Chapter 2 Flashcards by Morgan Cox

The __ for examining advertising is derived from the goal of society to promote behaviors that foster the greatest good for the most people:

utilitarian framework

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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?

the opening break shot in billiards

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According to the text, externalities are:

social costs

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How does advertising affect the value of a product?

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.

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Which of the following statements about how advertising affects price is true?

The consumer who buys the product pays for the advertising

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Which of the following statements about how advertising affects competition is true?

Some observers believe that advertising actually restricts competition.

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Ben and Berneice are going to the mall. Ben wants to buy a pair of jeans, and Berneice wants to buy a pair of Levi boot-cut jeans. Ben illustrates__demand while Berneice illustrates__demand.

Selective: Primary

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The only effect advertising has on consumer demand is to:

slow the rate of product decline

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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.

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The abidance of principle states that in an economy that produces more goods and services than can be consumed, advertising:

keeps consumers informed on their selection alternatives

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According to the__, if an economy produces more goods and service than can be consumed, advertising allows companies to compete more effectively for consumer dollars and keeps consumers informed of their selection alternatives.

abundance principle

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__refers to exaggerated, subjective claims that can’t be proven true or false.

puffery

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When the city of Pensacola, Florida, advertises itself as “the perfect place for the perfect Florida vacation,” it is using:

puffery

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The Little Giant Ladder System is advertised as “The strongest, safest most versatile ladder in the world” The advertiser is using:

puffery

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Under current law, the only product claims that are considered deceptive are those that:

are factually false and have the potential to deceive or mislead reasonable people

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Which of the following statements about deceptive advertising is true?

Puffery can be called deceptive advertising when consumers believe it to be true. `

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The basi premise of __ is that advertisers intentionally create ads with sexual messages that are hidden in the illustrations just below the limen (the threshold of perception).

subliminal advertising

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According to Wilson Bryan Key, subliminal advertising:

works through embedded messages that seduce consumers into buying the good or service

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An ad shows a young woman latin in a meadow with small farmhouses dotting the landscape horizon. As she looks at the clouds and smoke coming form the chimneys of the farmhouses, the ad shows what appears to be the words “Soups On” in smoky letters coming from one of the chimneys. If campbell’s soup were to run an ad such as this, the ad would be a form of which of the following

subliminal advertising

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According to the owner of NPC & Associates, Maryland’s largest African-American-owned 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 sterotypes

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Ever since the Napoleonic Wars, the British have used the term derogatory terms frogs to refer to the French. When the London-based Institut 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:

sterotype perpetuation

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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

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_____ means doing what the advertiser and the advertiser’s peers believe is morally right in a given situation

ethical advertising

Advertisers that are socially responsible:

do what society views as best for the welfare of people in general

44. In 2005, Ford Motor Company and designer Lily Pulitzer teamed to produce a scarf. Ten dollar from the sale of each scarf was donated to the Susan G. Komen Breast Cancer Foundation. By helping find a cure for breast cancer, Ford is:

behaving in a socially responsible fashion

45. How has the U.S. Supreme Court defined the rights of advertisers under the First Amendment?

It has distinguished between "speech" and commercial speech."

1. For businesspeople that believe that freedom of commercial speech should be afforded equal protection under the First Amendment, the _____ is ominous.

legislation against tobacco advertising

47. 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)

Which of the following statements about consumer privacy issues is true?

None of the above statements about consumer privacy issues is true.

The Federal Trade Commission (FTC) regulates:

advertising for products sold in interstate commerce

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

51. 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 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

52. Safeway, the 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

53. _____ advertising occurs when a consumer is “unjustifiably injured” or there is a “violation of public policy.”

Unfair

54. 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

1. 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

55. 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:

wanted to see the research data that supported this claim of superior taste

56. 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

57. When the Federal Trade Commission determines that an ad is deceptive or unfair, it can:

convince the advertiser to sign a consent decree

58. 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

59. Cease-and-desist orders:

prohibit further use of the offending advertisement

60. The Federal Trade Commission has filed a complaint against Provide Commerce, the parent company of ProFlowers, for "false and misleading" advertising. ProFlowers claims that it ships inventory "directly from the fields." The ads imply that the flowers are not picked until they are ordered. ProFlowers actually stores flowers in refrigerated warehouses and ships from these warehouses. The FTC has ordered ProFlowers to run _____ and inform its customer that its flowers do not come fresh from the field.

corrective

61. 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.

62. 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

63. The _____ has indirect control over advertising through its authority to license or revoke the license of all broadcasting stations.

Federal Communications Commission

1. Through the issuance of _____, the government provides incentives to invent, invest in, and disclose new technology worldwide.

patents

64. 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

65. Which of the following can be copyrighted?

the newest book by Dan Brown

66. 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

67. Which of the following is the largest of the U.S. business-monitoring organizations?

Better Business Bureau

68. 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

69. The National Advertising Division (NAD) of the National Advertising Review Council (NARC):

is a monitoring and investigative body

70. 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

71. _____ is defined as social action designed to dramatize the rights of the buying public.

Consumerism

72. Consumer advocate groups:

submit complaints about ads to appropriate government agencies

73. The _____, an association of the largest ad agencies in the United States, monitors industry-wide advertising practices.

American Association of Advertising Agencies