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Business Studies Test - 15
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Business Studies Test - 15
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  • Question 1/10
    5 / -1

    Which of the following is not the responsibility of the Consumer? 
    Solutions

    The correct answer is To be heard.

    Key Points

    • To be heard is the right of the consumer, not the responsibility
    • The Consumer Protection Act, implemented in 1986, gives easy and fast compensation to consumer grievances.
    • It safeguards and encourages consumers to speak against insufficiency and flaws in goods and services.
    • If traders and manufacturers practice any illegal trade, this act protects their rights as a consumer.
    • The primary motivation of this forum is to bestow aid to both the parties and eliminate lengthy lawsuits.
    • This Protection Act covers all goods and services of all public, private, or cooperative sectors, except those exempted by the central government.
    • The act provides a platform for a consumer where they can file their complaint, and the forum takes action against the concerned supplier and compensation is granted to the consumer for the hassle he/she has encountered.

    Consumer Rights and Responsibilities:
    The Rights of the Consumer

    • Right to Safety- Before buying, a consumer can insist on the quality and guarantee of the goods. They should ideally purchase a certified product like ISI or AGMARK.
    • Right to Choose- Consumer should have the right to choose from a variety of goods and in a competitive price.
    • Right to be informed- The buyers should be informed with all the necessary details of the product, make her/him act wise, and change the buying decision.
    • Right to Consumer Education- Consumer should be aware of his/her rights and avoid exploitation. Ignorance can cost them more.
    • Right to be heard- This means the consumer will get due attention to express their grievances at a suitable forum.
    • Right to seek compensation- The defines that the consumer has the right to seek redress against unfair and inhumane practices or exploitation of the consumer.

    The Responsibilities of the Consumer

    • Responsibility to be aware – A consumer has to be mindful of the safety and quality of products and services before purchasing.
    • Responsibility to think independently– Consumer should be well concerned about what they want and need and therefore make independent choices.
    • Responsibility to speak out- Buyer should be fearless to speak out their grievances and tell traders what they exactly want
    • Responsibility to complain- It is the consumer’s responsibility to express and file a complaint about their dissatisfaction with goods or services in a sincere and fair manner.
    • Responsibility to be an Ethical Consumer- They should be fair and not engage themselves with any deceptive practice.
  • Question 2/10
    5 / -1

    Consumer protection is important because of, 
    Solutions

    The correct answer is All of the above.

    Key Points

    Importance of consumer protection: 

    • Consumer Protection has a wide agenda.
    • It not only includes educating consumers about their rights and responsibilities, but also helps in getting their grievances redressed.
    • It not only requires a judicial machinery for protecting the interests of consumers but also requires the consumers to get together and form themselves into consumer associations for protection and promotion of their interests.
    • At the same time, consumer protection has a special significance for businesses too. 

    From Consumers’ point of view

    The importance of consumer protection from the consumers’ point of view can be understood from the following points:

    (i) Consumer Ignorance:

    • In the light of widespread ignorance of consumers about their rights and reliefs available to them, it becomes necessary to educate them about the same so as to achieve consumer awareness.

    (ii) Unorganised Consumers:

    • Consumers need to be organised in the form of consumer organisations which would take care of their interests.
    • Though, in India, we do have consumer organisations which are working in this direction, adequate protection is required to be given to consumers till these organisations become powerful enough to protect and promote the interests of consumers.

    (iii) Widespread Exploitation of Consumers:

    • Consumers might be exploited by unscrupulous, exploitative and unfair trade practices like defective and unsafe products, adulteration, false and misleading advertising, hoarding, black-marketing etc.
    • Consumers need protection against such malpractices of the sellers. 
  • Question 3/10
    5 / -1

    Which of the following is not important for consumer protection from the point view of Business? 
    Solutions

    The correct answer is Profit.

