Chapter 2 Flashcards
(80 cards)
1
Q
The economic effect of advertising triggers off a chain reaction of hard to predict economic events
A
True
2
Q
Advertising adds value to a brand by educating customers about new uses for a product
A
True
3
Q
Intense competition cannot reduce the number of businesses in an industry.
A
False
4
Q
The importance of advertising is best demonstrated by the iceberg principle.
A
False
5
Q
When an ad states that chicken soup made with Swanson chicken broth “tastes as good as
grandma”, it is using puffery.
A
True
6
Q
Critics claim advertising is so powerful that consumers are helpless to defend themselves
against it.
A
True
7
Q
Critics argue there is too much advertising due to the proliferation of new media.
A
True
8
Q
Advertisers today do not use male and female stereotypes in their ads.
A
False
9
Q
According to advertising supporters, it promotes a higher standard of living, subsidizes the
arts and supports freedom of the press.
A
True
10
Q
Adherence to ethical and socially responsible principles is the moral obligation of
advertisers.
A
True
11
Q
The U.S. Supreme Court does not differentiate between speech and commercial speech.
A
False
12
Q
While most children and parents are still joint consumers, more and more children are
becoming sole decision makers.
A
True
13
Q
Because there are so many federal, state and local agencies that regulate different aspects
of advertising, advertisers sometimes find it difficult to comply with regulations.
A
True
14
Q
Deceptive advertising occurs when a consumer is “unjustifiably injured” or there is a
“violation of public policy”.
A
False
15
Q
When State Farm insurance uses advertising to show that it has lower rates than
Progressive insurance, it is using comparative advertising.
A
True
16
Q
The FTC can request a company to use corrective advertising, but it may not legally
require a company to do so.
A
False
17
Q
The big cursive G that appears in all ads for General Mills cereals is an example of a
trademark.
A
True
18
Q
The chief function of the consumer protection agencies found in many cities and counties
is to act as a watchdog for the federal regulators.
A
True
19
Q
The largest of the U.S. business-monitoring organizations is the Better Business Bureau.
A
True
20
Q
Uniform newspaper advertising codes make it easy for advertisers to make sure that their
ads meet all legal and ethical requirements.
A
False
21
Q
According to the text, externalities are:
A
social costs.
22
Q
According to the text, which of the following images best describes the chain reaction of
economic events that takes place once a company begins to advertise?
A
The opening break shot in billiards
23
Q
How does advertising affect the value of a product?
A
The value of advertising explains why someone would buy the more expensive Bayer
aspirin rather than the store brand of aspirin that treats the same symptoms.
24
Q
Which of the following statements about how advertising affects price is true?
A
The consumer who buys the product pays for the advertising
25
Which of the following statements is true about how advertising affects competition?
Some observers believe that advertising actually restricts competition.
26
Mike and Lou are going to the mall. Mike wants to buy a pair of jeans and Lou wants to
buy a pair of Levi boot-cut jeans. Mike illustrates _____ demand while Lou illustrates _____
demand.
primary; selective
27
Maria is very upset because the writers' strike has caused her to have to live without
learning what‘s to come with the women on Desperate Housewives and how dangerous the
secret organization depicted in Heroes is. Her husband is happy as long as something
mindless is on television. Maria is exhibiting _____ demand.
selective
28
What effect does advertising have on consumer demand?
Advertising slows the rate of product decline.
29
Which of the following statements about the effects of advertising on the business cycle is
true?
When business cycles are down, advertising may act as a stabilizing force.
30
The abundance principle states that in an economy that produces more goods and services
than can be consumed, advertising:
keeps consumers informed of their selection alternatives.
31
According to the ____, if an economy produces more goods and services than can be
consumed, advertising allows companies to compete more effectively for consumer dollars
and keeps consumers informed of their selection alternatives.
abundance principle
32
_____ refers to exaggerated, subjective claims that can‘t be proven true or false.
Puffery
33
When the city of Pensacola, Florida, advertises itself as "the perfect place for the perfect
Florida vacation", it is using:
puffery.
34
In a 1940 issue of Time magazine, the Chesapeake and Ohio train lines advertised that
riding its trains would provide travelers with "the most pleasant trip they have ever known."
This advertiser is using:
puffery.
35
Under current law, the only product claims that are considered deceptive are those that:
are factually false and have the potential of misleading reasonable people.
36
Which of the following statements is true about deceptive advertising?
Puffery can be called deceptive advertising when consumers believe it to be true.
