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Exam (elaborations)

5100 Exam 1 Questions and answers latest update

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5100 Exam 1 Questions and answers latest update

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  • March 12, 2024
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  • 2023/2024
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5100 Exam 1
Facilitate - 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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