    Key Points

    From the point of view of Business 

    • A business must also lay emphasis on protecting the consumers and adequately satisfying them.
    • This is important because of the following reasons:
    • Long-term Interest of Business: Enlightened businesses realise that it is in their long-term interest to satisfy their customers. Satisfied customers not only lead to repeat sales but also provide good feedback to prospective customers and thus, help in increasing the customer-base of business. Thus, business firms should aim at long-term profit maximisation through customer satisfaction.
    • Business uses Society’s Resources: Business organisations use resources which belong to the society. They, thus, have a responsibility to supply such products and render such services which are in public interest and would not impair public confidence in them.  
    • Social Responsibility: A business has social responsibilities towards various interest groups. Business organisations make money by selling goods and providing services to consumers. Thus, consumers form an important group among the manystakeholders of business and like other stakeholders, their interest has to be well taken care of.
    • Moral Justification: It is the moral duty of any business to take care of consumer’s interest and avoid any form of their exploitation. Thus, a business must avoid unscrupulous, exploitative and unfair trade practices like defective and unsafe products, adulteration, false and misleading advertising, hoarding, black marketing etc.
    • Government Intervention: A business engaging in any form of exploitative trade practices would invite government intervention or action. This can impair and tarnish the image of the company. Thus, it is advisable that business organisations voluntarily resort to such practices where the customers’ needs and interests will well be taken care of.
  • Question 4/10
    5 / -1

    Which of the following is not a legal protection to consumer given by India? 
    Solutions

    The correct answer is The Sale of Goods Act, 2000.

    The Sale of Goods Act, 1930 is correct. 

    Key Points

    Legal protection to consumers

    • The Indian legal framework consists of a number of regulations which provide protection to consumers.
    • Some of these regulations are as under.
    • The Consumer Protection Act, 1986: The Consumer Protection Act, 1986 seeks to protect and promote the interests of consumers. The Act provides safeguards to consumersagainst defective goods, deficient services, unfair trade practices, and other forms of their exploitation. 
    • The Indian Contract Act, 1872: The Act lays down the conditions in which the promises made by parties to a contract will be binding on each other. The Act also specifies the remedies available to parties in case of breach of contract.
    • The Sale of Goods Act, 1930: The Act provides some safeguards and reliefs to the buyers of the goods in case the goods purchased do not comply with express or implied conditions or warranties.
    • The Essential Commodities Act, 1955: The Act aims at controlling production, supply and distribution of essential commodities, checking inflationary trend in their prices and ensuring equal distribution of essential commodities. The Act also provides for action against anti-social activities of profiteers, hoarders and blackmarketers.
    • The Agricultural Produce (Grading and Marking) Act, 1937: The Act prescribes grade standards for agricultural commodities and livestock products. The Act stipulates the conditions which govern the use of standards and lays down the procedure for grading, marking and packing of agricultural produce. 
    • The Prevention of Food Adulteration Act, 1954: The Act aims to check adulteration of food articles and ensure their purity so as to maintain public health.
    • The Standards of Weights and Measures Act, 1976: The provisions of this Act are applicable in case of those goods which are sold or distributed by weight, measure or number. It provides protection to consumers against the malpractice of under-weight or under-measure.
    • The Trade Marks Act, 1999: This Act has repealed and replaced the Trade and Merchandise Marks Act, 1958. The Act prevents the use of fraudulent marks on products and thus, provides protection to the consumers against such products.
    • The Competition Act, 2002: This Act has repealed and replaced the Monopolies and Restrictive Trade Practices Act, 1969. The Act provides protection to the consumers in case of practices adopted by business firms which hamper competition in the market.  
    • The Bureau of Indian Standards Act, 1986: The Bureau of Indian Standards has been set up under the Act. The Bureau has two major activities: formulation of quality standards for goods and their certification through the BIS certification scheme. 
  • Question 5/10
    5 / -1

    The Prevention of Food Adulteration Act was passed in the year of, 
    Solutions

    The correct answer is 1954.

    Key Points

    The Prevention of Food Adulteration Act, 1954: The Act aims to check adulteration of food articles and ensure their purity so as to maintain public health.

    Objectives of Prevention of Food Adulteration Act 1954 

    • It is to protect people from adulterated and poisonous food.
    • To restrain the sale of substandard food.
    • To protect the interests of the consumers by eliminating fraudulent practices.
       

