Question 1

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.

Question 2

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

Accepted Answer

A) True 
 B)False

Question 3

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

Accepted Answer

A) True 
 B)False

Question 4

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

Accepted Answer

A) True 
 B)False

Question 5

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.

Question 6

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

Accepted Answer

A) True 
 B)False

Question 7

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

Accepted Answer

A) True 
 B)False

Question 8

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.

Question 9

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.

Question 10

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.

Question 11

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

Accepted Answer

A) True 
 B)False

Question 12

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.

Question 13

Ads must disclose relevant limitations underlying their claims.

Accepted Answer

A) True 
 B)False

Question 14

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.

Question 15

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.

Question 16

Vague generalities are permissible in advertising.

Accepted Answer

A) True 
 B)False

Question 17

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

Accepted Answer

A) True 
 B)False

Question 18

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.

Question 19

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 20

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.

Exam 24: Consumer Law

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​

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

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

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

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​

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

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

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​

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​

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​

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

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​

Ads must disclose relevant limitations underlying their claims.

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

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​

Vague generalities are permissible in advertising.

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

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​

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

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​

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

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

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

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

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

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

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

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

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

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