Question 1

ChemCo, Inc., makes and sells products containing ingredients potentially hazardous to consumers. The government agency that has the authority to order ChemCo to remove a product from the market is​

Accepted Answer

A)   ​the Consumer Product Safety Commission.
B)   ​none of the choices.
C)   ​the Federal Trade Commission.
D)   ​the Food and Drug Administration.E) B) and C)
F) A) and C)

Question 2

Pro Motor Company makes cars. Federal law requires Pro to attach a label that includes the Environmental Protection Agency's fuel economy estimate for a vehicle to​

Accepted Answer

A)   ​every new car.
B)   ​no car-compliance with the law is voluntary.
C)   ​select old and new cars.
D)   ​whichever vehicles the car maker chooses.E) None of the above
F) A) and B)

Question 3

Elise and many other consumers complain to the Federal Trade Commission (FTC)  that a Faux Diamonds Company ad is deceptive. The FTC's first step is to​

Accepted Answer

A)   ​send a formal complaint.
B)   ​investigate.
C)   ​issue a cease-and-desist order.
D)   ​order restitution.E) A) and B)
F) C) and D)

Question 4

The Federal Trade Commission was created to prevent unfair and deceptive trade practices.

Accepted Answer

A) True 
 B)False

Question 5

Drugs can be test-marketed to the public before they are ensured to be safe and effective.

Accepted Answer

A) True 
 B)False

Question 6

To generate sales, Golden Investments, Inc., uses phone solicitation. Under federal law, in soliciting business, Golden's telemarketers must disclose​

Accepted Answer

A)   ​all material facts related to a sale.
B)   ​only the seller's name.
C)   ​only facts directly related to a potential customer's request.
D)   ​only facts needed to make a sale.E) A) and D)
F) B) and C)

Question 7

Merchants must issue a refund within a specified period of time when a consumer cancels an order.

Accepted Answer

A) True 
 B)False

Question 8

A credit-cardholder is liable for all unauthorized charges made before the creditor is notified that the card has been lost.

Accepted Answer

A) True 
 B)False

Question 9

Food products are required to bear labels detailing the nutritional content.

Accepted Answer

A) True 
 B)False

Question 10

One of the most important federal consumer protection laws is directed at deceptive trade practices.

Accepted Answer

A) True 
 B)False

Question 11

Mattress Company advertises a special sale-all bedding, half price. The ad does not state that the sale price does not include delivery or shipping costs. To avoid claims of deceptive advertising, Mattress should​

Accepted Answer

A)   ​clearly and conspicuously disclose the shipping cost in its ads.
B)   ​display the shipping cost in small print on ads displayed in stores.
C)   ​include the shipping cost in small print on its receipts.
D)   ​not reveal the shipping cost.E) A) and C)
F) B) and C)

Question 12

When an advertising claim has the appearance of authenticity, it does not create problems.

Accepted Answer

A) True 
 B)False

Question 13

Advertising that contains an endorsement by a celebrity is presumed to be deceptive.

Accepted Answer

A) True 
 B)False

Question 14

In its ads, Crunchy Inc. makes various claims about its snack products. Crunchy's advertising claims would most likely be deemed deceptive if the claims​

Accepted Answer

A)   ​mislead a reasonable consumer.
B)   ​contain vague generalities.
C)   ​consist of what is known as puffery.
D)   ​include obvious exaggerations.E) A) and B)
F) None of the above

Question 15

Brew Coffee Company sells coffee and related beverages. The company's ad contends that ambitious businesspersons "Drink Us & Rise Up in the World!'" The Federal Trade Commission would consider this ad to be​

Accepted Answer

A)   ​false and misleading.
B)   ​impermissibly vague and general.
C)   ​a deceptive half-truth.
D)   ​none of the choices.E) A) and B)
F) C) and D)

Question 16

Ads must disclose relevant limitations underlying their claims.

Accepted Answer

A) True 
 B)False

Question 17

Home Products, Inc., in its advertisements, makes false claims about its own products and about the products of its competitors. The firm may be subject to sanctions for the false claims about​

Accepted Answer

A)   ​its products only.
B)   ​its competitors' products only.
C)   ​its products and its competitors' products.
D)   ​none of the choices.E) A) and B)
F) C) and D)

Question 18

Vague generalities are permissible in advertising.

Accepted Answer

A) True 
 B)False

Question 19

Bea borrows funds from Credit Union to repair her home and to buy a car. She buys a laptop from Discount Store in a transaction financed by the seller. If these parties are subject to the Truth-in-Lending Act, Regulation Z applies to​

Accepted Answer

A)   ​the car loan only.
B)   ​the home repair loan only.
C)   ​the retail installment sale only.
D)   ​the car loan, the home repair loan, and the retail installment sale.E) B) and C)
F) A) and C)

Question 20

An ad for Running Shoes Inc. states that its products are "The Athlete's Choice." Because of this ad, the Federal Trade Commission is most likely to issue​

Accepted Answer

A)   ​a cease-and-desist order.
B)   ​a counteradvertising order.
C)   ​a restitution order.
D)   ​none of the choices.E) A) and B)
F) B) and D)

Exam 24: Consumer Law

Elise and many other consumers complain to the Federal Trade Commission (FTC) that a Faux Diamonds Company ad is deceptive. The FTC's first step is to​

Correct AnswerverifiedShow Answer

Bea borrows funds from Credit Union to repair her home and to buy a car. She buys a laptop from Discount Store in a transaction financed by the seller. If these parties are subject to the Truth-in-Lending Act, Regulation Z applies to​

Correct AnswerverifiedShow Answer

Food products are required to bear labels detailing the nutritional content.

