Test Bank for Understanding Business 12th by Nicekls

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1) The executive branch of the government is responsible for overseeing the legal system.

2) The U.S. court system is organized solely at the federal and state levels.

3) Trial courts hear cases involving criminal and civil law.

4) Criminal law defines crimes, establishes punishments, and includes payment for personal injury.

5) Laws regulating marriage and the payment for personal injuries are part of our body of civil law.

6) Laws regulating marriage and personal injury liability are part of our body of criminal law.

7) Business law creates the legal framework for the enforcement of criminal statutes.

8) Appellate courts hear the appeals of decisions made at the trial court level brought by the losing party in the case.

9) Businesses today prefer to have the government set the standards for acceptable behavior.

10) Business law refers to a body of regulations that, when enforced, provides a framework within which business may be conducted.

11) Business law is enforceable by the courts.

12) The government’s involvement in governing the behavior of business people seems to be increasing.

13) Statutory law refers to written legislation.

14) Common law is the body of law established through legislative action by Congress.

15) Common law is based on the precedent of earlier court decisions.

16) The language used in statutory law often requires interpretation by the courts.

17) Lower courts must abide by the precedents set by higher courts.

18) Administrative agencies actually have a greater impact on businesses than courts do.

19) Administrative agencies are given the power by Congress to pass rules and regulations within a specific area of authority.

20) The Federal Trade Commission enforces laws and guidelines regarding unfair business practices.

21) The Federal Trade Commission acts to stop false and deceptive advertising and labeling.

22) Public utility commissions are federal agencies.

23) Congress is responsible for passing legislation that is enforced by the judiciary.

24) Congress prohibited discrimination against people with physical disabilities when they enacted the Americans with Disabilities Act. This is an example of common law.

25) Decisions made by judges in previous cases are an important part of common law.

26) The Federal Trade Commission issues and interprets rules and regulations regarding business activities. The Federal Trade Commission is a governmental administrative agency.

27) Bigbux Bank recently changed its advertising campaign. It now announces the bank has the lowest bank fees in the country even though it has not done research to discover whether this is true. Business law is the framework within which a competitor could take Bigbux to court in the event its claims are not true.

28) The St. Louis County Planning Commission is an example of a local administrative agency. It oversees land-use proposals and other long-range issues in St. Louis County, Missouri.

29) A public utility commission sets rates that can be charged by various public utilities to prevent unfair pricing by regulated monopolies. These public utility commissions are examples of state administrative agencies.

30) Lawsuits against the tobacco industry are examples of tort law.

31) Intentional and unintentional behavior that causes harm or injury is an example of a tort.

32) An intentional tort is a willful act that results in injury.

33) Tort law involves criminal acts where victims can be awarded compensation.

34) Tort law includes product liability cases.

35) Negligence, in tort law, deals with behavior that causes intentional harm or injury.

36) The rule of strict product liability holds a firm liable for a defective product only if the firm knowingly placed a hazardous product on the market.

37) Companies that produced asbestos decades ago are still subject to the strict product liability provisions of federal tort law.

38) Producers of government-approved drugs and chemicals cannot be sued by individuals who develop side effects years later.

39) The Class Action Fairness Act is a first step toward setting limits on the amount of damages for which companies are liable should their products harm consumers.

40) Toyota and General Motors have both been involved in major product liability cases.

41) A patient injured through the negligence of a health care provider can be awarded compensation through the tort law system.

42) If an automobile manufacturer unknowingly sells a defective product that causes an injury, the manufacturer is protected from product liability lawsuits.

43) McDonald’s was the subject of a product liability suit charging that its food caused obesity, diabetes, and other health problems in children.

44) Because it is no longer used in construction today, National Asbestos Manufacturing cannot be sued for damages today that are caused by asbestos that may still remain in some buildings.

45) A patent protects an inventor’s right to a product or process.

46) A patent gives inventors exclusive rights to their inventions for 20 years.

47) Patent owners are prohibited from selling or licensing their patent rights to others.

48) Submarine patents are primarily designed to generate large patent royalties for their owners.

49) Recent legislation encourages the use of submarine patents.

50) A copyright protects an individual’s ownership rights to materials such as books, articles, photos, and cartoons, which they created.

