Management Information Systems: Managing the Digital Firm, 15e (Laudon)

Chapter 10 E-Commerce: Digital Markets, Digital Goods

1) What event marked the beginning of e-commerce?

A) The first product sold online.
B) The first domain name registered.
C) The first e-mail sent.
D) The first paid advertisements placed on a website.
E) The first product advertised online.

2) All of the following are examples of "on demand" companies except:

A) Uber.
B) Airbnb.
C) Lyft.
D) Instacart.
E) Instagram.

3) A marketplace extended beyond traditional boundaries and removed from a temporal and
geographic location is called a(n):
A) exchange.
B) marketspace.
C) online marketplace.
D) e-hub.
E) net marketplace.

4) When did e-commerce begin?

A) 1965
B) 1983
C) 1995
D) 1999
E) 2000

5) What standards are referred to when discussing universal standards as a unique feature of e-
commerce?
A) Internet technology standards
B) Common spoken and written languages
C) Universal measuring standards
D) Universal advertising and media format standards
E) EDI standards

6) All of the following are unique features of e-commerce technology, except:

A) personalization/customization.
B) interactivity.
C) transparency.
D) richness.
E) global reach.

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7) Which of the following dimensions of e-commerce technology involves engaging consumers
in a dialog that dynamically adjusts the experience to the individual?
A) Ubiquity
B) Personalization/customization
C) Richness
D) Interactivity
E) Information density

8) Which of the following dimensions of e-commerce technology involves the integration of

video, audio, and text marketing messages into a single marketing message and consumer
experience?
A) Ubiquity
B) Personalization/customization
C) Richness
D) Interactivity
E) Social technology

9) Which of the following dimensions of e-commerce technology has the potential to raise the
quality of information?
A) Information density
B) Richness
C) Customization
D) Interactivity
E) Global reach

10) The effort required to locate a suitable product is called:

A) price discrimination.
B) search costs.
C) menu costs.
D) shopping costs.
E) location costs.

11) Information density refers to the:

A) richness—complexity and content—of a message.
B) total amount and quantity of information delivered to consumers by merchants.
C) total amount and quantity of information available to all market participants.
D) amount of information available to reduce price transparency.
E) amount of physical storage space needed to store data about a specific entity, such as a
product or consumer.

12) Selling the same goods to different targeted groups at different prices is called:
A) cost customization.
B) cost optimization.
C) price gouging.
D) cost personalization.
E) price discrimination.

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13) Information ________ exists when one party in a transaction has more information that is
important for the transaction than the other party.
A) transparency
B) asymmetry
C) complexity
D) discrimination
E) competition

14) Varying a product's price according to the supply situation of the seller is called ________
pricing.
A) menu
B) flexible
C) dynamic
D) asymmetric
E) customized

15) Removing the business process layers in a distribution channel is called:

A) disintermediation.
B) BPR.
C) market segmentation.
D) network effects.
E) market transparency.

16) All of the following are increased in traditional markets compared to digital markets except:
A) search costs.
B) menu costs.
C) switching costs.
D) network effects.
E) information asymmetry.

17) Compared to digital markets, traditional markets have:

A) lower search costs.
B) stronger network effects.
C) higher delayed gratification effects.
D) reduced asymmetry.
E) higher transaction costs.

18) Compared to traditional goods, digital goods have:

A) greater pricing flexibility.
B) lower marketing costs.
C) higher production costs.
D) higher inventory costs.
E) lower menu costs.

19) Compared to traditional goods, digital goods have:

A) lower costs of production.
B) higher marginal costs per unit.
C) equivalent copying costs.
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D) similar inventory costs.
E) less disintermediation.

20) What is the primary benefit to consumers of disintermediation?

A) Faster service
B) Lower costs
C) Higher quality
D) Greater choices
E) None, because disintermediation primarily benefits manufacturers.

21) E-commerce refers to the use of any networking technologies to transact business. FALSE

22) Retail consumer e-commerce is growing at double-digit rates TRUE.

23) The Internet reduces information asymmetry. TRUE

24) All previous mass media in modern history, including the printing press, use a broadcast
model where content is created in a central location by experts. TRUE

25) Disintermediation provides major benefits to the distributor. FALSE

26) In general, for digital goods, the marginal cost of producing another unit is about zero.
TRUE

27) Traditional online marketing, such as display ads, still constitutes the majority of all online
marketing. TRUE

28) Information asymmetry exists when there is more information about one product than there
is about a similar product. FALSE

29) Price transparency refers to the ability of consumers to discover what merchants actually
pay for products. FALSE

30) Switching costs are the merchants' costs of changing prices. FALSE

35) Amazon.com is known primarily for its use of which of the following business models?
A) Content provider
B) Portal
C) Market creator
D) E-tailer
E) Transaction broker

36) Craigslist is an example of:

A) C2C e-commerce.
B) B2B e-commerce.
C) B2C e-commerce.
D) M-commerce.
E) P2P-commerce.
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37) Which of the following types of e-commerce involves businesses selling goods and services
directly to individuals via the Internet?
A) B2C e-commerce
B) B2B e-commerce
C) C2C e-commerce
D) M-commerce
E) P2P e-commerce

38) All of the following are examples of firms that use the community provider Internet
business model except:
A) eBay.
B) Facebook.
C) Twitter.
D) Instagram.
E) Pinterest.

39) Transaction brokers:

A) generate revenue from advertising or from directing buyers to sellers.
B) save users money and time by processing online sales transactions.
C) provide a digital environment where buyers and sellers can establish prices for products.
D) sell physical products directly to consumers or individual businesses.
E) provide online meeting places where people with similar interests can communicate.

40) Which of the following Internet business models involves a merchant creating an online
digital environment that enables people with like interests to share information?
A) Community provider
B) Service provider
C) Market creator
D) Transaction broker
E) Portal

41) Market creators:

A) save users money and time by processing online sales transactions.
B) provide a digital environment where buyers and sellers can establish prices for products.
C) create revenue by providing digital content over the web.
D) sell physical products directly to consumers or individual businesses.
E) generate revenue from advertising or from directing buyers to sellers.

42) Which of the following best illustrates the sales revenue model?
A) eBay receives a small fee from a seller if a seller is successful in selling an item.
B) Yelp receives a fee after steering a customer to a participating website where he or she
makes a purchase.
C) Pandora provides basic services for free, but charges a premium for advanced services.
D) Apple accepts micropayments for single music track downloads.
E) Netflix charges customers a monthly fee for access to its library of movies.

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43) Which of the following best illustrates the affiliate revenue model?
A) eBay receives a small fee from a seller if a seller is successful in selling an item.
B) Yelp receives a fee after steering a customer to a participating Web site where he or she
makes a purchase.
C) Pandora provides basic services for free, but charges a premium for advanced services.
D) Apple accepts micropayments for single music track downloads.
E) Netflix charges customers a monthly fee for access to its library of movies.

44) Which of the following best illustrates the transaction fee revenue model?
A) eBay receives a small fee from a seller if a seller is successful in selling an item.
B) Yelp receives a fee after steering a customer to a participating website where he or she
makes a purchase.
C) Pandora provides basic services for free, but charges a premium for advanced services.
D) Apple accepts micropayments for single music track downloads.
E) Netflix charges customers a monthly fee for access to its library of movies.

45) In the ________ revenue models, a firm offers some services for free but charges a
subscription fee for premium services.
A) free/freemium
B) subscription
C) transaction fee
D) affiliate
E) sales

46) Content providers use ________ systems to process large amounts of very small monetary
transactions cost-effectively.
A) subscription
B) mobile payment
C) transaction fee
D) micropayment
E) affiliate revenue

47) Which of the following best illustrates the advertising revenue model?
A) eBay receives a small fee from a seller if a seller is successful in selling an item.
B) Yelp receives a fee after steering a customer to a participating website where he or she
makes a purchase.
C) Facebook provides a social network for free, but shows sponsored content in users' News
Feeds.
D) Apple accepts micropayments for single music track downloads.
E) Netflix charges customers a monthly fee for access to its library of movies.

