Acme CorpAsserted in a Magazine Advertisement That Its Electric-Powered Bunion Sander

question 61

Multiple Choice

Acme Corp.asserted in a magazine advertisement that its electric-powered bunion sander will remove bunions from users' feet twice as fast as any other bunion sander on the market today.As part of an investigation into whether this advertising claim was deceptive,the Federal Trade Commission (FTC) issued a subpoena demanding that Acme produce all of its records regarding tests it has performed to substantiate the performance claim for the bunion sander.The subpoena also demanded production of all records of tests to substantiate any performance claims made by Acme during the past four years regarding each of the 32 other products manufactured by Acme.Four of these other products were electric-powered products in the personal care category.The remaining products were either lawn care products or nonelectric tools.The strongest argument that Acme may make concerning the subpoena is that the subpoena:

• A)is invalid because the FTC investigation is not being conducted for a legitimate purpose.
• B)need not be obeyed because it violates Acme's Fifth Amendment privilege against compulsory testimonial self-incrimination.
• C)need not be obeyed to its fullest extent because the portion dealing with records on most of Acme's other products is not sufficiently specific and is unreasonably burdensome.
• D)is invalid unless the FTC satisfies the "probable cause" standard required by the Fourth Amendment for the issuance of a search warrant.

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Definitions:

Cash Savings

Funds that are kept on hand or in a savings account for future needs, emergencies, or investment opportunities.

Investment Opportunities

Potential placements of capital in projects or assets that are expected to yield returns or financial growth over time.

Discount Rate

The interest rate used in discounted cash flow (DCF) analysis to present value future cash flows, or in other cases, the central bank's interest rate for banks.

Net Present Value

The contrast between the present-valued cash inflows and outflows over a determined period.