51) If in the normal course of a job an employee creates a cartoon, the copyright belongs to the employer.

52) Copyrights are filed with the Library of Congress and involve large amounts of paperwork.

53) Copyrights can be passed on to the creator’s heirs.

54) The holder of an exclusive copyright may charge a fee to anyone who wishes to use the copyrighted material.

55) A trademark gives exclusive legal protection to a name, symbol, or design that distinguishes the goods or services of one seller from those of competitors.

56) Unlike a patent, trademarks are not protected from infringement.

57) Trademarks generally belong to the owner forever, as long as they are properly registered and renewed every 10 years.

58) The Nike swoosh and the McDonald’s golden arches are examples of corporate trademarks.

59) Congratulations! You’ve just finished composing a song that will be the next big hit. Your next step is to apply for a patent through the U.S. Patent & Trademark Office.

60) Paul is a renowned nature photographer. Each of his works is copyrighted. This means that anyone can use his photos so long as they give Paul notice.

61) The Uniform Commercial Code establishes a standardized set of regulations for business transactions in all 50 states.

62) Regulations covering sales, checks, bank deposits, and bills of lading are contained in the Uniform Commercial Code.

63) The warranty you receive in the box with an iPad is an implied warranty.

64) A warranty guarantees that the product sold will be acceptable for the purpose for which the buyer intends to use it.

65) Batteries and tires sold with an express warranty provide the buyer with a guarantee regarding the life of the product.

66) Implied warranties are guarantees legally imposed on the seller.

67) A full warranty limits the defects or mechanical problems that are covered in a product.

68) Negotiable instruments provide a conditional promise to pay a specified amount of money.

69) A check is an example of a negotiable instrument.

70) Negotiable instruments are forms of commercial paper.

71) When a payee signs the back of a check the payee’s signature is referred to as an endorsement.

72) The offer of a 3-year or 36,000-mile warranty by a car dealer on a new vehicle is an example of an implied warranty.

73) The warranty you receive in the box with a toaster is an express warranty.

 

74) When Fitness Fanatics, Inc. agrees to replace or repair your defective stationary bike at no charge to you, Fitness Fanatics is fulfilling a full warranty on your bike.

75) When your younger brother signs the back of his paycheck and gives it to you in payment for money he owes you, he has endorsed the check, and you may deposit it in your checking account.

76) A contract is a legally enforceable agreement between two or more parties.

77) Contract law is a set of laws that covers sales laws and other commercial laws.

78) In order for a contract to be legal, mutual acceptance is achieved when one party is under duress.

79) Under contract law, duress means the presence of coercion through force or threat of force.

80) Under contract law, consideration means something of value.

81) If a contract is to be legally binding, both parties must give consideration.

82) In order to be legally binding, a contract must be a written agreement between two or more parties.

83) Under contract law, a 15-year-old may be a party to a contract.

84) Under contract law, an agreement for the sale of goods worth $50 or more must be in writing.

85) A breach of contract occurs when one party fails to follow the terms of the contract.

86) Under contract law, damages are the monetary settlements awarded to a person who is injured by a breach of contract.

87) Specific performance means that a person who violates a contract is required to live up to the agreement even if money damages are adequate.

88) Requiring that both parties are competent for a contract to be legal protects those who might be unable to protect themselves.

89) If Brad agrees to sing at Sean’s wedding for free and then doesn’t show up, Sean may sue Brad for breach of contract.

90) If Fairfield University violates its housing contract with a student, the student is prohibited from suing the university for damages because the contract was for the delivery of services rather than the delivery of goods.

91) Candace owns a rare painting and has agreed to a contract whereby she will sell it to the Washingtonian Museum for $7.8 million. At the last minute, she decides she cannot bear to part with her painting and will not sell it to the Washingtonian. The museum can sue Candace for specific performance.

92) The Justice Department’s antitrust division serves as a watchdog for violations of the Uniform Commercial Code.

93) The Sherman Antitrust Act was designed to prevent large businesses from stifling the competition of smaller or newer firms.

94) The Sherman Antitrust Act forbids actual monopolies or attempts to monopolize any part of commerce.

95) The Justice Department’s lawsuit against Microsoft is an example of an antitrust case.

96) The Clayton Act of 1914 prohibits price discrimination.

97) Exclusive dealing means selling goods with the condition that the buyer will not buy goods from a competitor.

98) A tying contract requires a buyer not to purchase goods from a competitor as a condition of buying product from the seller.

99) An interlocking directorate occurs when a board of directors includes members of the board of competing corporations.

100) The Clayton Act prohibits interlocking directorates.

101) The Federal Trade Commission Act of 1914 prohibits unfair methods of competition.

102) The Federal Trade Commission (FTC) deals with issues such as preventing companies from making misleading “Made in the USA” claims.

103) The Federal Trade Commission Act of 1914 prohibits minors from entering into contracts.

104) The FTC has jurisdiction over false or misleading advertising.

105) The Robinson-Patman Act prohibits price discrimination in all transactions except business-to-business transactions.

106) The Robinson-Patman Act applies only to business-to-business transactions.

107) The Robinson-Patman Act applies only to sellers who knowingly induce an unlawful discrimination in price.

108) One purpose of the Robinson-Patman Act is to outlaw price differences that substantially weaken competition.

109) The changing nature of U.S. business from manufacturing to knowledge technology has led to the call for new levels of regulation from federal agencies.

110) Consumerism is a social movement that seeks to increase and to strengthen the rights and powers of buyers in relation to sellers.

111) The Sarbanes-Oxley Act requires CEOs to verify the accuracy of their firms’ financial statements to the SEC.

112) Alcohol Labeling Legislation of 1988 provides for warning labels on liquor saying that minors should not drink.

113) The Nutrition Labeling and Education Act of 1990 requires truthful and uniform nutritional labeling on all food the FDA regulates.

114) The intent of the Sherman Antitrust Act of 1890 was to encourage the growth of large business organizations in the U.S. in order to compete with more established firms in Europe.

115) An interlocking directorate occurs when a contract between a retailer and a wholesaler requires misleading advertising.

116) When a Fat Burger offers a discount to senior citizens, they have violated the price discrimination provisions of the Robinson-Patman Act.

117) Requiring a Tire Warehouse to carry AutoPRO Performance Tires in order to sell AutoPRO Performance Batteries is prohibited by the Robinson-Patman Act.

118) Traditionally, taxes have been used as a source of funding for government operations and programs.

119) Taxes have been used as a method of encouraging or discouraging taxpayers from doing something.

120) The federal government can levy a sin tax in an effort to encourage businesses to hire new employees.

121) A tax credit is a document that increases a tax bill.

122) Income taxes include taxes paid on real and personal property.

123) Sales taxes are the largest source of tax income received by the federal government.

124) Another name for sin tax is excise tax.

125) Real property is real estate owned by individuals and businesses.

126) Money collected from excise taxes goes toward a specific purpose.

127) The primary objective of a sin tax is to generate additional revenue for the government.

128) The European Union currently levies certain Internet taxes.

129) The primary objective of a tax credit is to encourage businesses to behave in certain ways. One example is offering a tax credit to automobile manufacturers for the purchase of robotics used in the manufacture of automobiles.

130) Mateo had a very successful year. His small corporation earned over $5,000,000. His company will have to pay part of its income to the federal government for income taxes.

131) Nolan and Sadie own a very successful Cajun restaurant. They recently built their own building and own all of the decorations in the restaurant, along with the equipment needed to run the business. They will pay real property taxes on the building and land and personal property taxes on the decorations and equipment.

132) Bankruptcy is the legal process by which a person, business, or government entity that is unable to meet financial obligations is relieved of those debts by a court.

133) A bankruptcy allows creditors to get at least part of their money when there are assets available to divide among the creditors.

134) The Constitution gives the judiciary the power to establish bankruptcy laws.

135) The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 made it easier for individuals to eliminate most debts in a bankruptcy.

136) The number of Americans filing for bankruptcy has increased tremendously since the late 1980s.

137) Though high-profile business bankruptcies such as Sports Authority and Radio Shack dominate the news, over 90 percent of bankruptcy filings each year are by individuals.

138) In voluntary bankruptcy cases the creditors voluntarily start legal action against the debtor.

139) Most bankruptcies today are involuntary because creditors want to retrieve as much of their money as possible.

140) Chapter 11 bankruptcy is a way for sick companies to recover and is designed to help both debtors and creditors find the best solution.

 

141) Filing for bankruptcy under the Chapter 11 provisions allows a company to reorganize and continue operations while paying only a proportion of its debts.

142) A company has to be insolvent before it can file for Chapter 11 bankruptcy.

143) Chapter 13 bankruptcy permits individuals and small-business owners to repay creditors over a period of three to five years.

144) Chapter 13 proceedings are more complicated than Chapter 7 bankruptcy proceedings.

145) The number of Americans filing for bankruptcy has decreased as a result of the Bankruptcy Reform Act.

146) When Bryan and Lizzie got married they wanted to travel, buy nice houses and cars, and enjoy the good life. They used credit cards to finance their lifestyle, believing they would be fine as long as they could make the minimum payments. One day they discovered that because of rising interest rates, even the minimum payments were out of reach. They decided to declare Chapter 13 bankruptcy. Under this plan, they will have to pay their creditors back over 3 to 5 years.

147) The purpose of governmental deregulation is to eliminate laws that seem to hinder competition.

148) Both the airline and telecommunications industries have been deregulated.

149) Deregulation has always benefited consumers.

150) It appears that some regulation of business is necessary to ensure fair and honest dealings with the public.

151) Business and government do not need to work together to create a competitive environment that is fair and open since global competition is increasing.

152) When the airline industry was deregulated, consumers benefited because airlines established new routes and charged lower fares.

153) The branch of the government responsible for overseeing the legal system is the

A) judiciary.

B) executive.

C) legislative.

D) administrative.

 

154) ________ refers to rules, statutes, codes, and regulations established to provide a legal framework within which business may be conducted.

A) Common law

B) Statutory law

C) Bankruptcy law

D) Business law

155) The regulation of marriages and payments for personal injuries is covered by

A) civil law.

B) criminal law.

C) appellate law.

D) legislative law.

156) ________ law establishes punishments, and regulates the investigation of people accused of committing crimes.

A) Civil law

B) Criminal law

C) Appellate law

D) Business law

157) The body of law created by court decisions rendered by judges is called ________ law.

A) precedent

B) statutory

C) common

D) tort

158) Which of the following can review and, when necessary, overturn decisions made at the trial court level?

A) administrative agencies

B) appellate courts

C) arbitration judges

D) statutory agencies

159) Common law relies on decisions made by judges in previous cases. These earlier decisions are called

A) administrative guidelines.

B) precedents.

C) arbitration rules.

D) statutory models.

 

160) While the government regulates business activities, businesses would prefer to set their own standards of behavior. Which of the following is the most likely reason the government has intervened?

A) The relationships between businesses and other parties are more complex than ever.

B) The public perceives U.S. businesses as moving too slowly in implementing acceptable standards of behavior.

C) The judiciary branch of the government is more aware of the needs and desires of society.

D) There has been an increase in the number of lawyers.

161) The Environmental Protection Agency is an example of a(n)

A) common law agency.

B) statutory judicial agency.

C) private placement agency.

D) administrative agency.

162) The Griggs v. Duke Power Company (1971) case established a precedent on the need to use job-related tests in employment practices. Similar court cases have been decided based on this decision. This is an example of

A) common law.

B) statutory law.

C) administrative law.

D) criminal law.

163) Lawtown’s mayor has just signed legislation requiring fire sprinklers in every public school. This is an example of

A) common law.

B) statutory law.

C) administrative law.

D) unwritten law.

164) Which of the following holds a company liable for negligence in the production, design, sale, or use of products the firm markets?

A) breach of contract

B) price discrimination

C) promotional responsibility

D) product liability

165) Which of the following holds a company liable for damages caused by a defective product even if the firm was unaware of the defect at the time of sale?

A) network responsibility

B) managerial liability

C) patent infringement

D) strict product liability

 

166) A(n) ________ tort is a willful act that results in injury.

A) negligent

B) intentional

C) common

D) statutory

167) When a person’s or company’s behavior causes unintentional harm or injury to others they are said to be ________ in tort law.

A) out-of-control

B) liable

C) negligent

D) purposeful

168) The remedy for a tort is

A) imprisonment.

B) a breach of contract.

C) bankruptcy.

D) monetary compensation.

169) When McDonald’s lost a lawsuit to a person severely burned by hot coffee, McDonald’s was found to be guilty of

A) negligence.

B) liable.

C) intentional tort violation.

D) packaging liability.

170) Under the doctrine of strict product liability, a manufacturer can be held liable

A) even if when the product was introduced everyone agreed it was safe.

B) only if the firm knowingly sold a hazardous product.

C) only if the firm purposefully was negligent in the design or production of the product.

D) only if the firm intentionally introduced a defective product.

171) Julian was injured using a hair dryer manufactured by Epic Electronics. Julian has contacted a lawyer because he feels that Epic is responsible for his injury based on the legal principle of

A) restricted endorsement.

B) fault free obligations.

C) patent infringement.

D) strict product liability.

 

172) The City of Lawtown filed suit against certain gun manufacturers for financial payments to cover the costs of police work and medical care as a result of gun violence. This suit was based on the legal principle of

A) unintentional torts.

B) statutory consideration.

C) strict product liability.

D) common law.

173) In 1978, a 13-year-old boy was severely burned in a rear-end collision involving a Ford Pinto. The case went to court and Ford was ordered to pay $125 million in punitive damages based on the legal principle of

A) product discrimination.

B) product liability.

C) breach of contract.

D) exclusive dealing.

174) We count on companies to provide us with safe products, and to provide us with full disclosure if they are using potentially harmful chemicals in the production and distribution of their products. Under ________, if in a court of law it is proven that a well-known fast food chain is using a potentially harmful chemical in the preparation of their fries, the company is likely to be required to disclose information on this process to its customers.

A) strict product liability

B) patent infringement

C) statutory law

D) trademark law

175) A patent gives inventors exclusive rights to their inventions for

A) 20 months.

B) 17 years.

C) 20 years.

D) the lifetime of the inventor plus 50 years.

176) Which of the following protects the original work of authors and artists (i.e., their books, photos, or cartoons)?

A) a trademark

B) a copyright

C) the Uniform Commercial Code

D) a patent

177) The Nike swoosh and the golden arches of McDonald’s are examples of a

A) trademark.

B) submarine patent.

C) copyright.

D) commercially protected symbol.

 

178) Who owns the copyright of a cartoon character created by an employee of a firm as part of their normal job responsibilities?

A) employee who created the cartoon character

B) employer of the cartoon character’s creator

C) cartoon characters are not covered by copyright protection

D) union that represents the employee

179) About ________ percent of patent applications are approved.

A) 35

B) 45

C) 55

D) 65

180) A(n) ________ patent refers to the situation when some inventors intentionally delay a patent application because they expect others to develop similar products or technology.

A) underground

B) substandard

C) submarine

D) under-the-table

181) The intent of a patent is to

A) increase competition in the marketplace.

B) reward innovation and hard work of inventors.

C) slow the growth of monopolies.

D) encourage copycat inventions.

182) Which of the following is true of a copyright?

A) It is a specific representation that buyers rely on regarding the goods they purchase.

B) It protects a creator’s rights to materials such as books, paintings, and cartoons.

C) It is filed with the state legislature.

D) It is good for 20 years.

183) Without the permission of the inventor, Five Star Automobile Manufacturing copied the engine design of an innovative competitor. What is Five Star guilty of?

A) corporate liability

B) trademark infringement

C) profit minimization

D) patent infringement

184) Louis opened a new bakery. He had always admired the cute, friendly face of the Pillsbury Doughboy so as a tribute to Pillsbury, he decided to use it as his company’s logo. Not long after Pillsbury sued him for

A) corporate liability.

B) trademark infringement.

C) profit minimization.

D) patent infringement.

185) Which of the following was designed to simplify and standardize the laws affecting businesses involved in interstate trade?

A) common law

B) statutory law

C) the standardized commerce rules

D) the Uniform Commercial Code

186) The warranty you receive in the box with your new iPad is a(n)

A) implied warranty.

B) express warranty.

C) uniform warranty.

D) commercial warranty.

187) A(n) ________ guarantees that the product you buy will conform to the customary standards of the trade/industry.

A) implied warranty

B) express warranty

C) uniform warranty

D) commercial warranty

188) ________ instruments are forms of commercial paper that are transferable among businesses and individuals that represent a promise to pay a specified amount.

A) Uniform

B) Contract

C) Express

D) Negotiable

189) A warranty guarantees that

A) the seller will replace or repair the product at no charge if the customer finds a cheaper substitute.

B) the buyer has read and understood the information provided in the owner’s manual.

C) consumers will have access to a customer complaint resolution hot line.

D) the product sold will be acceptable for the purpose for which the buyer intends to use it.

190) Which of the following is a requirement for commercial paper to be considered a negotiable instrument?

A) It must be signed in approval by a third party.

B) It must contain a conditional promise to pay.

C) It must be a promise to pay a specified amount of money.

D) It must be an oral agreement between two or more parties.

 

191) You verbally promise to pay your sister tomorrow the $25 that you owe her. This promise however, is not a negotiable instrument because

A) it is not in writing.

B) it is not payable at a specific time.

C) it is not a promise to pay a specific amount.

D) it does not contain an unconditional promise.

192) A software development firm based in California and conducting business in Wyoming is unsure about the differences in state laws regarding business transactions. What body of laws standardizes interstate business regulations?

A) Uniform Commercial Code

B) Universal Business Regulations

C) National Commercial Rules

D) Unified Commercial Regulations

193) Which of the following describes the requirement that both parties in a legally binding contract must give something of value?

A) competent parties

B) mutual acceptance

C) consideration

D) legal purpose

194) Which of the following would cause a contract to be void?

A) consideration

B) mutual acceptance

C) competent parties

D) duress

195) A(n) ________ occurs when one party fails to follow the terms of a contract.

A) breach of contract

B) discharge of obligation

C) obligation failure of enforcement

D) infringement of contract

196) A ________ is a legally enforceable agreement between two or more parties.

A) warranty

B) negotiable instrument

C) contract

D) combination

197) Which of the following is a condition required for a legally binding contract?

A) discharge of obligation

B) warranty

C) mutual acceptance

D) duress

198) When one party fails to follow the terms of a contract, the party has committed a(n)

A) obligation violation.

B) breach of contract.

C) termination by association.

D) nonperformance endorsement.

199) Your neighbor agrees to sell you his car for $3,000. You and your neighbor have provided each other

A) duress.

B) consideration.

C) an endorsement.

D) an expressed warranty.

200) Your 15-year-old brother comes home with the great news that he has decided to buy his first car and has just agreed to give $10,000 to someone on Craig’s List. He signed the contract and just needs to pay the seller and pick up the car. Your dad is upset and calls the seller to tell him your brother will not be buying the car. What can the seller do?

A) sue your brother for breach of contract

B) sue your dad for breach of contract

C) sue your brother for specific performance

D) nothing

201) Alvin advertises on Craig’s List to sell his used lawnmower for $60. Roy tested the lawnmower and then offered Alvin $50 for it. In this case

A) the two parties have created a legally enforceable contract.

B) Roy’s offer represents an acceptance of the original terms.

C) there is no agreement and no contract.

D) there is no agreement, but there is a valid contract.

202) You and your boss agree to terminate your employment contract because you want to devote more time to school. This breach of contract would likely be resolved by

A) a specific performance requirement.

B) the payment of damages.

C) a judge.

D) a discharge of obligation.

203) Which of the following prohibits monopolies, attempts to monopolize, and any restraint of trade?

A) Clayton Act

B) Sherman Act

C) Robinson-Patman Act

D) Wheeler-Lea Amendment

 

204) Which of the following established a government agency to enforce the laws regulating unfair competition?

A) Clayton Act

B) Sherman Act

C) Federal Trade Commission Act

D) Robinson-Patman Act

205) The social movement designed to increase and strengthen the rights and powers of buyers in business transactions is called

A) environmentalism.

B) capitalism.

C) socialism.

D) consumerism.

206) The Dodd-Frank Wall Street Reform and Consumer Protection Act evolved from the mortgage industry meltdown. The agency that was created to provide consumers with accurate information so they can make informed decisions about loans and other financial instruments is known as the

A) Consumer Financial Protection Bureau (CFPB).

B) Federal Trade Commission (FTC).

C) Due Diligence Agency (DDA).

D) Financial Fairness Consortium (FFC).

207) The purpose of the Sherman Antitrust Act was to

A) encourage competition by restraining the growth of monopolies.

B) standardize the level of competition.

C) encourage the growth of large-scale efficiency found in big businesses.

D) minimize the inconsistency of multiple dealers of a single product.

208) The use of tying contracts was prohibited by the Clayton Act of 1914 because these contracts

A) required retailers to use false and misleading advertising.

B) required retailers to purchase unwanted items in order to purchase desired items.

C) forced households to buy wanted products in order to buy a desired product.

D) forced competitors into price discrimination agreements.

209) Willow is concerned that she is not getting full disclosure of information from a mortgage broker who is hoping to refinance the mortgage on her house. Having recently studied business law, you suggest to Willow that she contact the ________ that was formed after the Dodd-Frank Wall Street Reform and Consumer Protection Act became law.

A) Federal Trade Commission (FTC)

B) Consumer Financial Protection Bureau (CFPB)

C) Due Diligence Agency (DDA)

D) Financial Fairness Consortium (FFC)

 

210) Big Johnson Products charges Moe’s Meats a lower price for goods because Moe and Johnson play golf together regularly. Big Johnson charges other firms similar to Moe’s Meats more for the same products and this is beginning to hurt the business of the other firms. In fact, Moe’s Meats is taking so much business away from the others due to its lower prices that the other firms are in danger of going out of business. This is an example of

A) price discrimination.

B) price reversal.

C) price-cutting.

D) price maintenance.

211) A government policy aimed at reducing the purchase of a specific good through increased taxes has been most often applied to

A) cigarettes and liquor.

B) sports cars.

C) white bread.

D) diet soft drinks.

212) Which of the following refers to a tax designed to reduce the consumption of a specific good?

A) control tax

B) sin tax

C) flat tax

D) tax credit

213) Which of the following do school districts utilize to generate needed funding?

A) sin tax

B) sales tax

C) property tax

D) income tax

214) ________ often help to pay for highway construction or improvements.

A) Sin taxes

B) Property taxes

C) Income taxes

D) Facility taxes

215) ________ are the largest source of tax income received by the federal government.

A) Income taxes

B) Property taxes

C) Sales taxes

D) Excise taxes

 

216) The two main purposes of taxes are

A) to raise money for taxpayers and to encourage foreign governments to behave in certain ways.

B) to raise money for government funding and to encourage or discourage certain taxpayer behaviors.

C) to encourage businesses to make a profit and encourage foreign governments to invest in the U.S.

D) to strengthen monetary and fiscal policies.

217) Some economists advocate a ________ on the consumption of such products as gasoline, liquor, cigarettes, and even soda, in the hope that consumers will think about how their purchases are having negative impacts on themselves and their environment.

A) progressive tax

B) sin tax

C) flat tax

D) tax credit

218) Paul and Chris own Lucky’s Liquor Store. They are careful to pay all of their taxes in full and on time. Recently, the local government has decided to raise the taxes imposed on the sale of cigarettes and liquor. Paul and Chris are upset about this because

A) they will certainly have to pay more taxes.

B) people will likely buy less cigarettes and liquor from them.

C) the government has increased the sales tax.

D) their personal property tax will now increase.

219) ________ is the legal process by which a person, business, or government entity unable to meet financial obligations is relieved of those debts.

A) Emancipation

B) Financial release

C) Negligence

D) Bankruptcy

220) The section of the Bankruptcy Code that allows a business to reorganize and pay only a limited proportion of its debts is Chapter

A) 7.

B) 11.

C) 13.

D) 17.

221) In which of the following does the creditor start legal procedures?

A) debtor initiatives

B) voluntary bankruptcy

C) involuntary bankruptcy

D) creditor restructuring

 

222) The number of personal bankruptcies has

A) significantly decreased as a result of the Bankruptcy Reform Act.

B) increased.

C) nearly reached the level of business bankruptcies.

D) remained unchanged.

223) Which of the following is considered as a cause for the significant increase in bankruptcies?

