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Q:
In a limited liability company, the owners are referred to as interest holders.
Q:
In a limited partnership, the limited partners manage the business and are personally liable for all losses.
Q:
A shareholder derivative suit is brought by a minority shareholder, but any recovery inures to the corporation.
Q:
Explain illegal insider trading.
Q:
The owners of a corporation are called stockholders.
Q:
A partnership offers limited liability to its owners.
Q:
Describe the American economy during the time of deregulation. Highlight the excessive regulation argument and the biggest risk it posed.
Q:
Describe the three broad categories of the federal regulatory agencies authority.
Q:
Differentiate among the three types of rules enacted by administrative agencies. Describe the formal and informal rule making process of an agency.
Q:
Elaborate on the executive and congressional constraints on agencies.
Q:
A(n) _____ is an economics argument claiming that an individual or business that is protected from risk will increase its risk-taking behavior in the future in the belief that a bailout will follow, if needed.
A. unjust enrichment
B. unconscionable contract
C. wrongful discharge
D. moral hazard
Q:
Since the late 1970s, the United States has been in a period of deregulation during which:
A. federal agencies were newly created to undertake legislative functions of the government.
B. administrative agencies acted as governments, performing purely executive, legislative, and judicial roles.
C. federal powers were separated from the powers of the states.
D. great efforts were made to reduce the role of government in big portions of American life.
Q:
When is government intervention in a free enterprise economy justified? Explain any two rationales for the need of government regulation.
Q:
In the context of political process, what are the three main arguments that have emerged regarding market regulation by the government?
Q:
Why are the Commerce Clause and states police power potentially in conflict?
Q:
Explain the difference between state and local regulation in the context of their impact on business practices.
Q:
Which of the following statements relates to procedural rules?
A. They define rights and duties, such as crimes and punishments, and civil rights and responsibilities.
B. They impose new duties on affected parties and have the effect of law.
C. They delineate a federal agencys internal operating structure and methods.
D. They offer a federal agencys view of the meaning of those statutes for which the agency has administrative responsibility.
Q:
Federal Trade Commission rules providing for a cooling-off period of three business days within which the buyer may cancel door-to-door sales contracts are an example of an agencys application of its _____ rules.
A. procedural
B. interpretive
C. legislative
D. substantive
Q:
Internal Revenue Service regulations are an example of _____ rules.
A. substantive
B. interpretative
C. legislative
D. procedural
Q:
Which of the following statements is true of rule-making by agencies?
A. The agencies create rules that resemble laws but do not have the force of laws.
B. The federal government provides an online portal where the public can comment on proposed rules.
C. Legislative rules delineate the agencys internal operating structure and methods.
D. Procedural rules are policy expressions having the effect of law.
Q:
Which of the following statements is true of judicial review of agency rules?
A. Review of controversial, high visibility rules issued by agencies is not common.
B. Courts take a broad approach to judicial review of such cases.
C. Courts cannot overrule the agencies interpretation of a rule.
D. Judges readily sustain the judgment of the agency where reasonable.
Q:
Which of the following statements is true of the Federal Communications Commissions (FCC) indecency rules?
A. FCC rules increase the prices of cable TV services that broadcast indecent material.
B. FCC rules forbid indecent material on conventional broadcast services when children are likely to be in the audience.
C. FCC rules forbid indecent material on cable networks between 6 pm and 10 am.
D. FCC rules apply to subscription services such as programming delivered via satellite.
Q:
The _____ was enacted to provide a framework for agency rule-making and to detail broad standards for judicial review of agency decisions.
A. Public Records Act
B. Political Reform Act
C. Administrative Procedure Act
D. Uniform Adoption Act
Q:
Which of the following is an example of the federal regulatory authority of control of information?