48) Which of the following companies uses the service provider business model?
A) Expedia
B) ETrade
C) Facebook
D) Yahoo
E) Dropbox
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49) Netflix uses which of the following revenue models?
A) Advertising
B) Transaction fee
C) Subscription
D) Freemium
E) Affiliate

50) Uber uses a form of dynamic pricing. TRUE

51) eBay is an example of the market creator business model. TRUE

52) MSN is an example of the portal business model. TRUE

53) Web personalization is used primarily as a marketing tool. TRUE

54) Podcasting allows subscribers to listen to live, streaming radio and other audio content.
FALSE
55) In the affiliate revenue model, firms derive revenue by selling information or services
through partner e-commerce sites. FALSE (PROMOTING THEM)

61) Netflix's public announcement of a reward for a technology solution to its movie
recommendation system is an example of:
A) prediction markets.
B) behavioral targeting.
C) long-tail marketing.
D) social shopping.
E) crowdsourcing.

65) Facebook's Like button is an example of which of the following?

A) Social sign-on
B) Collaborative shopping
C) Network notification
D) Social search
E) Newsfeed

66) Which of the following is a marketing format that uses banner ads and pop-ups with
interactive features?
A) Search engine ads
B) Video ads
C) Rich media ads
D) E-mail ads
E) Display ads

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68) Which of the following is the largest mobile advertising market?
A) Google
B) Yahoo
C) Facebook
D) Microsoft
E) Twitter

69) What is the difference between personalization and customization, as applied to e-

commerce technologies?
A) Customization is any type of adjustment made to a product by the user; personalization
refers to a business changing a product or service for the user.
B) Personalization is any type of adjustment made to a product by the user; customization refers
to a business changing a product or service for the user.
C) Customization refers to adjusting marketing messages for a consumer; personalization refers
to adjusting a product or service based on a user's preferences.
D) Personalization refers to adjusting marketing messages for a consumer; customization refers
to adjusting a product or service based on a user's preferences.
E) There is no difference. Both terms refer to changing a product or communication for the
consumer.

70) Rich media advertisements are a sales-oriented marketing format. FALSE

71) Behavioral targeting occurs at two levels: individual websites and through ISPs. FALSE

72) Advertising networks track a user's behavior at thousands of websites. TRUE

73) Viral marketing is like traditional word-of-mouth marketing except that it is spread via
online communities. TRUE

74) The behavioral targeting of ads results in consumers responding ten times more frequently
than when delivered ads randomly. TRUE

80) A secure website that links a large firm to its suppliers and other key business partners is
called a(n):
A) e-hub.
B) marketspace.
C) exchange.
D) private industrial network.
E) net marketplace.

87) Net marketplaces may either support contractual purchasing based on long-term
relationships with designated suppliers or short-term spot purchasing. T

88) Exchanges have become one of the most popular types of Net marketplace because they
encourage competitive bidding that drives prices down. F
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89) Indirect goods are not involved firsthand in the production process. TRUE

90) A new social mobile app you are developing allows users to find friends who are logged in
and within a 10-mile radius. This would be categorized as a ________ service.
A) geosocial
B) geoinformation
C) geoadvertising
D) geomapping
E) geolocating

91) Geoadvertising sends ads to users based on their:

A) GPS locations.
B) home addresses.
C) shopping preferences.
D) website behaviors.
E) Google Maps settings.

92) What percent of online retailers now have m-commerce websites?

A) 15 percent
B) 25 percent
C) 55 percent
D) 75 percent
E) 85 percent

93) Foursquare is an example of which of the following?

A) Social graph
B) Collaborative shopping
C) Net marketplace
D) Crowdsourcing application
E) Geosocial services