If the FTC Rules That a Seller Has Made a False

question 80

Multiple Choice

If the FTC rules that a seller has made a false or deceptive advertising statement, the Commission can:

• A) as a first course of action fine the seller and, if that is not effective, file suit in federal court.
• B) require the seller to make additional advertisements to correct it.
• C) require the company to go out of business.
• D) report the company to the President of the United States for deregulation.

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Definitions:

Income Effect

The variation in income for a person or an economy and its impact on the demand for a specific good or service.

Perfect Substitutes

Goods that can serve the same purpose perfectly, where consumers are indifferent between them and will select based on price.

Giffen Good

A product that paradoxically sees an increase in demand as its price increases, violating the basic law of demand due to the income effect overshadowing the substitution effect.

Inferior Good

A type of good whose demand decreases as the income of consumers increases, opposite of a normal good.