A. Preventing the entry of certain products into the market
B. Directing that warning labels be stuck on products
C. Uniform pricing of cable TV services
D. Banning of a flame retardant used in childrens nightwear
Q:
CartMed Inc., an over-the-counter (OTC) drug manufacturer, is directed by the Office of National Drug Control Policy (ONDCP) to refrain from manufacturing cough syrups that exceed 22 percent alcohol content for children below the age of ten. This authority of the ONDCP falls under which of the following federal regulatory categories?
A. Control of information
B. Control of rates
C. Control of standards
D. Control of cost
Q:
Identify the type of rules that offer an administrative agencys view of the meaning of those statutes for which the agency has administrative responsibility.
A. Interpretive rules
B. Legislative rules
C. Procedural rules
D. Substantive rules
Q:
Which of the following statements is true of executive functions of federal agencies?
A. They always offer formal advice in response to requests.
B. They are empowered to resolve tax disputes.
C. They do not deal with the compliance with laws and regulations.
D. They hear workers compensation claims but cannot resolve them.
Q:
Which of the following is an example of an executive function performed by a federal agency?
A. Leasing federal lands
B. Enacting procedural rules
C. Regulating internal revenue service
D. Publishing all federal rules and orders daily
Q:
Identify the correct statement about a federal agency.
A. An independent federal agency is usually located within the departments of the governments executive branch.
B. In a rule-making situation, a federal agency avoids using the hybrid process.
C. In creating a federal agency, Congress delegates a portion of its authority to that body.
D. A federal agency does not have substantial authority to regulate a specified segment of American life.
Q:
Which of the following served as the basis for the creation of a fourth branch of government by Congress?
A. Agency commissioners are appointed in staggered terms, typically of three years duration.
B. Agencies must delegate a portion of their authority to Congress as they recognize that they are not the appropriate bodies to address the specific elements of certain problems.
C. The appointment of agency commissioners is done by the Senate with the advice of the president.
D. The appointment of agency commissioners for most of the independent agencies must reflect an approximate political balance between the two major parties.
Q:
The primary purpose of most of the early agencies was to address:
A. economic concerns.
B. discrimination issues.
C. environmental concerns.
D. product safety issues.
Q:
Which of the following statements is true of federal agencies?
A. Federal agencies typically appoint commissioners for a life term.
B. Federal agencies avoid using the hybrid rule-making process.
C. The president has direct authority over the executive federal agencies.
D. The independent federal agencies are usually located within the departments of the executive branch of the government.
Q:
Which of the following acts forbids the use, cultivation, or possession of marijuana for any purpose?
A. The Harrison Narcotics Tax Act
B. The Controlled Substances Act
C. The Food, Drug, and Cosmetic Act
D. The Pure Food and Drug Act
Q:
Which of the following ended Prohibition in 1933 and gave the states broad authority to regulate the sale of alcohol?
A. The Twenty-First Amendment
B. The Commerce Clause
C. The Fifth Amendment
D. The Supremacy Clause
Q:
Which of the following is an example of the federal government exceeding its authority in regulating commerce?
A. Regulating railroad routes and rates
B. Prohibiting indecent materials on regular broadcast television between 6 am and 10 pm
C. Forcing most Americans to maintain minimum essential health insurance
D. Specifying standards of safety and health in industry
Q:
Which of the following statements is true of licensure?
A. It is lauded for having benefits that exceed its costs in increased prices.
B. It is issued to increase services and decrease administrative expenses.
C. It is criticized as being designed to block the entry of competitors.
D. It is used by the federal government to intervene in business.
Q:
Which of the following was the first federal regulatory agency that Congress established in 1887 for the purpose of regulating railroad routes and rates?
A. The Federal Trade Commission
B. The Interstate Commerce Commission
C. The Environmental Protection Agency
D. The Food and Drug Administration
Q:
Which of the following statements is true of independent federal agencies?
A. They are usually the departments of the governments executive branch.
B. They are created via statutes labeled enabling legislation.
C. They are not vested with substantial legislation so as to prevent autonomy.
D. They are created to delegate a portion of their authority to Congress.
Q:
Adjudication ordinarily involves standards to be applied to the future conduct of a class of unspecified parties.
