Chapter 3 (Purchasing Power)

Question 1

Which of the following schemes involves advertising a basic service at a low price to lure in customers and then selling them additional repairs or services?

Answer 1

low-balling

Question 2

Which type of inflation occurs when prices are high, then drop due to decreased demand, and then are restored to a revious high level?

Answer 2

reflation

Question 3

Consumers are allowed to copy the contents of a CD to a portable or other device for personal purposes.

Answer 3

true

Question 4

Changing prices affect the spending power of both producers and consumers.

Answer 4

true

Question 5

Generic drugs are similar to brand-name drubs, but they are often less effective.

Answer 5

false

Question 6

Which of the following acts protects your health and billing information by limiting access to it?

Answer 6

hippa

Question 7

The U.S. government measures inflation by using tools such as the Consumer Price Index.

Answer 7

true

Question 8

Value-based pricing involves setting prices for products based ont he competitors’ prices.

Answer 8

false

Question 9

Businesses base price decisions, in part, on the spending patterns of consumers.

Answer 9

true

Question 10

Which of the following tyhpes of inflation rapidly rising prices that cause consumers to spend their money as fast as they can to avoid even higher prices?

Answer 10

hyperinflation

Question 11

Cost-push inflation occurs when cost increases are not offset with higher productivity that lowers the cost of each unit made.

Answer 11

true

Question 12

Preparing a shopping list will help consumers avoid impulse buying.

Answer 12

true

Question 13

An example of a product that meets emotional rather than basic needs is

Answer 13

makeup

Question 14

As inflation rises, the true buying power of each dollar falls; this means an individual’s standard of living will drop.

Answer 14

true

Question 15

Economizing and optimizing are consumer buying strategies that people use at different times.

Answer 15

true

Question 16

The buying strategy by which consumers save as much as possible and spend only when necessary is called

Answer 16

economizing

Question 17

Which form of Internet advertising is used to grab the reader’s attention while the reader is visiting a website?

Answer 17

banner ads

Question 18

The FDA approves drugs before they can be sold to the public.

Answer 18

true

Question 19

Advertising is a method used by businesses to create demand for products.

Answer 19

true

Question 20

Which of the following guarantees the quality and performance of a product or service?

Answer 20

warantee

Question 21

The Federal Reserve System

Answer 21

• central bank of us
• known as the fed
• created by congress

Question 22

As resources become scarced or more difficult to get, prices rise in the form of

Answer 22

real cost inflation

Question 23

Emotional and impulse buying often lead to buyer’s remorse, meaning you later realize you made a poor choice.

Answer 23

true

Question 24

Reflection occurs when prices are rising at a slow rate.

Answer 24

false

Question 25

The rate that banks charge their most creditworthy business customers is called the

Answer 25

prime rate

Question 26

As general price levels rise, the value of money

Answer 26

falls

Question 27

Door-to-door sales are a form of indirect advertising used to grab consumers' attention.

Answer 27

false

Question 28

Consumers should be careful not to let optimizing lead to

Answer 28

overspending

Question 29

Liquidation prices are always lower than sale prices.

Answer 29

false

Question 30

Which of the following strategies is effective for consumers to use while they are shopping?

Answer 30

stick to your shopping list

Question 31

The cost of making and delivering product A is $50. The company marks up this amount by 40% to set the price. What is the price of the product?

Answer 31

70

Question 32

The method of setting a price so that it will be comptetitive with similar products currently being sold is called

Answer 32

market based pricing

Question 33

Retail websites

Answer 33

both a and c

Question 34

Which of the following government agencies enforces laws and prevents the selling of mislabeled foods, drugs, and cosmetics

Answer 34

fda

Question 35

When merchants place merchandise at key points to attract quick purchases, they are appealing to which of the following consumer buying motives?

Answer 35

impulse buying

Question 36

Monetary policy refers to actions by the federal govenrment in setting wage rates.

Answer 36

false

Question 37

The U.S. government measures inflation by using tools such as the Consumer Price Index.

Answer 37

true