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Flashcards in Chapter 6 Deck (26):
1

Due care

The idea that consumers and sellers do not meet as equals and that the consumer's interests are particularly vulnerable to being harmed by the manufacturer, who has knowledge and expertise the consumer does not have

2

caveat emptor

means "let the buyer beware"

3

Strict product liability

The manufacturer of a product has legal responsibilities to compensate the user of that product for injuries suffered because the product's defective condition made it unreasonably dangerous regardless of whether the manufacturer was negligent in permitting that defect to occur.

4

What is the difference between strict and absolute liability?

With strict liability, the product must be defective, and the consumer always has the responsibility to exercise care

5

Consumer Product Safety Commission (CPSC)

Protects the public "against unreasonable risks of injury associated with consumer products."

6

Legal paternalism

The idea that the law may justifiably be used to restrict the freedom of individuals for their own good

7

FDA

Food and Drug Administration

8

6 points to increase product safety

1. give safety the priority necessitated by the product
2. abandon the misconception that accidents are solely the result of consumer misuse
3. monitor closely the manufacturing process
4. review the safety implications of their marketing and advertising strategies
5. provide consumers with full information about product performance
6. promptly investigate consumer complaints

9

2 kinds of warranties

express and implied

10

Warranties

Obligations to purchasers that sellers assume

11

Express warranties

The claims that sellers explicitly state

12

Implied warranties

Include the claim, implicit in any sale, that a product is for for its ordinary, intended use (the law calls this merchantability)

13

Horizontal price fixing

Occurs when competitors agree to adhere to a set price schedule, not to cut prices below a certain minimum, or to restrict price advertising or the terms of sales, discounts, or rebates

14

Vertical price fixing

Takes place when manufacturers and retailers- as opposed to direct competitors- agree to set prices

15

3 things businesses should refrain from

1. price fixing
2. price gouging
3. manipulative pricing

16

Price gouging

Seller's exploiting a short-term situation in which buyers have few purchase options for a much-needed product by raising prices substantially

17

Ambiguity

ads that can be understood in two or more ways

18

Weasel words

Evade or retreat from a direct or forthright statement (help, can be, up to)

19

Exaggeration

Making claims unsupported by evidence

20

Psychological appeal

A persuasive effort aimed primarily at emotion, not reason

21

Subliminal advertising

Advertising that communicates at a level beneath conscious awareness, where, some psychologists claim, the vast reservoir of human motivation primarily resides.

22

Federal Trade Commission (FTC)

Created in 1914 as an anti-trust weapon, but its mandate was expanded to include protecting consumers against deceptive advertising and fraudulent commercial practices

23

Reasonable-consumer standard

Prohibits only advertising claims that would deceive reasonable people

24

Gullible-consumer standard

Prohibits an ad that might mislead someone who is ill informed and naive

25

Consumer sovereignty

The idea that consumers should and do control the market through their purchases

26

Dependence effect

As a society becomes increasingly affluent, wants are increasingly created by the process by which they are satisfied.