A) a decrease in the understanding of bankruptcy law

B) a decrease in the price to complete the process by bankruptcy lawyers

C) an increase in the number of involuntary bankruptcy cases initiated by creditors

D) an increase in the ease with which some consumers can get credit

224) The financial claims of ________ are given priority when assets are distributed among creditors in a bankruptcy case.

A) employees

B) customers

C) bankruptcy lawyers

D) stockholders

225) Utilizing the bankruptcy laws, Speedster Distribution petitioned the court to reorganize and continue operations while paying only a limited proportion of its current debts. This represents an example of a Chapter ________ bankruptcy.

A) 7

B) 11

C) 13

D) 14

226) ________ is the process of eliminating laws and regulations that hinder competition.

A) Downsizing

B) Restructuring

C) Deregulation

D) Reregulation

227) Concerns over the increase in the number of business laws and regulations that were costing the public money led to

A) downsizing.

B) restructuring.

C) deregulation.

D) reregulation.

228) Which of the following industries has been deregulated?

A) chemicals

B) agriculture

C) airlines

D) steel

 

229) One result of deregulation in the airline industry has been

A) less-intense competition.

B) increased aviation-related fatalities.

C) higher prices for consumers.

D) lower prices for consumers.

230) One of the benefits that deregulation is supposed to provide to customers is

A) fewer choices.

B) reduced prices.

C) less quality.

D) improved government oversight.

231) Several states now allow for competition in the electric power industry. Business customers, for example, can purchase their electric service from several different utility companies. This activity reflects a movement toward ________ in the utility industry.

A) re-regulation

B) monopoly pricing

C) deregulation

D) privatizing

232) Explain the difference between statutory law, common law, and business law.

233) What type of law is tort law? Explain what a tort is as well as the meaning of negligence.

234) Compare and contrast the protection offered by patents, copyrights, and trademarks.

235) What is the Uniform Commercial Code and why is it important?

236) Identify the six conditions that must be met for a contract to be legally binding.

237) Explain two of the major U.S. antitrust laws.

238) Describe bankruptcy and three sections of the Bankruptcy Code.

 

Mini-Case

Nolan and Sadie have just opened a new restaurant on the edge of town, Cajun Kitchen. They own the land and building and have a brand-new kitchen as well as a lovely seating area, filled with mementos from the South. They have a liquor license and make wonderful Southern drinks. They are quite pleased that members of the community are helping their business grow by coming in for a meal or a drink after work. They are good businesspeople who pay their bills on time and as a result have great relationships with the vendors that supply them food.

239) One day as Nolan was speaking with one of his customers a shriek went up from the other side of the restaurant. When he rushed over, he found that one of his customers had spilled hot tea on her arm. If this customer was so inclined, she could ________ and the court would likely find in her favor.

A) sue Nolan and Sadie for breach of contract

B) sue them for negligence

C) sue them under statutory law

D) She can do nothing about this except not go to the restaurant ever again.

240) Sadie was expecting a shipment of food from one of her suppliers and it didn’t come. When she called the supplier the phone was disconnected. Later Sadie read that the supplier had gone out of business because it couldn’t pay its debts. The supplier likely declared Chapter ________ bankruptcy.

A) 7

B) 11

C) 13

D) 17

241) Cajun Kitchen sits on a large landscaped lot. Nolan and Sadie have a contract with Green Goddess Lawn Service to mow the lawn and take care of the landscape. They pay $200 per month for this service. After two weeks had gone by with no service, Nolan called the company only to find out that the owner and the crew had decided to take a vacation and would not be back to do the landscaping for another two weeks. Green Goddess

A) has discharged its obligation to Nolan and Sadie.

B) is liable for specific performance.

C) will likely have to pay Nolan and Sadie damages if they decide to sue them.

D) will not likely have to pay Nolan and Sadie damages if they decide to sue them.

242) As it turns out, Nolan and Sadie’s good fortune with the restaurant has caused their competitors to lose business. In fact, Cajun Kitchen has been so successful that two other nearby restaurants are in danger of going out of business. Nolan and Sadie have

A) engaged in anti-competitive behavior.

B) violated the Sherman Antitrust Act.

C) engaged in price discrimination.

D) done nothing against the law.