Question 1

Bankruptcy occurs when a business is unable to pay its debts as they come due.Filing for bankruptcy was once akin to contracting a social disease.

Accepted Answer

Filing for bankruptcy was once stigmatized and viewed as a negative reflection on a business, similar to the stigma surrounding contracting a social disease.

Question 2

The Clean Air Act,passed in 1970,assigned the EPA the task of setting clean air standards.

Accepted Answer

The Clean Air Act of 1970 did assign the EPA the task of setting national air quality standards in order to protect public health and welfare.

Question 3

In 1996,passage of the Small Business Regulatory Enforcement Fairness Act provided small businesses with some relief from government regulation.

Accepted Answer

The Small Business Regulatory Enforcement Fairness Act of 1996 provided small businesses with options for relief from excessive government regulation.

Question 4

Recent amendments have expanded the FTC's powers.

Accepted Answer

The FTC (Federal Trade Commission) Act was amended in 2020 to expand the agency's powers, giving them more authority in areas such as privacy, data security, and antitrust enforcement.

Question 5

When a company files for Chapter 11 bankruptcy,every creditor must approve its plan for reorganization.

Accepted Answer

While creditors have a say in the plan for reorganization, not all of them have to approve it. The plan must be approved by the bankruptcy court, and may require approval by a majority of creditors or classes of creditors, but not necessarily every single creditor.

Question 6

The Robinson-Patman Act focuses on preventing unfair labor practices.

Accepted Answer

The Robinson-Patman Act, also known as the Anti-Price Discrimination Act, focuses on preventing unfair pricing practices among businesses. It prohibits businesses from charging different prices to different customers for the same goods or services, unless there is a legitimate reason for the difference, such as differences in quantity purchased or transportation costs. It does not address labor practices.

Question 7

The Clean Water Act,passed in 1972,has achieved its 1983 and 1985 goals for clean water,even though it was five years late in reaching them.

Accepted Answer

The Clean Water Act has not fully achieved its goals for clean water by the target years of 1983 and 1985, as many water bodies in the U.S. still do not meet the standards set by the Act.

Question 8

The CPSC has the power to ban the production of any product it considers hazardous to consumers.

Accepted Answer

The Consumer Product Safety Commission (CPSC) has the authority to ban products it believes pose an unreasonable risk of injury or death to consumers. This power is granted to them by the Consumer Product Safety Act (CPSA) of 1972.

Question 9

A Chapter 11 bankruptcy provides a second chance for success.

Accepted Answer

Chapter 11 bankruptcy is designed to help businesses restructure and reorganize their debts in order to become profitable again. It allows businesses to continue operating while they develop a plan to pay off their creditors and become financially sound. Therefore, it can be seen as a second chance for success.

Question 10

The owner of a stolen credit card is liable for all charges on the card even if he/she notifies the credit card company of the theft before any unauthorized use of the card is made.

Accepted Answer

The owner of a stolen credit card is not liable for all charges on the card if they notify the credit card company of the theft before any unauthorized use of the card is made. The maximum liability for unauthorized charges on a credit card is $50, and most credit card issuers waive this fee altogether.

Question 11

Currently,complying with government regulations is costing $1.75 trillion per year.

Accepted Answer

As of my last update, I do not have access to real-time data or specific figures on the cost of complying with government regulations.

Question 12

The regulations and restrictions the government imposes on businesses place a disproportionate burden on small companies.

Accepted Answer

Small businesses often have limited resources and cannot afford to meet the same regulatory requirements as big corporations. This puts them at a disadvantage and may hinder their growth, creating an uneven playing field in the business world.

Question 13

Sam's Appliance Shop turns a past due account over to Jake's Collection Agency.Jake calls the customer at 4 a.m.every day and threatens him.This is illegal behavior on the part of Jake.

Accepted Answer

Jake's behavior is considered harassment and is illegal under the Fair Debt Collection Practices Act (FDCPA). The FDCPA prohibits debt collectors from calling debtors at unreasonable times or using abusive or threatening language.

Question 14

Recent consumer protection laws have reduced the required information on product labels to relieve the financial burden on small business.

Accepted Answer

This statement is false. Recent consumer protection laws have actually increased the required information on product labels to protect consumers and ensure they have detailed information about the products they are purchasing.

Question 15

Reorganization is covered by a Chapter 7 bankruptcy.

Accepted Answer

Reorganization is actually covered by Chapter 11 bankruptcy, not Chapter 7 which is primarily used for liquidation of assets to pay off debts.

Question 16

Many customers who file suits under product liability laws base their claims on negligence,when a manufacturer or distributor fails to do something that a "reasonable" person would do.

Accepted Answer

This is true. Negligence is one of the most common types of product liability claims, and it occurs when a manufacturer or distributor fails to take reasonable steps to ensure the safety of their product. This can include things like failing to adequately test a product, failing to provide adequate warnings or instructions, or failing to properly design or manufacture a product.

Question 17

An implied warranty of merchantability applies to every merchant seller,and the only way to disclaim it is by mentioning the term "warranty of merchantability" in a conspicuous manner.

Accepted Answer

An implied warranty of merchantability is automatically applied to merchant sellers, and to disclaim it, the seller must explicitly mention "merchantability" in a conspicuous manner, as required by the Uniform Commercial Code (UCC).

Question 18

The Clayton Act permits suppliers to charge customers different prices for the same product based on what the market will bear.

Accepted Answer

The Clayton Act prohibits suppliers from charging customers different prices for the same product if it will substantially lessen competition or create a monopoly. This practice is known as price discrimination and is generally illegal under the Clayton Act.

Question 19

A consultant is one who stands in the place of and represents another in business dealings.

Accepted Answer

A consultant does not necessarily stand in the place of and represent another in business dealings. They provide expert advice and guidance to clients.

Question 20

The Sherman Anti-Trust Act outlaws the restraint of trade and any attempt to monopolize.

Accepted Answer

The Sherman Anti-Trust Act was passed in 1890 and is a federal law that prohibits any agreements or practices that restrain free trade and competition between businesses. It also prohibits attempts to monopolize any part of trade or commerce.

Quiz 22: The Legal Environment: Business Law and Government Regulation