    Additional Information

    Legal protection to consumers

    • The Indian legal framework consists of a number of regulations which provide protection to consumers.
    • Some of these regulations are as under.
    • The Consumer Protection Act, 1986: The Consumer Protection Act, 1986 seeks to protect and promote the interests of consumers. The Act provides safeguards to consumersagainst defective goods, deficient services, unfair trade practices, and other forms of their exploitation. 
    • The Indian Contract Act, 1872: The Act lays down the conditions in which the promises made by parties to a contract will be binding on each other. The Act also specifies the remedies available to parties in case of breach of contract.
    • The Sale of Goods Act, 1930: The Act provides some safeguards and reliefs to the buyers of the goods in case the goods purchased do not comply with express or implied conditions or warranties.
    • The Essential Commodities Act, 1955: The Act aims at controlling production, supply and distribution of essential commodities, checking inflationary trend in their prices and ensuring equal distribution of essential commodities. The Act also provides for action against anti-social activities of profiteers, hoarders and blackmarketers.
    • The Agricultural Produce (Grading and Marking) Act, 1937: The Act prescribes grade standards for agricultural commodities and livestock products. The Act stipulates the conditions which govern the use of standards and lays down the procedure for grading, marking and packing of agricultural produce. 
    • The Prevention of Food Adulteration Act, 1954: The Act aims to check adulteration of food articles and ensure their purity so as to maintain public health.
    • The Standards of Weights and Measures Act, 1976: The provisions of this Act are applicable in case of those goods which are sold or distributed by weight, measure or number. It provides protection to consumers against the malpractice of under-weight or under-measure.
    • The Trade Marks Act, 1999: This Act has repealed and replaced the Trade and Merchandise Marks Act, 1958. The Act prevents the use of fraudulent marks on products and thus, provides protection to the consumers against such products.
    • The Competition Act, 2002: This Act has repealed and replaced the Monopolies and Restrictive Trade Practices Act, 1969. The Act provides protection to the consumers in case of practices adopted by business firms which hamper competition in the market.  
    • The Bureau of Indian Standards Act, 1986: The Bureau of Indian Standards has been set up under the Act. The Bureau has two major activities: formulation of quality standards for goods and their certification through the BIS certification scheme. 
  • Question 6/10
    5 / -1

    The Consumer Protection Act, 1986 is applicable to, 

    1. Co-operative sector

    2. Manufacturer

    3. Service sector 

    Solutions

    The correct answer 1, 2 and 3.

    Key Points

    The Consumer Protection Act 1986

    • The Consumer Protection Act (CPA) seeks to protect and promote the consumers’ interest through speedy and inexpensive redressal of their grievances.
    • The scope of the Act is very wide.
    • It is applicable to all types of undertakings, big and small, whether in the private or public sector, or in the co-operative sector, whether a manufacturer or a trader, and whether supplying goods or providing services.
    • The Act confers certain rights to consumers with a view to empowering them and to protect their interests.
    • The Consumer Protection Act provides for six rights of consumers.
    • The consumer protection councils set up under the Act are intended to promote and protect the various rights of consumers.
       

    These rights include the following:

    1. Right to Safety
    2. Right to be Informed
    3. Right to Choose
    4. Right to be Heard
    5. Right to seek Redressal
    6. Right to Consumer Education
  • Question 7/10
    5 / -1

    Which of the following is consumer responsibility? 
    Solutions

    The correct answer is All of the above

    Key Points

    A consumer should keep in mind the following responsibilities while purchasing, using and consuming goods and services.

    1. Be aware about various goods and services available in the market so that an intelligent and wise choice can be made.
    2. Buy only standardised goods as they provide quality assurance. Thus, look for ISI mark on electrical goods, FPO mark on food products, Hallmark on jewelry etc.
    3. Learn about the risks associated with products and services, follow manufacturer’s instructions and use the products safely.
    4. Read labels carefully so as to have information about prices, net weight, manufacturing and expiry dates, etc.
    5. Assert yourself to ensure that you get a fair deal.
    6. Be honest in your dealings. Choose only from legal goods and services and discourage unscrupulous practices like black-marketing, hoarding etc.
    7. Ask for a cash memo on purchase of goods or services. This would serve as a proof of the purchase made.
    8. File a complaint in an appropriate consumer forum in case of a shortcoming in the quality of goods purchased or services availed. Do not fail to take an action even when the amount involved is small.
    9. Form consumer societies which would play an active part in educating consumers and safeguarding their interests.
    10. Respect the environment. Avoid waste, littering and contributing to pollution.
  • Question 8/10
    5 / -1

    Which of the following organisation laid down the code of conduct for their members in their dealings with the customers?
    Solutions

    The correct answer is Both 1 and 2.

    Key Points

    Ways and means of Cosnumer Protection: 

    There are various ways in which the objective of consumer protection can be achieved. 

    Self Regulation by Business:

    • Enlightened business firms realise that it is in their long-term interest to serve the customers well. Socially responsible firms follow ethical standards and practices in dealing with their customers. Many firms have set up their customer service and grievance cells to redress the problems and grievances of their consumers.