Q:
Congress controls agency budgets and thus can encourage or discourage particular agency action.
Q:
Federal agency rules and orders cannot be challenged in court.
Q:
Which of the following would most likely be considered a negative externality for a manufacturing firm?
A. Internal disagreements among the firms employees
B. Unfavorable public opinion about the firms products
C. Air and water pollution as a result of the firms manufacturing processes
D. Government regulations detrimental to the firms manufacturing activities
Q:
When all the costs and benefits of a good or service are not fully internalized or absorbed, those costs or benefits fall elsewhere as what economists have labeled _____.
A. public goods
B. neighborhood effects
C. commoditization
D. imperfect information
Q:
Today, attention in the monopoly area is largely directed to:
A. preventing negative externalities.
B. curbing anticompetitive conduct.
C. controlling the formation of cartels.
D. regulating open competition.
Q:
Which of the following statements is true of public goods?
A. The added cost of benefiting one person is zero or nearly so.
B. There are methods for excluding those who choose not to pay for public goods.
C. They will be produced in adequate quantities in the absence of government regulations.
D. They can be provided to consumers through a pricing system.
Q:
Administrative law principles are generally applicable to the conduct of state and local governments.
Q:
Agency commissioners are appointed typically for a life term.
Q:
Administrative agencies act as pseudo governments, performing purely executive, legislative, and judicial roles.
Q:
Purely intrastate activities can be regulated by the federal government if they have a substantial effect on interstate commerce.
Q:
The Commerce Clause, as interpreted by the judiciary, affords private companies exclusive discretion over foreign commerce.
Q:
In the event of an irreconcilable conflict between federal and state law, the Supremacy Clause provides that federal law will preempt state or local law rendering it unconstitutional.
Q:
States cannot regulate insurance as this is solely a federal responsibility.
Q:
Police power refers to the right of the state governments to promote the public health, safety, morals, and general welfare.
Q:
When all the costs and benefits of a good or service are fully internalized or absorbed by producers or consumers, those costs or benefits fall elsewhere as externalities.
Q:
Negative externalities are those in which a decision maker does not receive the full benefit of a decision.
Q:
The Supremacy Clause of the U.S. Constitution broadly specifies the power accorded to the federal government to regulate business activity.
Q:
Optimal efficiency often demands one uniform federal rule rather than a patchwork of 50 state rules.
Q:
The U.S. Constitution does not expressly forbid state regulation of interstate commerce.
Q:
Describe implied warranty of merchantability and implied warranty of fitness for a particular purpose.
Q:
Explain the MagnusonMoss Warranty Act.
Q:
Identify the defenses available in strict liability cases. Also explain the coverage under strict liability cases.
Q:
A natural monopoly exists where a single large firm, such as a utility, is more efficient than several small ones.
Q:
What are the four forms of invasion of privacy?
Q:
Explain the tort defenses of consent, mistake, necessity, and self-defense with examples.
Q:
Identify and give an illustrative example of the two types of causation that must be shown in a negligence case.
Q:
Explain the doctrine of res ipsa loquitur. What is required to invoke the doctrine and what is the result of its successful use?
Q:
List and describe the three defenses to negligence and their results if successful.
Q:
Which of the following is a strict liability defense?
A. Assumption of risk
B. Comparative negligence
C. Contributory negligence
D. Self-defense
Q:
Which of the following is true of coverage under the strict liability clause?
A. Some states limit strict liability recovery to new goods.
B. Coverage generally extends only to property damage.
C. Proof of actual fault is necessary to determine coverage.
D. The courts have made strict liability to exclusively cover design and warning defect cases.
Q:
Jerry, while trying to use a lawn mower to trim his hedge, lifts it up and in this process is seriously injured. Which of the following is the most likely outcome under strict liability?