Correct AnswerverifiedShow Answer

ChemCo, Inc., makes and sells products containing ingredients potentially hazardous to consumers. The government agency that has the authority to order ChemCo to remove a product from the market is​

Correct AnswerverifiedShow Answer

The Federal Trade Commission was created to prevent unfair and deceptive trade practices.

Correct AnswerverifiedShow Answer

Vague generalities are permissible in advertising.

Correct AnswerverifiedShow Answer

One of the most important federal consumer protection laws is directed at deceptive trade practices.

Correct AnswerverifiedShow Answer

Mattress Company advertises a special sale-all bedding, half price. The ad does not state that the sale price does not include delivery or shipping costs. To avoid claims of deceptive advertising, Mattress should​

Correct AnswerverifiedShow Answer

In its ads, Crunchy Inc. makes various claims about its snack products. Crunchy's advertising claims would most likely be deemed deceptive if the claims​

Correct AnswerverifiedShow Answer

Pro Motor Company makes cars. Federal law requires Pro to attach a label that includes the Environmental Protection Agency's fuel economy estimate for a vehicle to​

Correct AnswerverifiedShow Answer

To generate sales, Golden Investments, Inc., uses phone solicitation. Under federal law, in soliciting business, Golden's telemarketers must disclose​

Correct AnswerverifiedShow Answer

An ad for Running Shoes Inc. states that its products are "The Athlete's Choice." Because of this ad, the Federal Trade Commission is most likely to issue​

Correct AnswerverifiedShow Answer

When an advertising claim has the appearance of authenticity, it does not create problems.

Correct AnswerverifiedShow Answer

Brew Coffee Company sells coffee and related beverages. The company's ad contends that ambitious businesspersons "Drink Us & Rise Up in the World!'" The Federal Trade Commission would consider this ad to be​

Correct AnswerverifiedShow Answer

Advertising that contains an endorsement by a celebrity is presumed to be deceptive.

Correct AnswerverifiedShow Answer

Home Products, Inc., in its advertisements, makes false claims about its own products and about the products of its competitors. The firm may be subject to sanctions for the false claims about​

Correct AnswerverifiedShow Answer

A credit-cardholder is liable for all unauthorized charges made before the creditor is notified that the card has been lost.

Correct AnswerverifiedShow Answer

Ads must disclose relevant limitations underlying their claims.

Correct AnswerverifiedShow Answer

Merchants must issue a refund within a specified period of time when a consumer cancels an order.

Correct AnswerverifiedShow Answer

Drugs can be test-marketed to the public before they are ensured to be safe and effective.

Correct AnswerverifiedShow Answer

Elise and many other consumers complain to the Federal Trade Commission (FTC) that a Faux Diamonds Company ad is deceptive. The FTC's first step is to

Correct Answer
verified

Bea borrows funds from Credit Union to repair her home and to buy a car. She buys a laptop from Discount Store in a transaction financed by the seller. If these parties are subject to the Truth-in-Lending Act, Regulation Z applies to

Correct Answer
verified

Correct Answer
verified

ChemCo, Inc., makes and sells products containing ingredients potentially hazardous to consumers. The government agency that has the authority to order ChemCo to remove a product from the market is

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Mattress Company advertises a special sale-all bedding, half price. The ad does not state that the sale price does not include delivery or shipping costs. To avoid claims of deceptive advertising, Mattress should

Correct Answer
verified

In its ads, Crunchy Inc. makes various claims about its snack products. Crunchy's advertising claims would most likely be deemed deceptive if the claims

Correct Answer
verified

Pro Motor Company makes cars. Federal law requires Pro to attach a label that includes the Environmental Protection Agency's fuel economy estimate for a vehicle to

Correct Answer
verified

To generate sales, Golden Investments, Inc., uses phone solicitation. Under federal law, in soliciting business, Golden's telemarketers must disclose

Correct Answer
verified

An ad for Running Shoes Inc. states that its products are "The Athlete's Choice." Because of this ad, the Federal Trade Commission is most likely to issue

Correct Answer
verified

Correct Answer
verified

Brew Coffee Company sells coffee and related beverages. The company's ad contends that ambitious businesspersons "Drink Us & Rise Up in the World!'" The Federal Trade Commission would consider this ad to be

Correct Answer
verified

Correct Answer
verified

Home Products, Inc., in its advertisements, makes false claims about its own products and about the products of its competitors. The firm may be subject to sanctions for the false claims about

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified