MBA 5100 Exam 1 Questions and Answers Rated A+

MBA 5100 Exam 1 Questions and Answers Rated A+ Facilitate Provide consumers with information to make decisions for themselves Preempt Firms forcing consumers to accept prescribed levels of quality and price Search Good Goods evaluated before purchase Experience Goods Goods evaluated after use Credence Goods When consumers have no way of knowing if it works Market Mavens Consumers so good at evaluating information that they're able to impact the market, ex. Ralph Nader Externalities A third party being affected by a transaction between a buyer and seller Lulling Effect When there are so many back ups and monitors in the market, consumers stop paying attention to possible risks Challenges faced by the CPSC Underfunded, red tape, far reaching mandates Consumer Product Safety Commission(CPSC) Created in 1972 to create safety standards, collect data on injuries, and recall/ban hazardous products Freedom of Information Act (FOIA) Provides direct access to federal agency docs CPSC Reporting Methods Toll free number, 100 hospitals making reports, news and radio reports CPSC has authority over: Labeling requirements, order involuntary recalls, inspect imports, impose civil penalties and ban products Problems with consumer sovereignty Complex products and services, comparative information is biased and not enough time to research CPSC "Offerer System" CPSC originally advertised an area of rule making and received proposals from outside sources, was inefficient with poor enforcement Maynes 6 Consumer Problems 1. Asymmetric powers favor businesses 2. Disadvantaged consumers 3. Informationally imperfect consumer markets 4. Monopolies 5. Consumer grievances 6. Underrepresentation of consumer interest 3 Consumer Handicaps (Maynes) 1. Person's interest as a consumer is secondary to that as a producer 2. Consumer activities are dispersed while producers are focused 3. Lack of recognition of "purchasing agent" role 1. Asymmetric Powers Favor Business Biased information is released by businesses(ads, persuasion, complaint resolution), and products are complex and numerous 2. Disadvantaged Consumers Consumers may lack to time or knowledge of products, or may be limited by personal characteristics like time or location, social status, etc. 3. Informationally Imperfect Consumer Markets The correlation between price and quality is almost always 0, technical complexity makes it hard to discern quality, price discrimination, etc. 4. Monopoly Problem Higher prices, lower quality, reduced output by firms 5. Consumer Grievances Complicated by geographic dispersion of sellers, an imperfect market plus contracts, laws, etc. 6. Underrepresentation of Consumer Interests Consumers need help asserting their interests, consumer goals are more broad while producers' are focused Food and Drug Administration (FDA) Established by Roosevelt in 1906, under the Dept. of Health and Human Services, Pure Food and Drug Act Under the Bureau of Chemistry, headed by Wiley, prohibits interstate commerce of adulterated food Federal Food, Drug, and Cosmetic Act 1938 amendment to FDA, promoted honesty and fair dealing, authorized factory inspections and prohibition of addictions of poisonous additives Food Safety Inspection Service (FSIS) Under Dept. of Agriculture, regulates meat, poultry, catfish and egg products, FDA responsible for all else Food Risks Microbial, chemical and physical Hazard Analysis and Critical Control Point (HAACP) Risk and science based approach to food safety inspections, focused on prevention rather than inspection (Identify, evaluate and control hazards) Food and Drug Safety Modernization Act (FSMA) 2011 amendment to Food, drug and cosmetic act, prevention, response, recall, and import safety. Focused on preventative identification and correction of food safety problems. Increased access to records to better act upon violations Food Poison Ingesting and chemical or natural toxin What percent of the food supply does the FDA inspect? 80% GMO Transplanting genetic information from one species into another, unrelated species (Frankenfoods), increase food supply and decrease price Bioengineered Foods Use of living organisms to make products such as cheese, beer, yogurt, or to increase production (hormones in animals) Organic Products Products that exclude genetic engineering, use of sewage sludge for fertilizer, and no antibiotics in animals Until when was meat inspection mostly visual? 1996 Characteristics of Inspections Unannounced, inspect food processing facilities, food stores, warehouses, accuracy of scales, water content of meat products, letters of warning to violators Does HAACP work? It's been reported that 5 out of 11 poultry plants did worse than under traditional measures of inspections because FSIS inspectors aren't consistently identifying and reporting problems, VIOLATORS ARE CITED THEN ALLOWED TO IMMEDIATELY RESUME MAD Cow Disease (BSE) Disease is spread among livestock because the infected areas of the animals are fed to other animals