37
The basic premise of _____ is that advertisers intentionally create ads with sexual
messages that are hidden in the illustrations just below the limen.
subliminal advertising
38
According to Wilson Bryan Key, subliminal advertising:
works through embedded messages that seduce consumers into buying the good or service.
39
When advertisers spend millions of dollars trying to convince people that their products
will make them sexier, healthier and more successful, they are trying to:
manipulate consumers' value systems.
40
Which of the following statements about the proliferation of advertising is true?
C. Most people tolerate ad clutter as the price they must pay for freedom of the press, free TV
and a high standard of living.
41
According to the owner of NPC & Associates, Maryland‘s largest African-Americanowned
ad agency, "If you were to come from another planet and watch American television,
you would think that all black people did was play basketball and hang out on street corners
and do rap music." He is accusing advertising of:
perpetuating stereotypes.
42
Ever since the Napoleonic Wars, the British have used the derogatory term ‘frogs' to refer
to the French. When the London-based Institute Francais advertised French language courses
at all levels from beginners to advanced students, it pictured the development of a frog in
stages from egg through tadpole to full maturity. This would be an example of:
stereotype perpetuation.
43
With respect to offensiveness in advertising, Benetton ads frequently come under attack
for its usage of nudity and sexual innuendo. Professionals indicate that the ultimate regulator
of such ads is the fact that:
if the ads don‘t pull in the audience, the campaign will falter and die—the marketplace has
the ultimate veto power.
44
_____ means doing what the advertiser and the advertiser‘s peers believe is morally right
in a given situation.
Ethical advertising
45
Socially responsible advertisers:
do what society views as best for the welfare of people in general.
46
Nike‘s Air Jordan XX3, the 23rd edition of the series of shoes endorsed by retired
basketball star Michael Jordan, differs from its predecessors because it is the first basketball
shoe shaped by what Nike calls "Nike Considered," an approach to design that favors
environmentally-preferable materials, reduces toxic chemicals and curbs waste. By adopting
such environmentally-supportive standards to make its products, Nike is:
A. manipulating the consumer.
behaving in a socially responsible fashion.
47
How do advertisers show their social responsibility?
By providing millions of dollars of pro bono work to nonprofit organizations
48
How has the U.S. Supreme Court intervened in the rights of advertisers under the First
Amendment?
It has distinguished between "speech" and "commercial speech" and offered significant
protection for truthful commercial speech.
49
To promote responsible children's advertising and to respond to public concerns, the
Council of Better Business Bureaus established the:
Children‘s Advertising Review Unit (CARU).
50
Which of the following statements about consumer privacy issues is true?
Internet companies use the information they gather about consumers to create personalized
files about each individual.
51
The Federal Trade Commission (FTC) regulates:
advertising for products sold in interstate commerce.
52
The FTC defines _____ as any ad that contains a misrepresentation, omission or other
practice that can mislead a significant number of reasonable consumers to their detriment.
deceptive advertising
53
U.S. Caviar ran ads in an onboard American Airlines magazine offering real Russian
caviar at substantially lower prices than it typically sold for. Later FTC investigators
determined that the caviar U.S. Caviar was selling as exotic Russian caviar was produced in
the U.S. and was actually overpriced given its quality. U.S. Caviar engaged in:
deceptive advertising.
54
Safeway, a UK supermarket chain, was reprimanded by a government agency in the
United Kingdom because it distributed a leaflet titled "More reasons NOT to shop at
Morrisons". (Morrisons is one of Safeway‘s primary competitors in the UK). In the leaflet,
Safeway depicted two shopping receipts, one for Safeway and one for Morrisons. The
Safeway receipt claimed goods purchased at Safeway were much cheaper than the same
goods purchased at Morrisons. Morrsions said that the goods on the imaginary receipt were
not typical purchases and that the reason they were cheaper on the Safeway receipt was
because the goods were on sale in the Safeway store. The FTC would have said that Safeway
was guilty of:
deceptive advertising.
55
_____ advertising occurs when a consumer is "unjustifiably injured" or there is a
"violation of public policy".
Unfair
56
A complaint was filed with the Federal Trade Commission that accused the film industry
regularly advertised R-rated movies during television shows and in magazines most popular
with children. In other words, the FTC investigated to see if the film industry was guilty of:
unfair advertising.
