Personal Finance 13Th Ed By Jack Kapoor – Test Bank
Personal Finance, 13e (Kapoor)
Chapter 8 Consumer Purchasing Strategies and Legal Protection
1) The first phase in the buying process involves information gathering.
Answer: TRUE
Difficulty: 1 Easy
Topic: Purchase decisions and implications
Learning Objective: 08-02 Implement a process for making consumer purchases.
Bloom’s: Remember
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
2) Advertising is a type of consumer information commonly provided by business organizations.
Answer: TRUE
Difficulty: 1 Easy
Topic: Purchase decisions and implications
Learning Objective: 08-02 Implement a process for making consumer purchases.
Bloom’s: Remember
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
3) Government agencies provide education programs and complaint hotlines to assist consumers in gathering information to make wise buying decisions.
Answer: TRUE
Difficulty: 1 Easy
Topic: Purchase decisions and implications
Learning Objective: 08-02 Implement a process for making consumer purchases.
Bloom’s: Remember
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
4) The most consistent quality is usually found with national-brand products.
Answer: TRUE
Difficulty: 1 Easy
Topic: Purchase decisions and implications
Learning Objective: 08-01 Identify strategies for effective consumer buying.
Bloom’s: Remember
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
5) Open dating information provides consumers with information about the freshness of a perishable product.
Answer: TRUE
Difficulty: 1 Easy
Topic: Purchase decisions and implications
Learning Objective: 08-01 Identify strategies for effective consumer buying.
Bloom’s: Remember
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
6) Service contracts are usually free and included in the cost of appliances and other high-priced items.
Answer: FALSE
Difficulty: 2 Medium
Topic: Warranties and service contracts
Learning Objective: 08-01 Identify strategies for effective consumer buying.
Bloom’s: Remember
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
7) Mediation involves a legally binding decision by a third party to solve a consumer complaint.
Answer: FALSE
Difficulty: 2 Medium
Topic: Purchases – consumer complaints
Learning Objective: 08-03 Determine steps to take to resolve consumer problems.
Bloom’s: Remember
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
8) Representation by a lawyer is usually required in small claims court.
Answer: FALSE
Difficulty: 1 Easy
Topic: Purchases – consumer complaints
Learning Objective: 08-04 Evaluate legal alternatives available to consumers.
Bloom’s: Remember
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
9) A class-action suit is a legal action taken by a few individuals on behalf of all the people who have suffered the same alleged injustice.
Answer: TRUE
Difficulty: 2 Medium
Topic: Purchases – consumer complaints
Learning Objective: 08-04 Evaluate legal alternatives available to consumers.
Bloom’s: Remember
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
10) Unit pricing uses a standard unit of measurement to compare the prices of packages of different sizes.
Answer: TRUE
Difficulty: 1 Easy
Topic: Price computations and comparisons
Learning Objective: 08-01 Identify strategies for effective consumer buying.
Bloom’s: Remember
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
11) A limited warranty covers all aspects of the product and does not require the buyer to incur any of the costs for shipping and repairs.
Answer: FALSE
Difficulty: 1 Easy
Topic: Warranties and service contracts
Learning Objective: 08-01 Identify strategies for effective consumer buying.
Bloom’s: Remember
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
12) One way to gather information about a product is to use an independent testing organization like Underwriters Laboratories (UL).
Answer: TRUE
Difficulty: 2 Medium
Topic: Purchase decisions and implications
Learning Objective: 08-02 Implement a process for making consumer purchases.
Bloom’s: Remember
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
13) An example of an economic factor that influences buying decisions would be:
- A) family size.
- B) inflation.
- C) advertising.
- D) hobbies.
- E) lifestyle.
Answer: B
Difficulty: 1 Easy
Topic: Purchase decisions and implications
Learning Objective: 08-01 Identify strategies for effective consumer buying.
Bloom’s: Understand
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
14) Which one of the following is the best example of a personal opportunity cost associated with a consumer purchase?
- A) Enjoyment derived from owning an item
- B) Taxes paid on purchases
- C) Money spent by stores on advertising
- D) Time and effort spent on comparison shopping
- E) Efforts by the government to prevent consumer fraud
Answer: D
Difficulty: 1 Easy
Topic: Opportunity costs
Learning Objective: 08-01 Identify strategies for effective consumer buying.
Bloom’s: Understand
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
15) The first phase of the consumer buying process involves:
- A) comparing alternatives.
- B) evaluating alternatives.
- C) identifying the problem.
- D) researching alternatives.
- E) selecting the buying location.
Answer: C
Difficulty: 1 Easy
Topic: Purchase decisions and implications
Learning Objective: 08-02 Implement a process for making consumer purchases.
Bloom’s: Remember
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
16) Which organization tests products for electrical and fire safety to assure items meet safety standards?
- A) Consumers Watch
- B) Better Business Bureau
- C) Consumer Product Safety Commission
- D) Underwriters Laboratories
- E) Federal Trade Commission
Answer: D
Difficulty: 1 Easy
Topic: Purchase decisions and implications
Learning Objective: 08-02 Implement a process for making consumer purchases.
Bloom’s: Remember
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
17) The main purpose of Consumers Union is to:
- A) report the quality of products and services.
- B) reduce fire hazards of home appliances.
- C) handle consumer complaints from government workers.
- D) represent the government in consumer complaint hearings.
- E) provide environmental information on automobiles.
Answer: A
Difficulty: 2 Medium
Topic: Purchase decisions and implications
Learning Objective: 08-02 Implement a process for making consumer purchases.
Bloom’s: Understand
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
18) A cooperative is designed to:
- A) solve consumer complaints.
- B) test consumer products for quality.
- C) sell products or services to members at reduced prices.
- D) obtain brand-name items for less than wholesale cost.
- E) lobby for changes in consumer protection laws.
Answer: C
Difficulty: 2 Medium
Topic: Purchasing strategies
Learning Objective: 08-01 Identify strategies for effective consumer buying.
Bloom’s: Understand
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
19) ________ are nonprofit organizations organized by member-owners to save money on various products and services. Their prices are usually lower than at other retailers.
- A) Cooperatives
- B) Warehouse stores
- C) Factory outlets
- D) Catalog showrooms
- E) Hypermarkets
Answer: A
Difficulty: 2 Medium
Topic: Purchasing strategies
Learning Objective: 08-01 Identify strategies for effective consumer buying.
Bloom’s: Understand
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
20) Cooperatives are commonly organized to sell:
- A) service contracts.
- B) furniture.
- C) auto repair service.
- D) food.
- E) information processing service.
Answer: D
Difficulty: 2 Medium
Topic: Purchasing strategies
Learning Objective: 08-01 Identify strategies for effective consumer buying.
Bloom’s: Understand
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
21) Impulse buying refers to:
- A) evaluating alternatives.
- B) gathering information.
- C) comparison shopping.
- D) selecting the least desirable alternative.
- E) unplanned purchasing.
Answer: E
Difficulty: 1 Easy
Topic: Purchase decisions and implications
Learning Objective: 08-01 Identify strategies for effective consumer buying.
Bloom’s: Remember
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
22) The items produced for a specific retail chain of stores are commonly sold under a ________ brand.
- A) store
- B) government
- C) regional
- D) local
- E) national
Answer: A
Difficulty: 1 Easy
Topic: Purchase decisions and implications
Learning Objective: 08-01 Identify strategies for effective consumer buying.
Bloom’s: Remember
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
23) Which of the following information is required on food labels?
- A) Ingredients
- B) Unit pricing
- C) Generic name
- D) Common product name
- E) Brand name
Answer: A
Difficulty: 2 Medium
Topic: Purchase decisions and implications
Learning Objective: 08-01 Identify strategies for effective consumer buying.
Bloom’s: Remember
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
24) Private label products are those that:
- A) are sold as government surplus.
- B) require nutritional labeling information.
- C) provide freshness information on the package.
- D) are distributed by all national chain stores.
- E) are sold by one chain of stores.
Answer: E
Difficulty: 2 Medium
Topic: Purchasing strategies
Learning Objective: 08-01 Identify strategies for effective consumer buying.
Bloom’s: Remember
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
25) Open dating provides information on:
- A) freshness.
- B) pricing.
- C) nutrition.
- D) common product use.
- E) government inspection.
Answer: A
Difficulty: 2 Medium
Topic: Purchase decisions and implications
Learning Objective: 08-01 Identify strategies for effective consumer buying.
Bloom’s: Remember
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
26) A 64-ounce package selling for $3.20 would have a unit price of:
- A) $3.20 per ounce.
- B) $2.00 per pound.
- C) $0.05 per ounce.
- D) $20.00 per quart.
- E) $20.48 per ounce.
Answer: C
Explanation: $3.20 / 64 = $0.05.
Difficulty: 2 Medium
Topic: Price computations and comparisons
Learning Objective: 08-01 Identify strategies for effective consumer buying.
Bloom’s: Apply
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
27) What type of warranty indicates that the seller has the right to sell a product?
- A) Express warranty
- B) Full warranty
- C) Implied warranty of title
- D) Warranty of merchantability
- E) Limited warranty
Answer: C
Difficulty: 2 Medium
Topic: Warranties and service contracts
Learning Objective: 08-01 Identify strategies for effective consumer buying.
Bloom’s: Remember
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
28) Howard Ramsell recently became aware of implied warranties that exist for consumer purchases. An implied warranty exists as a result of:
- A) a stated intent of the seller.
- B) actions by consumers.
- C) the intended use of a product.
- D) rulings of federal consumer agencies.
