Economics Ch. 6 & 7 Test – Flashcards
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To buy an item with credit; paying over time
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Financing
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The promotion of a product or service by identifying it with distinct characteristics (usually associated with public perception, quality or effectiveness)
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Branding
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Latin term for "buyer beware"
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Caveat Emptor
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An amount of money you spend, usually $300, that causes some pain to part with
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Significant Purchase
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Refers to the financial opportunity that is given up because you choose to do something else with your money
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Opportunity Cost
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Feeling regret or concern after making a large purchase
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Buyer's Remorse
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Refers to the public's ability to recall and recognize a brand by its logo, jingles, packaging, etc
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Brand Recognition
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The process of communicating the value of a product or service to customers
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Marketing
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True or False: As a consumer, you should consider inflation in your investment and retirement planning
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True
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True or False: If you don't have cash on hand, financing a significant purchase is a good option.
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False
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Which of the following is not a need? a) Food b) Housing c) Eating Out d) Utilities
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c) Eating Out
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The purpose of advertising is to: a) Inform the consumer b) Tease the consumer c) Persuade the consumer d) All of the above
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d) All of the above
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Which of the following is not a common marketing strategy? a) Providing financing options b) Making the customer do product research c) Personal selling d) Repetition
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b) Making the customer do product research
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What are the 5 steps you should take before making a significant purchase?
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1) Wait a night before purchasing 2) Buying reasoning - consider motives 3) Don't buy anything you don't understand 4) Consider opportunity cost of your money 5) Seek wise counsel
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Having to do with a person's honesty and moral attributes
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Integrity
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Retail store where people sell items and the owner of the shop gets a percentage of the sale
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Consignment Shop
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The ability to walk away from a purchase when negotiating
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Walk-Away Power
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Process by which the holder of a mortgage sells the property of a homeowner who has not made interest and/or principal payments on time as stipulated in the mortgage contract
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Foreclosure
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A public sale in which property or items of merchandise are sold to the highest bidder
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Auction
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The process of quantifying costs and benefits of a decision
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Cost-Benefit Analysis
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The difference between the wholesale price and retail price
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Markup
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Type of yard sale with more items, usually the entire contents of a household
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Estate Sale
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To bargain for a lower price
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Negotiate
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True or False: Using cash gives you more bargaining power than using credit
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True
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True or False: Being married (or emotionally attached) to a purchase will cause you to lose bargaining power.
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True
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Getting the best deal on a purchase involves doing all of the following except: a) Having patience b) Being first in line for a new product c) Negotiating d) Shopping around to find the best deal
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b) Being first in line for a new product
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Which of the following is typically not a good place to find a deal? a) Consignment shops b) Individuals c) Mall d) Online auctions
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c) Mall
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Which of the following describes why using cash is a great bargaining tool? a) Cash is visual b) Cash has immediacy c) Cash is emotional d) All of the above
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d) All of the above
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A significant purchase equals how much?
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$300, but it really depends on the person
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"Live like no one else, so later ____________________"
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I can live like no one else
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What does Dave Ramsey mean when he says "Live like no one else, so later I can live like no one else"
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Don't take on debt early in life so you can do it later debt free
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"______ do what feels good, ______ devise a plan and follow it" -Dave Ramsey
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Children; adults
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Because you can _______ spend more than you make, you must develop a __________
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always; power over purchase
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The easiest way to save money...
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Is to not spend it
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Look always to create?
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Win-Win Deals
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What are the 7 basic rules of negotiating?
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1) Tell the truth always (integrity is always #1) 2) Use the power of Cash 3) Use Walk-Away Power 4) Shut Up! 5) "That's not good enough" 6) "Good guy, bad guy" (used on you a lot) 7) "If I Take Away" Technique
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Where can you get good deals?
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-Ebay -Flea Markets -Garage Sales -Consignment Stores -Estate Sales -Conventions -Pawn Shops -Classified Ads -Coupons
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When a company places an ad and offers no interest on your purchase for three years: a) They are not interested in making a profit b) They are showing their appreciation to you by giving you free money c) The cost of the financing is built into the price of the item d) All of the above
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c) The cost of the financing is built into the price of the item
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What is a safe assumption to make regarding companies and their marketing practices? a) Companies know that competition is fierce for consumer dollars b) Companies spend millions of dollars and do extensive research on advertising c) Companies use all angles to aggressively compete for your money d) All of the above
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d) All of the above
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What concept is best explained by the statement, "Money spent here cannot be spent there?"
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Opportunity Cost
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Identify which method companies are using to compete for your money: "90-days-same-as-cash" a) Personal selling b) Financing c) Media d) Product positioning
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b) Financing
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Identify which method companies are using to compete for your money: Reputation for holding its value a) Personal selling b) Financing c) Media d) Product Positioning
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a) Personal Selling
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Identify which method companies are using to compete for your money: Car salesman a) Personal selling b) Financing c) Media d) Product Positioning
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d) Product Positioning
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Identify which method companies are using to compete for your money: TV commercials a) Personal selling b) Financing c) Media d) Product Positioning
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c) Media
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Four common marketing tactics are:
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Personal selling, financing, repetition, product positioning
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Dave tells the story of a man who bought his dream car, drove it home, but then returned it the next day after some money calculations. This story is an example of:
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Buyer's remorse
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Which of the following should you consider when making a significant purchase? a) Your buying motives b) If you can't pay with cash, don't buy it c) The opportunity cost d) All of the above
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d) All of the above
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Which of the following is not a form of product positioning? a) Shelf-positioning b) Packaging and color c) Financing d) Brand Recognition
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c) Financing
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Which is not a "power over purchase" tactic? a) Compare your purchase with a friend's b) Consider the opportunity cost c) Wait overnight d) Seek counsel
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a) Compare your purchase with a friend's
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True or False: A good salesperson will answer a question with a question
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False
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True or False: Never buy something you do not fully understand
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True
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True or False: The amount of stuff a person has is directly related to contentment and happiness
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False
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True or False: Young single adults should find an accountability partner with whom to discuss big purchases
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True
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True or False: Inflation has no effect on your buying power
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False
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True or False: A budget has little effect on a person's financial success unless he or she also develops power over purchase
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False
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True or False: You should never wait overnight before making a big purchase if there is only one item left
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False
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True or False: Teens have cited "friends" as the strongest influences over their purchase decisions
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True
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True or False: Repetition has proven to be an ineffective marketing technique
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False
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True or False: Zero percent financing is nothing more than a really good marketing tool
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False
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An economic system based on a free market, profit motive, open competition and private ownership of the means of production
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captialism
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The persistent increase in the cost of goods and services or the persistent decline in the buying power of money
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inflation
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A spur-of-the-moment, unplanned decision to buy a product or service
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impulse buy