A. Jerry will win since he was hurt while using the mower and injury is all that must be established under strict liability.
B. Jerry will win even though he was aware of the risk that his action created.
C. The company will lose if Jerry proves that the product had defects which caused him injury.
D. The company will win if it can prove that using a mower to trim a hedge is an improper and unforeseeable use.
Q:
In many states, a plaintiff who willingly enters a dangerous situation and is injured will be barred from recovery. The central defense for negligence in this case is:
A. statute of limitations.
B. strict liability.
C. assumption of risk.
D. comparative negligence.
Q:
Stacy, a water sports enthusiast, goes surfing in spite of warnings of rough weather conditions from lifeguards. Consequently, she is injured because of rough tides. Stacy is barred from recovering damages as the lifeguards could not fully perform their duty of preventing harm because of her _____.
A. assumption of risk
B. negligent entrustment
C. strict liability
D. express consent
Q:
A(n) _____ exists if a seller of goods states a fact or makes a promise regarding the character or quality of the goods.
A. assumption of risk
B. express warranty
C. libel
D. warranty of merchantability
Q:
Jude purchases a vacuum cleaner that is advertised as having certain distinctive cleaning properties. However, at the first use he realizes that the vacuum cleaner fails to function as promoted. In the context of warranty, which of the following statements is true?
A. There is a breach of implied warranty of fitness for a particular purpose.
B. There is a breach of implied warranty of merchantability.
C. There is a breach of express warranty.
D. There is a no breach of warranty as it is a case of puffing.
Q:
Ellen informs the sales clerk of an electronics store that she needs washing machines capable of heavy-duty use. The sales clerk sells a machine to Ellen withholding the fact that it is not heavy-duty. The machine break down after the first month. Which of the following is accurate in this scenario?
A. Ellen can sue the store for breach of implied warranty of merchantability.
B. Ellen can sue the store for breach of implied warranty of fitness for a particular purpose.
C. Ellen cannot sue the store as there is no breach of warranty because the clerk made no affirmative statement or promise about the machines.
D. Ellen cannot sue the store as there is no breach of warranty because the clerk has no responsibility for the way the machine is used.
Q:
Which of the following statements is true of the MagnusonMoss Warranty Act?
A. The act made it illegal for sellers to provide limited warranties.
B. The act, being entirely consistent with Congresss hopes, applies to all products and all warranties.
C. The act extended and clarified the warranty rules of the Uniform Commercial Code.
D. The act specifies that offer of express warranty is a must.
Q:
Which of the following statements is true of the strict liability law?
A. Strict liability law focuses on the condition of the product, rather than the conduct of the parties.
B. Strict liability in tort imposes complete liability for damages from a defective product on the injured consumer.
C. Strict liability law, to be applied, requires proof of negligence on the part of the defendant.
D. Strict liability does not hold anyone in the chain of distribution liable for damages from the defective product.
Q:
The residents of a suburban region are unable to enjoy fresh air due to the foul smell coming from an unauthorized tannery located nearby. In this case, the owners of the tannery can be sued for _____.
A. intrusion
B. conversion
C. nuisance
D. trade libel
Q:
Ryans neighbor, Nick, is away on a week-long tour. Ryan sees smoke rising from Nicks house one day and, fearing a possible outbreak of fire, breaks in through the front door only to find that the smoke was from outside and not from within the house as he had thought. In this case, Ryan can avail the defense of _____.
A. necessity
B. consent
C. duress
D. self-defense
Q:
Which of the following requirements must a plaintiff meet to establish a successful negligence claim?
A. The plaintiff must establish that the defendant owed the plaintiff a duty of due care.
B. The plaintiff must show that the defendant meant to do the act that caused the harm.
C. The plaintiff must prove that the defendant intentionally published false statements about the plaintiff.
D. The plaintiff must have been psychologically injured by an unreasonably dangerous product.