- E) a written statement from the manufacturer.
Answer: C
Difficulty: 2 Medium
Topic: Warranties and service contracts
Learning Objective: 08-01 Identify strategies for effective consumer buying.
Bloom’s: Understand
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
29) Which one of these statements best describes a criticism of automobile service contracts?
- A) Repair companies provide poor service.
- B) Service contracts are included in the initial price of the product and thus are not optional.
- C) The government regulation of service contract companies is weak.
- D) The contracts do not always include everything you might expect.
- E) There are a limited number of authorized repair facilities.
Answer: D
Difficulty: 2 Medium
Topic: Warranties and service contracts
Learning Objective: 08-01 Identify strategies for effective consumer buying.
Bloom’s: Understand
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
30) The purpose of a service contract is to:
- A) prevent legal action due to a defective product.
- B) protect a product owner from the high costs of certain repairs.
- C) reduce the chance of needing repairs.
- D) obtain regular maintenance on a product.
- E) have legal assistance for consumer complaints.
Answer: B
Difficulty: 2 Medium
Topic: Warranties and service contracts
Learning Objective: 08-01 Identify strategies for effective consumer buying.
Bloom’s: Understand
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
31) Most consumer complaints are resolved by:
- A) legal action.
- B) assistance from a government agency.
- C) contacting a company’s headquarters.
- D) returning to the original sales location.
- E) obtaining help from an action line.
Answer: D
Difficulty: 1 Easy
Topic: Purchases – consumer complaints
Learning Objective: 08-03 Determine steps to take to resolve consumer problems.
Bloom’s: Remember
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
32) Pam McNally is planning to use the services of the Better Business Bureau. A major purpose of the BBB is to help:
- A) recommend reputable companies in an area.
- B) resolve consumer complaints with local merchants.
- C) lobby for improved consumer protection laws.
- D) evaluate products and services for quality.
- E) represent business in government hearings.
Answer: B
Difficulty: 2 Medium
Topic: Purchases – consumer complaints
Learning Objective: 08-03 Determine steps to take to resolve consumer problems.
Bloom’s: Understand
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
33) The process of resolving conflicts between a customer and a business with the use of a third party whose recommendations are nonbinding is called:
- A) mediation.
- B) arbitration.
- C) a class action suit.
- D) a product lawsuit.
- E) a small claims court hearing.
Answer: A
Difficulty: 2 Medium
Topic: Purchases – consumer complaints
Learning Objective: 08-03 Determine steps to take to resolve consumer problems.
Bloom’s: Remember
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
34) ________ is the settlement of a difference by a third party whose decision is legally binding.
- A) Negotiation
- B) Mediation
- C) Arbitration
- D) Servicing
- E) Cooperative action
Answer: C
Difficulty: 2 Medium
Topic: Purchases – consumer complaints
Learning Objective: 08-03 Determine steps to take to resolve consumer problems.
Bloom’s: Remember
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
35) Arbitration differs from mediation in that arbitration:
- A) involves government officials.
- B) requires the use of a lawyer.
- C) is only available in certain states.
- D) allows compromise through negotiation.
- E) is legally binding.
Answer: E
Difficulty: 3 Hard
Topic: Purchases – consumer complaints
Learning Objective: 08-03 Determine steps to take to resolve consumer problems.
Bloom’s: Understand
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
36) The purpose of small claims court is to:
- A) regulate fair business activities.
- B) provide hearings on proposed consumer protection laws.
- C) allow consumers with similar complaints to take action as a group.
- D) handle legal disputes involving minor amounts.
- E) assist low-income consumers who need legal help.
Answer: D
Difficulty: 2 Medium
Topic: Purchases – consumer complaints
Learning Objective: 08-04 Evaluate legal alternatives available to consumers.
Bloom’s: Understand
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
37) Small claims courts:
- A) hear only class-action suits.
- B) are located in every state.
- C) have no minimum dollar limit on claims.
- D) require the use of an attorney.
- E) require that claims be in excess of $100,000.
Answer: B
Difficulty: 2 Medium
Topic: Purchases – consumer complaints
Learning Objective: 08-04 Evaluate legal alternatives available to consumers.
Bloom’s: Remember
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
38) Recently, Jim Walker was on a bus tour in a mountainous area. The bus broke down forcing the group to stay overnight. Group members had to pay for their own hotel bills. Jim believes that the hotel cost for the group should be paid by the tour company. Which legal action would be most appropriate?
- A) Small claims court
- B) Mediation
- C) Legal aid society
- D) Arbitration
- E) Class-action suit
Answer: E
Difficulty: 2 Medium
Topic: Purchases – consumer complaints
Learning Objective: 08-04 Evaluate legal alternatives available to consumers.
Bloom’s: Analyze
Accessibility: Keyboard Navigation; Screen Reader Compatible
Gradable: automatic
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