Social Responsibility and Business International Edition 4th Edition by O. C. Ferrell – Test Bank

Social Responsibility and Business International Edition 4th Edition by O. C. Ferrell – Test Bank

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

ANS: B PTS: 1

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.

ANS: D PTS: 1

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.

ANS: A PTS: 1

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

ANS: C PTS: 1

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

ANS: A PTS: 1

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

ANS: B PTS: 1

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

ANS: D PTS: 1

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.

ANS: E PTS: 1

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

ANS: B PTS: 1

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

ANS: C PTS: 1

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.

ANS: B PTS: 1

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

ANS: D PTS: 1

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.

ANS: C PTS: 1

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.

ANS: A PTS: 1

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

ANS: E PTS: 1

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

ANS: C PTS: 1

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.

ANS: B PTS: 1

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.

ANS: E PTS: 1

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

ANS: B PTS: 1

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.

ANS: D PTS: 1

ESSAY

21. “The customer is always right.” Explain why this well-known saying is not really true.

ANS:

Answers will vary.

PTS: 1

22. How has consumerism affected public policy over the past four decades?

ANS:

Answers will vary.

PTS: 1

23. What does the “right to be heard” entail?

ANS:

Answers will vary.

PTS: 1

24. What concerns about the right to privacy has the Internet raised?

ANS:

Answers will vary.

PTS: 1

25. Why does Southwest Airlines formalize its commitment to customer service?

ANS:

Answers will vary.

PTS: 1