57
In 2005, Adolph Coors Co. ran an ad which featured a purported taste test between Aspen
Edge and Anheuser-Busch‘s Michelob Ultra. A taste-tester downed a glass of Aspen Edge
and took only a sip of Michelob Ultra. A print version of the ad said, "Beer drinkers agree that
Aspen Edge has more taste than Michelob Ultra". This ad is an example of _____
advertising.
comparative
58
Two companies, Le Shuttle and P&O European Ferries, provide Europeans with the
ability to cross the English Channel. An advertisement for Le Shuttle claimed it was more
popular with travelers than P&O European Ferries. This is an example of _____ advertising.
comparative
59
In 2005, Adolph Coors Co. ran an ad which featured a purported taste test between Aspen
Edge and Anheuser-Busch‘s Michelob Ultra. A taste-tester downed a glass of Aspen Edge
and took only a sip of Michelob Ultra. A print version of the ad said, "Beer drinkers agree that
Aspen Edge has more taste than Michelob Ultra". Coors was forced to remove the television
advertisements after Anheuser-Busch said it made unsubstantiated claims about consumer
preferences. Anheuser-Busch:
issued an unsupported cease-and-desist order.
60
Two companies, Le Shuttle and P&O European Ferries, provide Europeans with the
ability to cross the English Channel. An advertisement for Le Shuttle claimed it was more
popular with travelers than P&O European Ferries. P&O European Ferries lodged an
objection with a European regulatory agency and pointed out that they had carried 1. 4 million
cars in the previous year compared to only 1 million on the Shuttle. P&O European Ferries
was hoping to get Le Shuttle to run _____ advertising.
corrective
61
When Grace looked at the container of Roundup weed and grass killer, she saw a notice
that read, "Avoid contact with eyes. This product can cause eye irritation". This _____ would
be important to all of us who wanted to take the best possible care of our eyes.
affirmative disclosure
62
When the Federal Trade Commission determines that an ad is deceptive or unfair, it can:
convince the advertiser to sign a consent decree.
63
A(n) _____ is a document that the advertiser accused of deceptive or unfair advertising
signs in which it agrees to stop the objectionable advertising.
consent decree
64
Which of the following statements is true about cease-and-desist orders?
They prohibit further use of the offending advertisement.
65
The Federal Trade Commission has filed a complaint against Provide Commerce, the
parent company of Pro-Flowers, for "false and misleading" advertising. Pro-Flowers claim
that it ships inventory "directly from the fields". The ads imply that the flowers are not picked
until they are ordered. Pro-Flowers actually stores flowers in refrigerated warehouses and
ships from these warehouses. The FTC can order Pro-Flowers to run _____ and inform its
customers that its flowers do not come fresh from the field.
substantiated advertisement
66
Which of the following statements about the Food and Drug Administration (FDA) is
true?
The FDA has authority over the labeling, packaging and branding of all packaged foods
and therapeutic devices.
67
Which federal agency would have the authority to deal with the fact that a brand of hotdog
marked "Low Fat" contains only ten percent less fat than regular hotdogs?
The Food and Drug Administration
68
An ad in a 1940 Time magazine states, "Listerine mouthwash reduces germs on up to
96.7% of tissue surfaces 15 minutes after a Listerine gargle. Which federal agency would
have the authority to determine if this claim was correct?
The Food and Drug Administration
69
The _____ has indirect control over advertising through its authority to license or revoke
the license of all broadcasting stations.
Federal Communications Commission
70
Through the issuance of ____, the government provides incentives to invent, invest in and
disclose new technology worldwide.
patents
71
A trademark:
is any word, name, symbol or device or combination thereof, which identifies one
particular product or line of products from a single source.
72
Which of the following can be copyrighted?
The newest book by Dan Brown
73
Much of the state legislation that deals with advertising is based on the:
"truth-in-advertising" model developed by Printer‘s Ink, the industry trade paper for many
years.
74
Which of the following is the largest of the U.S. business-monitoring organizations?
Better business bureau
75
The primary purpose of the National Advertising Review Council is to:
promote and enforce standards of truth, accuracy, taste, morality and social responsibility
in advertising.
76
The National Advertising Division (NAD) of the National Advertising Review Council
(NARC):
is a monitoring and investigative body.
77
Good Housekeeping magazine places its "Seal of Approval" on all the products advertised
in it. If any of the products are later found to be defective, Good Housekeeping promises to
refund the money paid for the products. This kind of careful screening:
is a way for a medium to monitor its advertisements.
78
_____ is defined as social action designed to dramatize the rights of the buying public.
Consumerism
79
Consumer advocate groups:
submit complaints about ads to appropriate government agencies.
80
The ____, an association of the largest ad agencies in the United States, monitors
industry-wide advertising practices.
American Association of Advertising Agencies