    Business Associations:

    • The associations of trade, commerce and business like Federation of Indian Chambers of Commerce of India (FICCI) and Confederation of Indian Industries (CII) have laid down their code of conduct which lay down for their members the guidelines in their dealings with the customers.

    Consumer Awareness:

    • A consumer, who is well informed about his rights and the reliefs available to him, would be in a position to raise his voice against any unfair trade practices or unscrupulous exploitation. In addition to this, an understanding of his responsibilities would also enable a consumer to safeguard his interests.

    Consumer Organisations:

    • Consumer organisations play an important role in educating consumers about their rights and providing protection to them. These organisations can force business firms to avoid malpractices and exploitation of consumers.

    Government:

    • The government can protect the interests of the consumers by enacting various legislations. The legal framework in India encompasses various legislations which provide protection to consumers. The most important of these regulations is the Consumer Protection Act, 1986. The Act provides for a three-tier machinery at the district, state and national levels for redressal of consumer grievances. The redressal mechanism under this three-tier machinery has been explained hereunder. 
  • Question 9/10
    5 / -1

    Who can't file a complaint before the appropriate consumer forum? 
    Solutions

    The correct answer is None of the above.

    Key Points

    Redressal Agencies under the Consumer Protection Act. 

    • For the redressal of consumer grievances, the Consumer Protection Act provides for setting up of a three tier enforcement machinery at the District, State, and the National levels, known as the District Consumer Dispute Redressal Forum, State Consumer Disputes Redressal Commission, and the National Consumer Disputes Redressal Commission.
    • They are briefly referred to as the ‘District Forum’, ‘State Commission’, and the ‘National Commission’, respectively.
    • While the National Commission is set up by the Central Government, the State Commissions and the District Forums are set up, in each State and District, respectively, by the State Government concerned.
    • The Figure on redressal agencies shows the hierarchical structure of this three-tire machinery.
    • Before studying the set-up and functioning of these redressal agencies let see how the Consumer Protection Act defines a consumer and who can file a complaint under the Consumer Protection Act.

    Who can file a complaint?: A complaint before the appropriate consumer forum can be made by:

    • Any consumer
    • Any registered consumers’ association
    • The Central Government or any State Government
    • One or more consumers, on behalf of numerous consumers having the same interest; and
    • A legal heir or representative of a deceased consumer.
  • Question 10/10
    5 / -1

    The right to acquire knowledge and to be a well-informed consumer throughout life is 
    Solutions

    The correct answer is Right to Consumer Education.

    Key Points

    The Consumer Protection Act provides for six rights of consumers.

    The consumer protection councils set up under the Act are intended to promote and protect the various rights of consumers.

    These rights include the following:

    Right to Consumer Education:

    • The consumer has a right to acquire knowledge and to be a well informed consumer throughout life. He should be aware about his rights and the reliefs available to him in case of a product or service falling short of his expectations. Many consumer organisations and some enlightened businesses are taking an active part in educating consumers in this respect.

    Right to Safety:

    • The consumer has a right to be protected against goods and services which are hazardous to life and health. For instance, electrical appliances which are manufactured with substandard products or do not conform to the safety norms might cause serious injury. Thus, consumers are educated that they should use electrical appliances which are ISI marked as this would be an assurance of such products meeting quality specifications.

    Right to be Informed:

    • The consumer has a right to have complete information about the product he intends to buy including its ingredients, date of manufacture, price, quantity, directions for use, etc. It is because of this reason that the legal framework in India requires the manufactures to provide such information on the package and label of the product. 

    Right to Choose:

    • The consumer has the freedom to choose from a variety of products at competitive prices. This implies that the marketers should offer a wide variety of products in terms of quality, brand, prices, size, etc. and allow the consumer to make a choice from amongst these.

    Right to be Heard:

    • The consumer has a right to file a complaint and to be heard in case of dissatisfaction with a good or a service. It is because of this reason that many enlightened business firms have set up their own consumer service and grievance cells. Many consumer organisations are also working towards this direction and helping consumers in redressal of their grievances.

    Right to seek Redressal:

    • The consumer has a right to get relief in case the product or service falls short of his expectations. The Consumer Protection Act provides a number of reliefs to the consumers including replacement of the product, removal of defect in the product, compensation paid for any loss or injury suffered by the consumer, etc.
    •  
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