Deck 34: Protecting the Consumer and the Taxpayer

Question 1

Price fixing

A) violates federal law.
B) violates state law.
C) violates both state and federal laws.
D) is permissible if it results in lower costs to the consumer.

Answer 1

C

Question 2

False "suggested list prices" are an example of price fixing.

Answer 2

False

Question 3

A judgment in a class action suit is binding only upon the person bringing the suit.

Answer 3

False

Question 4

If a company is guilty of false advertising, the Federal Trade Commission (FTC) may require the company to run corrective advertisements.

Question 5

Lemon laws entitle a consumer to receive a new car if there is any defect in the present car.

Question 6

Price fixing is legal if it results in lower prices for consumers.

Question 7

The Consumer Product Safety Commission does not have the power to force a toy manufacturer to place a warning label on its products.

Question 8

Liability for injuries on international flights is set by the Prague Convention.

Question 9

Failure to use plain English in contracts voids those contracts.

Question 10

The purpose of consumer protection laws is

A) to prohibit unfair business practices.
B) to set minimum product standards.
C) to provide procedures for correcting wrongs.
D) all of these.

Question 11

An item sold at or below cost in order to attract customers is called

A) a rain check.
B) a loss leader.
C) bait.
D) the switch.

Question 12

Advertising items for sale that are not in stock is an example of misleading advertising.

Question 13

Price fixing tends to eliminate competition.

Question 14

A person who receives unordered goods must pay for them if they are not returned.

Question 15

If a store runs out of sale items, consumers must be given rain checks.

Question 16

A consumer who receives unordered goods

A) must accept and pay for them.
B) must send them back if unwanted.
C) may keep the goods as a gift.
D) may sell them and send the money to the company.

Question 17

Once a consumer enters into a sales contract, he or she may not cancel it for any reason.

Question 18

Exaggerating the quality of merchandise is called

A) fluffing.
B) puffing.
C) luffing.
D) ruffing.

Question 19

Consumer protection is the sole responsibility of Congress.

Question 20

Labels on certain products must contain the name and address of the manufacturer.

Question 21

The mandate of the federal Food and Drug Administration is

A) to set safety standards for many products.
B) to require testing of new drugs.
C) to examine advertising and labeling of products.
D) all of these.

Question 22

A(n) ____________________ is one who purchases goods and services for personal use.

Question 23

Compensation for a canceled airline flight is determined by

A) federal law.
B) federal regulations.
C) airline policy.
D) federal and state laws.

Question 24

A seller who violates consumer protection laws may be subject to

A) civil penalties only.
B) criminal penalties only.
C) neither civil nor criminal penalties.
D) both civil and criminal penalties.

Question 25

The purpose of food product labeling is

A) to protect the health of consumers.
B) to help consumers compare the quality of similar products.
C) to indicate a product's freshness.
D) all of these.

Question 26

The purpose of the Fair Packaging and Labeling Act is to provide information about

A) price.
B) quantity.
C) the manufacturer.
D) all of these.

Question 27

The law intended to prevent price misrepresentation in the sale of automobiles is the

A) Automobile Information Disclosure Act.
B) Magnuson-Moss Warranty Act.
C) Hatch Act.
D) Automobile Consumer Act.

Question 28

A taxpayer's right to contest a decision involving income taxes is protected by

A) the U.S. Constitution.
B) state law.
C) the Internal Revenue Service.
D) the Tax Court.

Question 29

Consumers' rights may be enforced by

A) the federal government.
B) consumers individually.
C) a class action suit.
D) all of these.

Question 30

Price fixing, loss leaders, and price misrepresentation are illegal because they eliminate ____________________.

Question 31

A contract must be written in plain English if it is

A) a consumer contract.
B) for money, goods, or services.
C) for merchandise valued at less than a certain amount.
D) all of these.

Question 32

The federal agency mainly responsible for product safety is the

A) Federal Trade Commission.
B) Food and Drug Administration.
C) Consumer Product Safety Commission.
D) Federal Safety Commission.

Question 33

The agency primarily responsible for consumer safety is the ____________________.

Question 34

Lemon laws cover

A) all defects.
B) only those defects that affect the safety, use, and value of the car.
C) only defects resulting from the negligence of the dealer.
D) none of these.

Question 35

A group claiming a violation of consumer protection laws may seek redress by bringing a(n)

A) derivative action.
B) individual action.
C) class action.
D) pro bono proceeding.

Question 36

Liability for lost, delayed or damaged baggage is determined by

A) the Federal Trade Commission.
B) the Federal Aviation Administration.
C) each airline.
D) Congress.

Question 37

Under the lemon laws in most states, if a car cannot be repaired after a certain number of attempts or after a certain period of time, the owner is entitled to

A) a refund of the purchase price.
B) a new car.
C) either refund of the purchase price or a new car.
D) neither a refund of the purchase price nor a new car.

Question 38

Consumers have the right to change their minds about door-to-door sales and to cancel the contract within

A) 3 days.
B) 5 days.
C) 15 days.
D) 30 days.

Question 39

A(n) ____________________ is a coupon that allows a consumer to purchase an out-of-stock sale item at a later time for the sale price.

Question 40

Congress requires that certain contracts be written in ____________________.

Question 41

Ross Pharmaceuticals manufactured a cold remedy that could be addictive. The product label did not carry any warnings about its use. Has Ross violated the law?

Question 42

Liability for injuries on flights within the United States is determined by ____________________.

Question 43

A lawsuit brought by an individual on behalf of a group of consumers is known as a(n) ____________________.

Question 44

The treaty that established airlines' liability for injuries on international flights is the ____________________.

Question 45

The Baldwins purchased a new piano. A few months later they discovered defects in the piano and sought to cancel the contract because it was not written in plain English. May they cancel the contract?

Question 46

The owners of several stores in a shopping center agreed on certain hours during which they would remain open. Is this an unfair trade practice? Why or why not?

Question 47

Harrison purchased a vacuum cleaner from a door-to-door salesperson for $300. Two days later she changed her mind and wanted to cancel the sale. The company insisted that she was bound by the written sales contract. Is the company correct?

Question 48

The Nu-Tone Company, a cosmetics manufacturer, sent samples of its new skin lotion to people who had not requested them. The company later sent bills for the lotion to the same people. Must the individuals pay those bills?

Question 49

Failure to repair a new or used vehicle purchased with a warranty is a violation of the ____________________ laws.

Question 50

A taxpayer's rights are described in publications of the ____________________.