Question 1

Which of the following is an example of puffery?

Accepted Answer

Puffery refers to exaggerated or vague claims that cannot be proven or are subjective. Saying that the fast food chain sells the world's finest chicken is an example of puffery because it is a subjective claim that cannot be proven. The other options make specific, quantifiable claims that could be proven or disproven.

Question 2

A company can sue a competitor under the , which forbids "false description or representation."

Accepted Answer

The Lanham Act of 1947 forbids false descriptions or representations, making it possible for a company to sue a competitor for using false advertisements or claims. The Wheeler-Lea Act of 1938 prohibits unfair or deceptive acts or practices, but it applies to all businesses, not just competitors. The Nutrition Labeling and Education Act of 1990 relates to food labeling, and the Franchising Rule of 1979 is specific to the regulation of franchises.

Question 3

The Federal Trade Commission works with the sectors to regulate fraud issues.

Accepted Answer

The Federal Trade Commission (FTC) is responsible for protecting consumers from unfair or deceptive practices in the marketplace. This includes regulating fraud issues in a variety of sectors, including advertising and sales practices.

Question 4

Discuss how the role of government in the area of economics has been that of an actor and a referee between consumers and the business community.

Accepted Answer

The answer of Discuss how the role of government in...

Question 5

The refusal of courts during the nineteenth century to interfere with the freedom of parties to enter into contracts can be traced, in part, to the writings of .

Accepted Answer

The writings of Adam Smith, specifically his book "The Wealth of Nations," advocated for free market capitalism and the freedom of individuals to make their own economic decisions, including the right to enter into contracts. This philosophy influenced legal thinking during the nineteenth century, leading to a general reluctance to intervene in contractual agreements.

Question 6

Puffery involves .

Accepted Answer

Puffery involves making exaggerated or hyperbolic claims about a product or service in a promotional message or sales talk, without actually making specific claims that can be proven or verified. This type of advertising is considered legal, but it is often seen as unethical because it can be deceptive and misleading to consumers. Option A is an example of a sales promotion, while option B and D are examples of deceptive or false advertising.

Question 7

Under the Fair Packaging and Labeling Act, which of the following governmental units promulgates rules governing the labeling and packaging of products?

Accepted Answer

The Department of Health and Human Services (specifically the Food and Drug Administration) is responsible for enforcing the Fair Packaging and Labeling Act, which requires that consumer products bear labels that provide accurate and truthful information about the contents and net quantity of the product. The other options listed do not have jurisdiction over packaging and labeling requirements.

Question 8

As Adam Smith's laissez-faire philosophy gained popularity in the eighteenth and nineteenth centuries, the freedom-to-contract doctrine evolved through case law out of our federal court system.

Accepted Answer

The freedom-to-contract doctrine evolved primarily through state court decisions, not the federal court system, during the eighteenth and nineteenth centuries.

Question 9

Since the 1930s, state courts have expanded the freedom-to-contract doctrine.

Accepted Answer

Since the 1930s, state courts have actually limited the freedom-to-contract doctrine in order to protect consumers and employees from unfair contracts and exploitation.

Question 10

The U.S. courts throughout the nineteenth century upheld the principle of caveat emptor.

Accepted Answer

This is true. The principle of caveat emptor, or "let the buyer beware," meant that the responsibility was on the buyer to inspect and investigate the quality of goods or property before purchasing. The courts believed that buyers had access to all necessary information to make an informed decision, and therefore the seller was not liable for any defects or issues with the item sold, unless they actively misrepresented it. This principle remained in practice until the early twentieth century, when consumer protection laws began to be enacted.

Question 11

Which of the following could be an example of deception?

Accepted Answer

The advertisement stating that 14 out of 15 dentists use a particular toothpaste could be an example of deception because it may not be a representative sample, and the claim may not be backed up by scientific evidence.

Question 12

List the powers of a bankruptcy trustee.

Accepted Answer

The answer of List the powers of a bankruptcy trustee....

Question 13

A professional basketball player states in an advertisement that a particular brand of sports gear will improve one's performance on the court. Which of the following methods of deceptive advertising does this example depict?

Accepted Answer

This example depicts the method of deceptive advertising known as a testimonial, where a famous or influential person endorses a product to convince consumers to buy it.

Question 14

Debate continues among economists, political scientists, and legal scholars as to what role, if any, the government should play in the relationship between consumers and business organizations.

Accepted Answer

The statement accurately reflects ongoing debates among experts about government intervention in the consumer-business relationship.

Question 15

Which of the following statements is true with regard to the Federal Trade Commission (FTC) staff proving deceptive advertising under Section 5 of the FTC Act?

Accepted Answer

The FTC staff need to prove that the misrepresentation or omission is material in order to prove deceptive advertising under Section 5 of the FTC Act. Material misrepresentations or omissions are those that are likely to affect a consumer's decision to buy or use a product or service. The other options are incorrect. The FTC does need to show that there is a misrepresentation or omission likely to mislead consumers and that there is intent to deceive, and the reasonableness of consumer behavior may be taken into consideration.

Question 16

The freedom-to-contract doctrine has been limited by the implied warranty doctrine, as well as by the courts' relaxation of strict privity relationships between manufacturers and consumers.

Accepted Answer

The implied warranty doctrine and relaxation of strict privity relationships have imposed some limitations on the freedom-to-contract doctrine.

Question 17

The freedom-to-contract doctrine evolved through law out of the court system(s).

Accepted Answer

The freedom-to-contract doctrine emerged from court cases, rather than being enacted through legislation. Additionally, the development of contract law varies by state, so it is most likely that this doctrine evolved through the state court system.

Question 18

Governed by the freedom-to-contract doctrine, United States courts throughout the nineteenth century generally refused to interfere in contractual relations merely because one party was more economically powerful or better able to drive a hard bargain.

Accepted Answer

The statement accurately describes the United States courts' approach to the freedom-to-contract doctrine during the nineteenth century.

Question 19

The freedom-to- doctrine states that parties who are legally competent are allowed to enter into whatever contracts they wish.

Accepted Answer

The correct term is "freedom to contract," which refers to the ability of parties to freely enter into agreements and determine the terms of their contracts.

Question 20

Which of the following is the leading federal consumer protection agency?

Accepted Answer

The leading federal consumer protection agency is the Federal Trade Commission (FTC). The other options mentioned do not directly relate to consumer protection. The Interstate Commerce Commission regulates transportation, the Occupational Safety and Health Administration focuses on workplace safety, and the Federal Accountability Act promotes accountability and transparency in government spending.

Quiz 25: Laws of Debtor-Creditor Relations and Consumer Protection