Chapter 7 Self-Quiz

. According to Veblen, in what circumstances can personal savings serve the same reputation-enhancing function as conspicuous consumption?

In no circumstances

In every circumstance

In small rural communities where people gossip

In societies where slavery is a common practice

Among transient workers in urban communities

. Galbraith makes advertising analogous to which mythical creatures?

Dragons

Demons

Fairies

Sirens

All of the above

. According to Galbraith, which notion still survives as the predominate view of modern economics?

The notion that the customer is always right

The notion that if the supply decreases, then the demand will increase proportionally

The notion that consumers buy in accordance with independently determined wants

The dependence effect

The independence effect

. The way wants depend on the process by which they are satisfied is called:

The contingency factor

The dependence effect

The social concern thesis

The independence mirage

None of the above

. The "inherent tendency" of public services, according to Galbraith, will always be what?

To emulate private sector techniques and create social wants

To exploit the dependence effect

To become prioritized well below that of private production

To advertise their products using the same outlets that private companies take advantage of

All of the above

. Hayek attempts to point out the flaw in Galbraith's argument by applying it to what?

War

Credit card companies

The government

Politics

The arts

. Hayek and Galbraith agree that:

Some desires are created and some are innate.

Advertising creates desires in people.

Innate desires are important, but created desires are not.

Both (a) and (b)

All of (a), (b), and (c)

. Hayek's response to Galbraith's argument about the dependence effect is that:

Galbraith's view is overly capitalistic.

Galbraith is wrong in thinking that created desires are the most important.

Galbraith is wrong in thinking that created desires are never important.

Galbraith is wrong in thinking that any desires can be created in people.

Galbraith is wrong in thinking that any desires are innate.

. Goldman mentions all of the following conditions of pure competition EXCEPT:

Competition within industries and among firms

Fluidity of labor

Perfect knowledge on the part of consumers

Producers' knowledge of consumer demand

Government's knowledge of fair competition among firms

. Alan Goldman's opinion of advertising is that:

There is no place for it in an ideal capitalist economy.

It has both positive and negative effects.

It is inconsistent with the aims of the free market.

It is a waste of economic resources.

It can only be justified because it subsidizes the media.

. Why does Goldman think that advertisers should be truthful?

Because advertising that is truthful creates trust and customer loyalty.

Because advertising is only justifiable as a source of information for consumers.

Because lying is morally wrong.

Because advertisers have freedom of speech.

Because it is wrong for advertisers to create desires in people.

. Savan thinks that we don't actually buy products, but that we buy:

The company that presents them

The country that presents them

The world that presents them

The metaphysical reality that presents them

The image of ourselves that we would have for ourselves

. What does Savan mean by "the sponsored life"?

Advertising pays for many things we value, like TV and magazines.

Advertising is absorbed deeply into our lives and experiences.

Advertisers are getting very skilled at holding our attention.

We see about 16,000 advertisements every day, on average.

Advertising encourages us to buy and consume more than we need.

. Which of these is NOT one of Savan's suggestions for protecting yourself from advertising?

Notice when an ad tries to appeal to your sense of individuality or nonconformity.

Notice who is being flattered by an ad.

Don't assume that a brand's image says anything important about the product.

Limit your exposure by watching fewer hours of television.

Notice the "big lies" that ads tell, like "this car will attract women."

. Restrictions on advertising arguably violate the right to free speech.

TRUE

FALSE

. According to Veblen, people are more likely to engage in conspicuous consumption in cities than in rural areas.

TRUE

FALSE

. The notion of dependently determined wants is more prevalent today, according to Galbraith.

TRUE

FALSE

. Hayek thinks that his love of Jane Austen novels is original to himself, not created.

TRUE

FALSE

. Hayek argues that created desires can still be important desires.

TRUE

FALSE

. Deception in advertising is less common than we think.

TRUE

FALSE

. Goldman points out some positive effects of advertising, such as informing consumers about different products.

TRUE

FALSE

. "Conspicuous consumption" of valuable goods, Veblen argues, is a way that persons might attempt to demonstrate that they enjoy a high reputation.

TRUE

FALSE

. Savan thinks that commercials simply sell our experiences back to us.

TRUE

FALSE

. Building a relationship with a person is impossible if you are trying to sell to him or her.

TRUE

FALSE

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