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5100 Exam 1 Questions and answers latest update
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5100 Exam 1 Questions and answers latest update
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5100 Exam 1Facilitate - correct answer Provide consumers with information to make decisions for themselves
Preempt - correct answer Firms forcing consumers to accept prescribed levels of quality and price
Search Good - correct answer Goods evaluated before purchase
Experience Goods - correct answer Goods evaluated after use
Credence Goods - correct answer When consumers have no way of knowing if it works
Market Mavens - correct answer Consumers so good at evaluating information that they're able to
impact the market, ex. Ralph Nader
Externalities - correct answer A third party being affected by a transaction between a buyer and seller
Lulling Effect - correct answer When there are so many back ups and monitors in the market, consumers
stop paying attention to possible risks
Challenges faced by the CPSC - correct answer Underfunded, red tape, far reaching mandates
Consumer Product Safety Commission(CPSC) - correct answer Created in 1972 to create safety standards,
collect data on injuries, and recall/ban hazardous products
Freedom of Information Act (FOIA) - correct answer Provides direct access to federal agency docs
CPSC Reporting Methods - correct answer Toll free number, 100 hospitals making reports, news and
radio reports
, CPSC has authority over: - correct answer Labeling requirements, order involuntary recalls, inspect
imports, impose civil penalties and ban products
Problems with consumer sovereignty - correct answer Complex products and services, comparative
information is biased and not enough time to research
CPSC "Offerer System" - correct answer CPSC originally advertised an area of rule making and received
proposals from outside sources, was inefficient with poor enforcement
Maynes 6 Consumer Problems - correct answer 1. Asymmetric powers favor businesses
2. Disadvantaged consumers
3. Informationally imperfect consumer markets
4. Monopolies
5. Consumer grievances
6. Underrepresentation of consumer interest
3 Consumer Handicaps (Maynes) - correct answer 1. Person's interest as a consumer is secondary to that
as a producer
2. Consumer activities are dispersed while producers are focused
3. Lack of recognition of "purchasing agent" role
1. Asymmetric Powers Favor Business - correct answer Biased information is released by businesses(ads,
persuasion, complaint resolution), and products are complex and numerous
2. Disadvantaged Consumers - correct answer Consumers may lack to time or knowledge of products, or
may be limited by personal characteristics like time or location, social status, etc.
3. Informationally Imperfect Consumer Markets - correct answer The correlation between price and
quality is almost always 0, technical complexity makes it hard to discern quality, price discrimination, etc.
4. Monopoly Problem - correct answer Higher prices, lower quality, reduced output by firms
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