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Economics Ch 3 Assessment

True/False
Indicate whether the sentence or statement is true or false.
 

1. 

People buy necessities with their disposable income.
 

2. 

Where people live can influence how much they earn.
 

3. 

For a consumer, decision making stops after he or she has bought an item.
 

4. 

The time a consumer spends in finding out about a product is an opportunity cost.
 

5. 

All rational consumers will make the same choices.
 

6. 

The right to be heard guarantees that legislators will listen to consumer interests.
 

7. 

The ability of consumers to collect money from a manufacturer in payment for damages caused by their products is the right to redress.
 

8. 

Better Business Bureaus are private consumer groups that give consumers information on products and selling practices.
 

9. 

Private consumer groups protect the interests of manufacturers.
 

10. 

Consumers who attempt to return a used item because it has been advertised elsewhere for a lower price exhibit ethical behavior.
 

Multiple Choice
Identify the letter of the choice that best completes the statement or answers the question.
 

11. 

American consumers spend most of their money on
a.
recreation.
c.
health and personal care.
b.
housing and food.
d.
transportation.
 

12. 

The first decision a consumer must make is
a.
whether or not to buy an item.
c.
whether the product has a warranty.
b.
what quality the product should be.
d.
how to use the product.
 

13. 

All the steps in consumer decision making involve
a.
disposable income.
c.
luxury items.
b.
discretionary income.
d.
opportunity cost.
 

14. 

A rational choice involves choosing the
a.
most expensive goods.
b.
least expensive goods, regardless of quality.
c.
goods that you believe can best satisfy your wants.
d.
goods that are highly advertised.
 

15. 

Money that is spent on luxury items or entertainment is
a.
discretionary income.
c.
opportunity cost.
b.
disposable income.
d.
highest alternative choice.
 

16. 

An ad that appeals to emotions, but does not provide facts is an example of
a.
bait and switch.
c.
informative advertising.
b.
competitive advertising.
d.
comparison shopping.
 

17. 

Which of the following is illegal?
a.
selling generic brands
b.
bait and switch
c.
developing a consumer knowledge base
d.
competitive advertising
 

18. 

The opportunity cost of comparison shopping is the
a.
time you could have spent doing something else.
b.
price you pay for the item you choose.
c.
money advertisers spend to attract your attention to their products.
d.
money you save by making a rational choice.
 

19. 

A wise consumer makes a decision based on
a.
competitive advertising.
c.
bait and switch.
b.
comparison shopping.
d.
generic names.
 

20. 

Which of the following is the most efficient method of gathering information?
a.
listening to ads on the radio
c.
making telephone calls
b.
going to different stores
d.
browsing the Web
 

21. 

Being protected against goods that are dangerous to life or health is a consumer's
a.
right to choose.
c.
right to safety.
b.
right to be heard.
d.
right to be informed.
 

22. 

By giving consumers the right to choose, the government
a.
discourages competition.
b.
protects consumers in markets where competition does not exist.
c.
makes consumers responsible for knowing whether advertising is accurate.
d.
makes markets more competitive.
 

23. 

If a product is faulty, who is responsible for initiating the problem-solving process?
a.
the consumer
c.
the manufacturer
b.
the government
d.
the seller
 

24. 

Which of the following is an example of consumer responsibility?
a.
to test new products
b.
to set requirements for automobile safety
c.
to learn as much as possible about a product or service to be purchased
d.
to regulate labeling of products
 

25. 

Pointing out that a cashier failed to charge you for an item is an example of
a.
consumer rights.
c.
right to redress.
b.
consumer protection.
d.
ethical behavior.
 

Completion
Complete each sentence or statement.
 

26. 

Competitive advertising is often used for well-established ____________________.
 

 

27. 

If a faulty product has a ____________________, the manufacturer or seller will repair or replace it within a certain time period.
 

 

28. 

It is difficult to know who produced products that have ____________________.
 

 

29. 

The value of the time you spend _________________________ should not be greater than the value you receive from making the best choice of product for yourself.
 

 

30. 

From _________________________, consumers can learn about the existence, price, quality, and special features of products without spending much time.
 

 

Matching
 
 
Match each item with the correct statement below.
a.
consumer
b.
disposable income
c.
discretionary income
d.
rational choice
e.
opportunity cost
 

31. 

the value of the highest alternative choice that a person did not make
 

32. 

any person or group that buys or uses goods and services to satisfy personal needs and wants
 

33. 

choosing the alternative that has the greatest value among comparable quality products
 

34. 

money or income a person has left to spend on extras after necessities have been bought
 

35. 

income remaining for a person to spend after all taxes have been paid
 
 
Match each item with the correct statement below.
a.
bait and switch
b.
comparison shopping
c.
warranty
d.
brand name
e.
generic brand
 

36. 

promise made by a manufacturer or seller to repair or replace a product within a certain time period if it is found to be faulty
 

37. 

word, picture, or logo on a product that helps consumers distinguish it from similar products
 

38. 

deceptive advertising practice that attracts consumers with a low-priced product, then tries to sell them a higher-priced product
 

39. 

general name for a product rather than a specific name given by the manufacturer
 

40. 

getting information on the types and prices of products available from different stores and companies
 
 
Match each item with the correct statement below.
a.
consumerism
b.
ethical behavior
c.
Better Business Bureau
d.
Food and Drug Administration
e.
right to redress
 

41. 

private consumer group that helps settle disagreements between buyers and sellers
 

42. 

movement to educate buyers about purchases and to demand safer products from manufacturers
 

43. 

the ability to obtain from manufacturers adequate payment for damages caused by their goods
 

44. 

acting in accordance with convictions about right and wrong
 

45. 

federal agency that protects the public against impure and unsafe foods, drugs, and cosmetics
 



 
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