LAW 531 Week 5 Knowledge Check

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LAW 531 Week 5 Knowledge Check

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1. Identify an accurate statement about the Food, Drug, and Cosmetic Act (FDCA).

  • It prohibits the disclosure of nutrition information on food labels.
  • It only covers the quality of actual products and does not encompass packaging.
  • It prohibits the shipment, distribution, or sale of adulterated food.
  • It does not place liability on manufacturers or distributors for deceptive labelling. 

2. Which product is exempt from Food and Drug Administration (FDA) regulation of cosmetics?

  • Household soap
  • Facial cleanser
  • Lip color
  • Eye shadow 

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3. Glitter is a clothing store advertising a week-long sale featuring low-price summer merchandise. Amy visits the store on the second day of the sale to buy discounted clothing. However, the store has very few of the low-price clothes remaining. When Amy inquires about the sale, she is, instead, directed to a section of very expensive clothing that is not on sale. Feeling pressurized by the salesperson to buy some of the expensive clothes, Amy ends up spending a lot of money at the store. What type of deceptive business practice is best illustrated in the scenario?

  • Credit and debt
  • Trade libel
  • Door-to-door sales
  • Bait and switch 

4. What is an environmental impact statement most likely to contain?

  • Guidelines for maintaining environmental standards for state governments
  • A cost-benefit analysis of a proposed federal action that might affect the environment
  • Annual environmental reports provided by state governments
  • Conservation proposals made by environmental experts outside the government 

5. Identify the federal act that was enacted to regulate the disposal of new hazardous wastes and empowers the Environmental Protection Agency (EPA) to regulate facilities that generate, treat, store, transport, and dispose hazardous wastes.

  • Resource Conservation and Recovery Act (RCRA)
  • Toxic Substances Control Act
  • National Environmental Policy Act (NEPA)
  • Nuclear Waste Policy Act 

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6. What is a true statement in the context of environmental laws?

  • The Clean Air Act encompasses only stationary sources of pollution and not automobiles.
  • States are responsible for the enforcement of air quality standards even though the Environmental Protection Agency (EPA) sets the standards.
  • The primary task of enforcing the provisions of the Clean Water Act rests with the federal government and not state governments.
  • The federal Clean Water Act does not encompass the maintenance of wetlands. 

7. What is true of the per se rule according to Section 1 of the Sherman Act?

  • It holds that even reasonable restraints violate Section 1 of the Sherman Act.
  • It applies to restraints that are intrinsically anticompetitive.
  • It applies to cases where restraints have both pro- and anticompetitive effects.
  • It applies to cases where justifications and evidence can be considered to evaluate restraints. 

8. Envy, Bling, and Pattern are three established and well-known clothing manufacturers and sellers. They decide not to sell their clothes to Embellish, a clothing retail store. Which form of horizontal restraint does this scenario best exemplify?

  • Price fixing
  • Division of markets
  • Group boycotts
  • Conscious parallelisms 

9. Some forms of business and activities like labor unions and agricultural cooperatives are expressly exempt from the reach of antitrust laws in the rules enacted by Congress. What type of exemptions are these?

  • Statutory exemptions
  • Implied exemptions
  • State action exemptions
  • Organization exemptions 

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10. When is a court likely to apply the piercing the corporate veil doctrine?

  • When a corporation is not generating adequate profits because of a drop in sales
  • When a shareholder has been found to be misusing corporate assets
  • When shareholders are not adequately participating in the management of the corporation
  • When an employee has violated corporation rules 

11. What statement is true in the context of the board of directors of a corporation?

  • All members of the board should be officers of the corporation.
  • All members of the board should have the same set of specific qualifications.
  • Officers of other corporations can be elected as directors of the board.
  • Directors of the board should be residents of the state in which the corporation was incorporated. 

12. Riya is a corporate officer as well as a senior academic author at Derive Inc., a content management company. The company develops question banks and learning material for students. Riya, without permission from the company, starts her own content management company. Derive then recovers damages and profits from Riya. Which act of disloyalty does this scenario best exemplify in the context of fiduciary duties?

  • Making a secret profit
  • Usurping a corporate opportunity
  • Self-dealing
  • Competing with the corporation 

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13.What step can food manufacturers and processors take to avoid legal risks associated with the Nutrition Labeling and Education Act (NLEA)?

  • Exclude dietary information on packaging
  • Provide information about all the nutrients on packaging
  • Provide only point-of-purchase nutrition information
  • Exclude information about serving size on packaging 

14. According to Section 2 of the Clayton Act, in which of these scenarios is a seller most likely to face a legal risk?

  • Jeremy, a seller, uses price discrimination to meet a competitor’s price.
  • Alex, a seller, sells similar quality products to two customers at different prices around the same time.
  • Marcos, a seller, increases product prices because of increased costs of production and packaging.
  • Chang, a seller, offers a service to a particular customer for a reduced price. 

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15. What will help chemical industries avoid legal risks in the context of environmental laws?

  • Using special labeling for toxic substances
  • Avoiding testing of new chemicals
  • Meeting only the standards that are economically feasible
  • Adopting only technologically feasible disposal standards 

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