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Exam 3: The Big Picture: Economic and Regulatory Aspects

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Question 21

Multiple Choice

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A(n) _____ refers to a document the advertiser signs agreeing to stop the objectionable advertising without admitting any wrongdoing.

A) trademark
B) consent decree
C) testimonial
D) customer feedback form
E) estate clearance decree

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Question 22

Multiple Choice

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Advertising helps keep prices down by:

A) educating consumers about new uses of products.
B) conveying positive images of products.
C) lowering the cost of production.
D) encouraging competition.
E) offering people the opportunity to satisfy symbolic wants and needs.

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Question 23

True/False

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The importance of advertising is best demonstrated by the principle of communal interest.

_____ refers to doing what society views as best for the welfare of people in general or for a specific community of people.

Critics opine that advertising is so powerful that consumers are helpless to defend themselves against it.

The basic activity of the _____ is the review and evaluation of child-directed advertising in all media.

MedPro,an American drug manufacturer,claimed in an ad that its new drug for reducing cholesterol in adults is better than other similar drugs currently available in the market.According to the claims made by MedPro,the new drug significantly reduced the chance of heart disease,a dreaded side effect of some cholesterol-reducing drugs.Furthermore,laboratory tests helped substantiate MedPro's claim that the new drug substantially reduced the risk of heart disease in patients with high cholesterol.This is an example of _____.

Green Life,a supermarket based in Louisiana,recently came under scrutiny when it distributed leaflets that explicitly discouraged consumers from shopping at Appleton Supermarket,Green Life's rival.In the leaflet,Green Life provided a comparative price chart that compared the prices of similar merchandise available at both the supermarkets.The price chart promoted the view that Green Life provided far better value for consumer dollars than did Appleton.Appleton alleged that Green Life's claims were not only misleading but also instrumental in jeopardizing its sales.In this instance,Green Life had engaged in _____.

In the context of advertising,children are rarely treated as sole decision makers.

Comparative advertising is illegal in the United States.

The National Advertising Division (NAD) of the National Advertising Review Council (NARC) :

A supermarket in Ashland County,Wisconsin,was charged for running a series of ads in the local newspapers creating a false sense of urgency among consumers about sales that never actually came to an end.This is an example of _____.

Redwagon,an automobile manufacturer,was charged for its failure to warn elderly customers about safety problems in one of its models,the Red Auto.Elderly users of the Red Auto were substantially inconvenienced owing to the lack of information pertaining to the safety problem in their cars.In this case,the FTC found that Redwagon had failed to address this safety issue in their ads for the Red Auto.This is an example of _____.

The chief function of the consumer protection agencies is to protect local consumers against unfair and misleading practices by area merchants.

Which of the following is an instance of stereotyping in advertising?

How does advertising add value to a brand?

In declining markets:

Proponents of advertising say advertised products are unsafe because they do not put a company's name and reputation on the line.

In which of the following ways does advertising add value to a brand?

Limitation of freedom of commercial speech threatens every legal business in America primarily because any limitation on the freedom to advertise: