TEST BANK for E-Commerce 2020–2021: Business, Technology and Society, Global Edition 16th Edition by

E-commerce 2021: business. technology. society., 16e (Laudon/Traver) Chapter 1 The Revolution Is Just Beginning 1) Analysts estimate that by 2024, consumers will be spending around _______ in digital transactions.

A) $180 million B) $1.8 billion C) $180 billion D) $1.8 trillion Answer: D Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 1.1: Understand why it is important to study e-commerce.

2) It is likely that e-commerce will eventually impact nearly all commerce.

Answer: TRUE Difficulty: Easy AACSB: Application of knowledge Learning Objective: 1.1: Understand why it is important to study e-commerce.

3) Why study e-commerce?

Answer: E-commerce is a disruptive innovation that is different and more powerful than any of the other technologies we have seen in the past century. E-commerce technologies—and the digital markets that result—have brought about some fundamental, unprecedented shifts in commerce. While other technologies transformed economic life in the twentieth century, the evolving Internet and other information technologies are shaping the twenty-first century.

Difficulty: Moderate AACSB: Application of knowledge; Written and oral communication Learning Objective: 1.1: Understand why it is important to study e-commerce.

4) Which of the following best defines e-commerce?

A) digitally enabled commercial transactions between and among organizations and individuals B) the use of digital technologies in a firm's daily activities C) the digital enablement of transactions and processes within an organization D) any electronically based organizational activity that supports a firm’s market exchanges Answer: A Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 1.2: Define e-commerce, understand how e-commerce differs from ebusiness, identify the primary technological building blocks underlying e-commerce, and recognize major current themes in e-commerce.

5) Which of the following is an example of e-business?

A) Amazon's inventory control system B) the Amazon.com website C) an Amazon mobile app D) Amazon's Pinterest page Answer: A 1 Copyright © 2022 Pearson Education, Inc.

Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 1.2: Define e-commerce, understand how e-commerce differs from ebusiness, identify the primary technological building blocks underlying e-commerce, and recognize major current themes in e-commerce.

6) Which of the following can be considered synonymous with the term e-commerce?

A) e-business B) digital commerce C) the Internet D) the Web Answer: B Difficulty: Easy AACSB: Application of knowledge Learning Objective: 1.2: Define e-commerce, understand how e-commerce differs from ebusiness, identify the primary technological building blocks underlying e-commerce, and recognize major current themes in e-commerce.

7) Which of the following is not true about the use of apps?

A) Users spend nearly 90% of their smartphone app minutes using their top five apps.

B) Users still spend more time using mobile browsers than they do using mobile apps.

C) Apps are easier to control and monetize than websites.

D) Users typically use about 20 different apps per month.

Answer: B Difficulty: Difficult AACSB: Application of knowledge Learning Objective: 1.2: Define e-commerce, understand how e-commerce differs from ebusiness, identify the primary technological building blocks underlying e-commerce, and recognize major current themes in e-commerce.

8) All of the following statements about e-commerce in the United States in 2020 are true except: A) Social e-commerce generated more revenue than mobile e-commerce.

B) Mobile advertising accounted for almost 70% of all digital advertising spending.

C) On-demand service firms fueled the growth of local e-commerce.

D) Retail e-commerce and m-commerce grew as a result of the Covid-19 pandemic.

Answer: A Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 1.2: Define e-commerce, understand how e-commerce differs from ebusiness, identify the primary technological building blocks underlying e-commerce, and recognize major current themes in e-commerce.

9) In 2020, about ________ of Internet users in the United States accessed the Internet solely using a mobile device.

A) 8% B) 21% C) 28% 2 Copyright © 2022 Pearson Education, Inc.

D) 34% Answer: B Difficulty: Difficult AACSB: Information technology Learning Objective: 1.2: Define e-commerce, understand how e-commerce differs from ebusiness, identify the primary technological building blocks underlying e-commerce, and recognize major current themes in e-commerce.

10) Which of the following is not a major business trend in e-commerce in 2020-2021?

A) The mobile app ecosystem continues to grow.

B) Retail e-commerce revenues exceed B2B e-commerce revenues for the first time.

C) On-demand service companies garner multibillion-dollar valuations.

D) Social e-commerce continues to grow.

Answer: B Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 1.2: Define e-commerce, understand how e-commerce differs from ebusiness, identify the primary technological building blocks underlying e-commerce, and recognize major current themes in e-commerce.

11) Which of the following is not a major technology trend in e-commerce in 2020-2021?

A) Cloud computing enables content stored on Internet-based servers to be accessed by consumer devices such as smartphones.

B) Firms are turning to business analytics to make sense out of big data.

C) Smart speakers provide an additional platform for e-commerce.

D) Growth of the Internet of Things slows down.

Answer: D Difficulty: Difficult AACSB: Information technology Learning Objective: 1.2: Define e-commerce, understand how e-commerce differs from ebusiness, identify the primary technological building blocks underlying e-commerce, and recognize major current themes in e-commerce.

12) Which of the following has not been the subject of concern about its increasing market dominance in 2020-2021?

A) Amazon B) Google C) Netflix D) Facebook Answer: C Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 1.2: Define e-commerce, understand how e-commerce differs from ebusiness, identify the primary technological building blocks underlying e-commerce, and recognize major current themes in e-commerce.

13) Which of the following statements about the mobile platform is not true?

A) In 2020, about 93% of Internet users in the United States used a mobile device to access the 3 Copyright © 2022 Pearson Education, Inc.

Internet at least some of the time.

B) Over 235 million individuals in the United States used tablet computer apps in 2020.

C) Retail m-commerce purchases were expected to reach about $315 billion in 2020.

D) Adult mobile U.S. Internet users spend an average of three-and-a-half hours per day within apps in 2020.

Answer: B Difficulty: Difficult AACSB: Application of knowledge Learning Objective: 1.2: Define e-commerce, understand how e-commerce differs from ebusiness, identify the primary technological building blocks underlying e-commerce, and recognize major current themes in e-commerce.

14) Which of the following statements about the Web is not true?

A) The Web is the technology upon which the Internet is based.

B) The Web was the original "killer app."

C) The Web provides access to pages written in Hypertext Markup Language.

D) The Web is both a communications infrastructure and an information storage system.

Answer: A Difficulty: Difficult AACSB: Application of knowledge Learning Objective: 1.2: Define e-commerce, understand how e-commerce differs from ebusiness, identify the primary technological building blocks underlying e-commerce, and recognize major current themes in e-commerce.

15) In 2019, there were more than ________ Internet hosts worldwide.

A) 1 million B) 10 million C) 100 million D) 1 billion Answer: D Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 1.2: Define e-commerce, understand how e-commerce differs from ebusiness, identify the primary technological building blocks underlying e-commerce, and recognize major current themes in e-commerce.

16) Which of the following was the original "killer app" that made the Internet commercially interesting and extraordinarily popular?

A) e-commerce B) the Web C) social networks D) mobile apps Answer: B Difficulty: Easy AACSB: Application of knowledge Learning Objective: 1.2: Define e-commerce, understand how e-commerce differs from ebusiness, identify the primary technological building blocks underlying e-commerce, and recognize major current themes in e-commerce.

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17) The term e-commerce refers to the digital enabling of business processes both inside and outside the firm.

Answer: FALSE Difficulty: Moderate AACSB: Information technology Learning Objective: 1.2: Define e-commerce, understand how e-commerce differs from ebusiness, identify the primary technological building blocks underlying e-commerce, and recognize major current themes in e-commerce.

18) E-commerce and e-business systems blur together at the business firm boundary, where internal business systems link up with suppliers or customers.

Answer: TRUE Difficulty: Easy AACSB: Information technology Learning Objective: 1.2: Define e-commerce, understand how e-commerce differs from ebusiness, identify the primary technological building blocks underlying e-commerce, and recognize major current themes in e-commerce.

19) The Internet has shown similar growth patterns as other electronic technologies of the past.

Answer: FALSE Difficulty: Easy AACSB: Application of knowledge Learning Objective: 1.2: Define e-commerce, understand how e-commerce differs from ebusiness, identify the primary technological building blocks underlying e-commerce, and recognize major current themes in e-commerce.

20) What is the key factor in determining if a transaction is "commerce"?

Answer: The key factor in determining if a transaction is commerce is the "exchange of value” (e.g., money) across organizational or individual boundaries in return for products and services.

Difficulty: Easy AACSB: Analytical thinking; Written and oral communication Learning Objective: 1.2: Define e-commerce, understand how e-commerce differs from ebusiness, identify the primary technological building blocks underlying e-commerce, and recognize major current themes in e-commerce.

21) Which of the following is not a unique feature of e-commerce technology?

A) interactivity B) social technology C) information asymmetry D) richness Answer: C Difficulty: Moderate AACSB: Information technology Learning Objective: 1.3: Identify and describe the unique feature of e-commerce technology and discuss their business significance.

22) Which of the following features of e-commerce technology enables merchants to market and 5 Copyright © 2022 Pearson Education, Inc.

sell "complex" goods and services to consumers via marketing messages that can integrate video, audio, and text?

A) richness B) ubiquity C) information density D) personalization Answer: A Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 1.3: Identify and describe the unique feature of e-commerce technology and discuss their business significance.

23) Which of the following features of e-commerce technology allows users to participate in the creation of online content?

A) ubiquity B) global reach C) information density D) social technology Answer: D Difficulty: Moderate AACSB: Analytical thinking Learning Objective: 1.3: Identify and describe the unique feature of e-commerce technology and discuss their business significance.

24) Which of the following is the best definition of transaction cost?

A) the expense of changing national or regional prices B) the cost of participating in a market C) the cost of finding suitable products in the market D) the cost merchants pay to bring their goods to market Answer: B Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 1.3: Identify and describe the unique feature of e-commerce technology and discuss their business significance.

25) The world's online population was estimated to be around ________ in 2020.

A) 400 million B) 4 billion C) 40 billion D) 400 billion Answer: B Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 1.3: Identify and describe the unique feature of e-commerce technology and discuss their business significance.

26) Which of the following features of e-commerce technology is related to the concept of network externalities?

6 Copyright © 2022 Pearson Education, Inc.

A) richness B) interactivity C) universal standards D) information density Answer: C Difficulty: Difficult AACSB: Application of knowledge Learning Objective: 1.3: Identify and describe the unique feature of e-commerce technology and discuss their business significance.

27) Which of the following statements is true about the traditional tradeoff between the richness and reach of a marketing message prior to the development of the Web? A) Marketing messages had little richness.

B) The smaller the audience reached, the less rich the message.

C) The larger the audience reached, the less rich the message.

D) Richness was unrelated to reach.

Answer: C Difficulty: Difficult AACSB: Information technology Learning Objective: 1.3: Identify and describe the unique feature of e-commerce technology and discuss their business significance.

28) Interactivity in the context of e-commerce provides which of the following functionalities?

A) the ability to physically touch and manipulate a product B) the complexity and content of a message C) the ability of consumers to create and distribute content D) the enabling of two-way communication between consumer and merchant Answer: D Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 1.3: Identify and describe the unique feature of e-commerce technology and discuss their business significance.

29) The cost incurred by merchants to change product prices (i.e., the costs of reentering prices into computer systems) is referred to as: A) Subscription costs.

B) Fixed costs.

C) Menu costs.

D) Variable costs.

Answer: C Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 1.3: Identify and describe the unique feature of e-commerce technology and discuss their business significance.

30) Which of the following refers to any disparity in relevant market information among parties in a transaction?

A) information asymmetry 7 Copyright © 2022 Pearson Education, Inc.

B) unfair competitive advantage C) imperfect competition D) dynamic pricing Answer: A Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 1.3: Identify and describe the unique feature of e-commerce technology and discuss their business significance.

31) Which of the following is a physical place you visit in order to transact?

A) marketspace B) marketplace C) social network D) the Internet Answer: B Difficulty: Easy AACSB: Application of knowledge Learning Objective: 1.3: Identify and describe the unique feature of e-commerce technology and discuss their business significance.

32) _________ represents the total number of users or customers an e-commerce business can obtain.

A) Ubiquity B) Interactivity C) Reach D) Information density Answer: C Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 1.3: Identify and describe the unique feature of e-commerce technology and discuss their business significance.

33) Which of the following refers to the complexity and content of a message?

A) richness B) reach C) information density D) interactivity Answer: A Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 1.3: Identify and describe the unique feature of e-commerce technology and discuss their business significance.

34) E-commerce is available just about everywhere and anytime. This is known as: A) richness.

B) information density.

C) ubiquity.

D) reach.

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Answer: C Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 1.3: Identify and describe the unique feature of e-commerce technology and discuss their business significance.

35) Ubiquity increases the cognitive energy required to transact in a marketspace.

Answer: FALSE Difficulty: Moderate AACSB: Analytical thinking Learning Objective: 1.3: Identify and describe the unique feature of e-commerce technology and discuss their business significance.

36) Universal standards make price discovery more costly, slower, and less accurate.

Answer: FALSE Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 1.3: Identify and describe the unique feature of e-commerce technology and discuss their business significance.

37) Price transparency refers to the ease with which consumers can find out what merchants pay for products.

Answer: FALSE Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 1.3: Identify and describe the unique feature of e-commerce technology and discuss their business significance.

38) Personalization involves targeting marketing messages to specific individuals by adjusting the message based upon a consumer's preferences or past purchasing behavior.

Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 1.3: Identify and describe the unique feature of e-commerce technology and discuss their business significance.

39) E-commerce technologies provide a unique, many-to-many model of mass communication.

Answer: TRUE Difficulty: Easy AACSB: Information technology Learning Objective: 1.3: Identify and describe the unique feature of e-commerce technology and discuss their business significance.

40) Identify the eight unique features of e-commerce technology and explain how these features set e-commerce apart from more traditional ways of conducting commercial transactions.

