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chapter
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1
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Page 271
Name
28
Role of Consumers
in a Free Enterprise
System
section:
vocabulary
Fill in the missing word(s) in the space provided at the right.
Example: All countries operate on some type of _______ system.
1. A(n) _______ economy is one in which both consumers and producers
play important roles.
2. Transfer payments are _______ income because they are not obtained
by working for them.
3. _______ advertising is a fantastic price offer on an item that is out of stock;
customers are then urged to buy another item at a higher price.
4. Satisfaction or reward received by consumers who buy products is
called _______.
5. _______ are government grants to some citizens paid with money collected
from other citizens.
6. _______ is the willingness and ability of consumers to purchase a product.
7. Having money with which to buy goods and services is called _______.
8. _______ are schemes by which managers can make large profits by getting
other workers to sell products to their friends.
9. When a consumer gets action desired to resolve a problem with a product
or service, it is called _______.
10. A(n) _______ is a fraudulent practice in which vulnerable people are
convinced that they are investing in a legitimate enterprise.
11. Advertising an item at special savings that is in reality selling at regular
price is called a(n) _______.
12. Reducing prices and quantities to the lowest unit possible to compare
values is called _______.
13. Manufacturers or makers of goods and services for sale are called _______.
14. When producers get together to set prices and do not engage in
competition, they are involved in _______.
15. Buyers and users of goods and services are called _______.
16. The quantity of goods and services being produced is called _______.
17. Advertising repairs at low prices, then urging more repairs, is
called _______.
18. _______ occurs when more than one producer or supplier of a good or
service exists, each trying to sell its product.
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Answers
economic
0. _______________________
market
1. _______________________
unearned income
2. _______________________
Bait and switch
3. _______________________
utility
4. _______________________
5.
6.
7.
Transfer payments
_______________________
Demand
_______________________
purchasing
power
_______________________
Pyramid schemes
8. _______________________
redress
9. _______________________
pigeon drop
10. _______________________
fake sale
11. _______________________
unit pricing
12. _______________________
producers
13. _______________________
14.
15.
16.
price-fixing
_______________________
consumers
_______________________
supply
_______________________
low-balling
17. _______________________
Competition
18. _______________________
41771Chap_28
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Section 2
2
10:40 AM
Page 272
Review Questions
section:
review questions
After each of the following statements, circle T for a true statement or F for a false statement.
For
Scoring
Answers
1. Everyone is a producer and everyone is a consumer in a market economy.
2. Demand is the quantity of goods and services available for sale.
3. Whenever consumers purchase a product, they are casting a dollar vote
for that product.
4. It is necessary to have competition, purchasing power, and informed
consumers in a free enterprise system.
5. The government shifts purchasing power among citizens by making
transfer payments.
6. A monopoly is a market with many buyers but only one seller.
7. Consumer sovereignty is the power of consumers to determine what is
produced and sold.
8. Low-balling results when the consumer is promised a great deal of money
with little effort.
9. Vulnerable people are often subject to the schemes of con artists who
convince them to invest their money in phony deals.
10. Infomercials are advertisements involving product demonstrations and
testimonials.
F
_________
F
_________
T
T
F
F
1.
2.
T
F
T
3. _________
T
F
T
4. _________
T
T
F
F
5.
6.
T
F
T
7. _________
T
F
F
8. _________
T
F
T
9. _________
T
F
T
10. _________
T
_________
T
_________
On the line at the right of each sentence, print the letter that represents the word or group of words
correctly completing the sentence or answering the question.
1. A method of swindling money from vulnerable people through phony
deals is known as (a) bait and switch, (b) pigeon drop,
(c) pyramid schemes, (d) low-balling.
2. In the _______ scheme, distributors are promised commissions from their
own sales and those of other distributors they recruit. (a) bait and switch,
(b) pyramid, (c) pigeon drop, (d) low-balling
3. Which of the following items is a warning signal for a deceptive practice?
(a) very low prices, (b) something for nothing, (c) must decide today,
(d) all the above
4. Which of the following items is the best buy when unit prices are
computed? (a) 3/$.89, (b) 4/$1.00, (c) 5/$1.29, (d) 6/$1.33
5. When seeking consumer redress, (a) contact the manufacturer first,
(b) write the Better Business Bureau first, (c) contact the seller first,
(d) complain to your neighbor so that he or she will not make the
same mistake.
6. Which of the following items is not a transfer payment? (a) interest income,
(b) social security, (c) welfare, (d) veterans’ benefits
7. Everyone is a (a) producer, (b) consumer, (c) producer and consumer,
(d) producer or consumer.
8. The _______ has the final say in what is produced and at what price.
(a) producer, (b) government, (c) consumer, (d) president of the
United States
272
b
____________
1. _________
b
____________
2. _________
d
____________
3. _________
d
____________
4. _________
c
____________
5. _________
a
____________
6. _________
b
____________
7. _________
c
____________
8. _________
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Chapter 28
3
section:
problem solving
Activity 28.1 Calculating Unit Prices
Directions: To compute unit prices, reduce the selling price to the lowest possible unit. For example, if
a product costs $1.00 and a package contains 8 ounces, the price per unit is $1.00 divided by 8 ounces,
or 12.5 cents per ounce.
Calculate the following unit prices to the nearest penny:
1. a. The cost of gasoline is $15.50 to fill up a tank containing 13 gallons. What is the cost
per gallon? $1.19
b. There are 3.785 liters per gallon. You bought 33 liters of gasoline and paid $11.25. What is the
price per gallon? $1.29
2. You are purchasing the following items. Calculate unit prices to the nearest penny:
a. 6/$1.00
b. 3/$1.09
17 cents
36 cents
c. 5/$.99
d. 6/$.89
20 cents
15 cents
e. 4/$1.00
f. 8/$3.99
25 cents
50 cents
3. Compute the following prices per ounce to the nearest penny:
a. 8 oz./$1.49
b. 12 oz./$1.33
19 cents
11 cents
c. 31 oz./$2.29
d. 48 oz./$3.89
7 cents
8 cents
e. 1 lb./$3.29
f. 1 lb. 6 oz./$4.49
21 cents
20 cents
g. 2 lbs. 12 oz./$3.99
h. 3 lbs. 6 oz./$4.99
9 cents
9 cents
4. After reading the following problems, which of the following cars should you buy?
Car B
(Car A or Car B) __________
a. Car A uses regular gasoline at $1.21 a gallon and gets 19 miles per gallon (mpg) in town.
Assume that you drive 100 miles a week, or 400 miles a month. What is your gas bill each
month? $25.47
b. Car B uses premium unleaded gasoline at $1.41 a gallon and gets 24 mpg in town. If you drive
100 miles a week, 400 miles a month, what will be your gas bill each month?
$23.50
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41771Chap_28
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Section 3
10:40 AM
Page 274
Problem Solving
Activity 28.2 Reading the Label
Directions: The following label represents a consumer product. Read the label carefully and answer the
questions in the right-hand column.
1. What general information is given
about potatoes and potato chips?
The
potato is America’s favorite vegetable; potato
______________________________________________
chips
are a favorite energy food for active
______________________________________________
Americans;
they provide protein, vitamins, miner______________________________________________
als;
they are quick-fried, thus vitamins are sealed
______________________________________________
in;
a one-ounce serving contains 10 percent of the
______________________________________________
RDA
of Vitamin C and measurable amounts of pro______________________________________________
tein,
thiamine, and niacin; only the finest natural
______________________________________________
ingredients
are used; no preservatives are added.
______________________________________________
______________________________________________
______________________________________________
oz.
2. How large is one serving size? One
__________
3. How many calories are contained in 10
1,500
servings? __________________________________
4. How much cholesterol is contained in
None
an ounce of potato chips? _______________
5. What percentages of the RDA are provided in:
2%
a. Protein _________________________________
4%
b. Thiamine ______________________________
less than 2%
c. Calcium ________________________________
4%
d. Vitamin B6 _____________________________
6. List the ingredients.
Potatoes, vegetable oil, cottonseed oil, corn
______________________________________________
oil, palm oil, sunflower oil, soybean oil or
______________________________________________
partially hydrogenated soybean oil, salt
______________________________________________
______________________________________________
______________________________________________
______________________________________________
7. Is the package sold by weight or
volume?
By weight
______________________________________________
8. List the name of the producer and the
address.
Gripman's Fine Snack Foods, Alexandria, VA
______________________________________________
22310-2511
______________________________________________
9. Are preservatives contained in this
product?
No
______________________________________________
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Chapter 28
Activity 28.3 Correcting an Error
Directions: Information about the correct procedures to follow in solving errors in bank statements or
credit card statements are usually sent to bank and credit card customers at least once a year. Following
is a leaflet, sometimes sent with a monthly bank reconciliation, for you to review. The purpose of this
leaflet is to inform customers of the procedures to follow in case of errors or inquiries about electronic
transfers. Answer the questions that follow.
1. What should you do if you suspect an error in a
DNT receipt?
Call the bank or write to the address shown.
___________________________________________________________
___________________________________________________________
___________________________________________________________
2. How soon after suspecting an error must you contact the bank?
Within 60 days after you receive the statement with an error
___________________________________________________________
___________________________________________________________
3. How soon will the bank acknowledge your complaint?
Within 10 business days
___________________________________________________________
4. How many days will the bank take to investigate
and respond to your complaint?
Up to 45 days
___________________________________________________________
5. If your complaint is not in writing, what must
you do?
Put it in writing within 10 business days of oral notice.
___________________________________________________________
___________________________________________________________
___________________________________________________________
___________________________________________________________
6. If the bank agrees there is an error, what will it do?
Correct the error within one business day.
___________________________________________________________
___________________________________________________________
___________________________________________________________
___________________________________________________________
7. If the bank does not find an error, what will it do?
Mail an explanation within three business days after their
___________________________________________________________
investigation. At your request, the bank will send copies of
___________________________________________________________
documents that they relied upon to reach their conclusions.
___________________________________________________________
___________________________________________________________
___________________________________________________________
___________________________________________________________
8. What is the name of the bank? Is the bank federally
insured?
Metro First Bank; yes
___________________________________________________________
___________________________________________________________
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Section 3
10:40 AM
Page 276
Problem Solving
Activity 28.4 Reading the Warranty—No. 1
Directions: Read the following warranty carefully and answer the questions.
1. What type of equipment or merchandise is represented by this
warranty?
Electronic calculator
_______________________________________
2. Who is the manufacturer of the
equipment? Where is the manufacturer located?
Evans-Powell; Chicago, Illinois
_______________________________________
3. How long does the warranty last?
One year
_______________________________________
4. To whom is the warranty
extended?
To the original purchaser only
_______________________________________
5. How is the warranty made void?
Calculator has been damaged by accident or unreasona. ___________________________________
able use, neglect, improper service, or other causes
___________________________________
not arising out of defects in material or workmanship.
The serial number has been altered or defaced.
b. ___________________________________
___________________________________
6. Do you have to return the
merchandise for repair or
replacement?
Yes (The company will decide whether
_______________________________________
to repair or replace a calculator.)
_______________________________________
7. How long is the warranty on a
replaced (reconditioned) model?
90 days or the extent of the original
_______________________________________
warranty, whichever is longer
_______________________________________
8. What is the address for the
Canadian service facility of this
manufacturer?
P.O. Box 841 Toronto, Canada M2V 1P1
_______________________________________
_______________________________________
9. Where should Pennsylvania residents write to this manufacturer?
P.O. Box 851, Chicago, IL 60611-4160
_______________________________________
10. What are the limits to the
warranty on this product?
Implied warranties are limited to one
_______________________________________
year. The manufacturer is not liable for
_______________________________________
loss of use of the calculator or other
_______________________________________
costs, expenses, or damages incurred by
_______________________________________
the purchaser.
_______________________________________
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Chapter 28
Activity 28.5 Reading the Warranty—No. 2
Directions: From the limited warranty below, answer the questions that follow.
1. How long does the warranty extend for labor? parts?
90 days labor; one year parts
___________________________________________________________________________________________________________________
2. How must the original equipment be returned to the manufacturer?
Packed carefully in original packing or its equivalent, together with a copy of original bill of sale
___________________________________________________________________________________________________________________
3. Is the warranty transferable or assignable to anyone other than the original purchaser?
No
___________________________________________________________________________________________________________________
4. What public law is cited in this warranty?
Public Law 93-637, Magnuson-Moss Warranties/Federal Trade Commission Improvements Act
___________________________________________________________________________________________________________________
5. To what address should you send the warranty and registration card?
Call-on-Time Recorders, Inc., National Service Department, 4821 Blair Boulevard, San Francisco, CA 94162-1580
___________________________________________________________________________________________________________________
6. How long after the purchase should you send in the warranty and registration card?
Within 10 days
___________________________________________________________________________________________________________________
7. List the toll-free number that can be called with questions regarding authorized service centers for
this product.
800-555-0111
___________________________________________________________________________________________________________________
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