best describes the legal standards concerning advertising
communication?
a.
There is no tolerance for any type of exaggeration.
b.
Companies are free to make claims about their products because consumers are expected
to have common sense to distinguish between truth and fantasy.
c.
Scientific evidence is not helpful for substantiating claims that manufacturers make about
their products.
d.
Companies can make false claims about products without fear of legal action because the
FTC rarely takes action against companies in this situation.
e.
Although some exaggeration is tolerated, deceptive claims or claims that cannot be
substantiated are likely to result in legal action.
9. Which area of law refers to a business’s legal responsibility for the performance of its products?
a.
Lemon laws
b.
Product liability
c.
Warranties
d.
Strict accountability
e.
Product misuse
10. Why did McDonald’s start displaying warning signs that its coffee is hot after the famous lawsuit?
a.
As a friendly reminder to customers that coffee is in fact hot
b.
As a form of advertising that the coffee at McDonald’s is always fresh
c.
To try to eliminate further injury and product liability
d.
Because the government ordered that these signs be posted
e.
So that customers would not think McDonald’s was serving iced coffee
11. How do product liability lawsuits in Japan compare with those in the United States?
a.
Product liability lawsuits are extremely common in Japan and occur much more frequently
than in the United States.
b.
Product liability lawsuits are much more common in the United States than they are in
Japan.
c.
The overall number of product liability suits in Japan is very similar to the number in the
United States.
d.
Although both countries have high rates of product liability lawsuits, the United States
usually has a few more than Japan.
e.
There has never been a product liability lawsuit in Japan because Japanese companies
eliminate defects before selling products.
12. Which of the following was not included in John F. Kennedy’s Consumer Bill of Rights?
a.
Right to be heard
b.
Right to choose
c.
Right to safety
d.
Right to fair treatment
e.
Right to be informed
13. The movement to protect consumers from an imbalance of power with business and to maximize
consumer welfare in the marketplace is known as
a.
the consumer welfare movement.
b.
the Consumer Bill of Rights.
c.
consumerism.
d.
the consumer proactive movement.
e.
customer rights.
14. What impact has information services and the Internet had on consumers and businesses?
a.
They have shifted the balance of power between consumers and businesses because
consumers are able to compare prices, read independent rankings, and obtain greater
product knowledge.
b.
The Internet and other information services have not had a substantial impact on
consumers and businesses.
c.
The balance of power between consumers and business has remained the same because
businesses have obtained greater access to information about their competitors.
d.
Greater information services and the Internet have shifted power back to businesses since
they can now obtain more information about their customers.
e.
Laws and regulations represent the influence businesses have on consumers and vice
versa—whether or not information is more readily available does not impact the laws
governing consumers’ rights.
15. The Nutrition Labeling and Education Act of 1990 can be most closely attributed to which right
of the Consumer Bill of Rights?
a.
Right to be heard
b.
Right to choose
c.
Right to safety
d.
Right to fair treatment
e.
Right to be informed
16. To whom should consumers turn first when exercising their right to seek redress?
a.
Federal Trade Commission
b.
Local Better Business Bureau
c.
Seller of the product/service
d.
Their attorney
e.
Consumer Protection Agency
17. Abstaining from using, purchasing, or dealing with an organization is known as a(n)
a.
avoidance.
b.
boycott.
c.
refusal.
d.
economic demonstration.
e.
pressurization.
18. The Home Ownership and Equity Protection Act requires home equity lenders to
a.
verbally disclose the interest rates associated with the mortgage loan.
b.
use a practice called “red lining,” to determine those customers with the lowest risk of
defaulting on the loan.
c.
employ loan officers who mirror the demographics of the majority of home buyers in the
region.
d.
give consumers the right to dispute and correct inaccurate information on their credit
reports.
e.
disclose, in writing, the borrower’s rights, payment amounts, and the consequences of
defaulting on the loan.
19. Which of the following is typically not associated with false or bogus weight loss claims?
a.
Causes substantial weight loss by wearing it on the body or rubbing it into the skin
b.
Creates gradual weight loss through a balanced diet and exercise routine
c.
Enables the consumer to lose weight while sleeping
d.
Creates weight loss regardless of how much the consumer eats or drinks
e.
Causes weight loss of two pounds or more a week for a month or more without dieting or
exercise
20. The Consumers Union tests products in its own laboratories and studies, then communicates the results
a.
in Good Housekeeping magazine.
b.
to manufacturers, who choose whether to publish the findings.
c.
to state and federal regulatory agencies.
d.
in Consumer Reports magazine.
e.
via weekly e-mail reports.
ESSAY
21. “The customer is always right.” Explain why this well-known saying is not really true.
22. How has consumerism affected public policy over the past four decades?
23. What does the “right to be heard” entail?
24. What concerns about the right to privacy has the Internet raised?
25. Why does Southwest Airlines formalize its commitment to customer service?