Answer: The eight unique features of e-commerce technology are ubiquity, global reach, universal standards, richness, interactivity, information density, personalization/customization, and social technology.

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The fact that e-commerce is available nearly everywhere, at any time, (ubiquity) extends the marketplace beyond traditional boundaries and removes it from a temporal and geographic location. A marketspace is created in which shopping can take place anywhere, enhancing consumer convenience and reducing shopping costs, whereas in traditional commerce the marketplace is a physical place you must visit in order to transact.

The global reach of e-commerce means that commerce is enabled across national and cultural boundaries as never before, with potentially billions of consumers and millions of businesses worldwide included in the marketspace. Traditional commerce, by contrast, is local or regional involving local merchants or national merchants with local outlets.

Universal standards (one set of technical media standards) also allow for the seamless enablement of global commerce. In contrast, most traditional commerce technologies differ from one nation to the next.

In traditional markets, national sales forces and small retail stores can provide a complex and content-rich message. However, there is generally a trade-off between the richness of the message and the number of consumers who can be reached with the marketing message. In ecommerce the trade-off is no longer necessary. An information rich environment is extended globally.

Unlike any other commercial technology of the twentieth century, except perhaps the telephone, e-commerce technologies are interactive, allowing for two-way communication between the seller and the consumer.

E-commerce technologies reduce information collection, storage, processing, and communication costs, thereby greatly increasing the prevalence, accuracy, and timeliness of information. This information density (information that is more plentiful, cheaper, and of higher quality) sets e-commerce apart from all other traditional methods of conducting transactions.

E-commerce technologies also permit the personalization and customization of marketing messages on a level that was impossible with previous commerce technologies. Marketing messages can be targeted to specific individuals based on their interests and past purchasing behavior, and the product or service can be altered to suit a customer's preferences and prior behavior.

Social technology allows users to easily generate and share content and permits a many-to-many model of mass communications that is different from previous technologies. This supports the creation of new business models and products that support social network services.

Difficulty: Difficult AACSB: Analytical thinking; Information technology; Written and oral communication Learning Objective: 1.3: Identify and describe the unique feature of e-commerce technology and discuss their business significance.

41) How has e-commerce changed the marketing of goods?

Answer: E-commerce has greatly changed the marketing of goods. Before e-commerce was developed, the marketing and sale of goods was a mass-marketing and sales force-driven 10 Copyright © 2022 Pearson Education, Inc.

process. Marketers viewed consumers as passive targets of advertising campaigns. E-commerce has brought many new possibilities for marketing. The Internet and Web can deliver, to an audience of millions, rich marketing messages with text, video, and audio in a way not possible with traditional commerce technologies such as radio, television, or magazines. Merchants can target their marketing messages to specific individuals by adjusting the message to a person's name, interests, and past purchases. In addition, much information about the consumer can be gathered from the website the consumer visits. With the increase in information density, a great deal of information about the consumer's past purchases and behavior can be stored and used by online merchants. The result is a level of personalization and customization unthinkable with existing commerce technologies.

Difficulty: Moderate AACSB: Analytical thinking; Written and oral communication Learning Objective: 1.3: Identify and describe the unique feature of e-commerce technology and discuss their business significance.

42) Which type of e-commerce is distinguished by the type of technology used in the transaction rather than by the nature of the market relationship?

A) consumer-to-consumer (C2C) B) social e-commerce C) mobile e-commerce D) business-to-business (B2B) Answer: C Difficulty: Moderate AACSB: Information technology Learning Objective: 1.4: Describe the major types of e-commerce.

43) Which of the following is a leading platform for social e-commerce?

A) Amazon B) eBay C) Wikipedia D) Facebook Answer: D Difficulty: Easy AACSB: Information technology Learning Objective: 1.4: Describe the major types of e-commerce.

44) Business-to-consumer (B2C) e-commerce in the United States: A) grew at double-digit rates between 2010 and 2020.

B) has less revenue than C2C e-commerce.

C) now constitutes over 50% of the overall U.S. retail market.

D) is growing more slowly as it confronts its own fundamental limitations.

Answer: A Difficulty: Difficult AACSB: Application of knowledge Learning Objective: 1.4: Describe the major types of e-commerce.

45) Which of the following is not an example of an on-demand service company?

A) Instacart 11 Copyright © 2022 Pearson Education, Inc.

B) Airbnb C) DoorDash D) Facebook Answer: D Difficulty: Easy AACSB: Application of knowledge Learning Objective: 1.4: Describe the major types of e-commerce.

46) Which of the following is a platform for B2B e-commerce?

A) Airbnb B) Facebook C) Groupon D) Go2Paper Answer: D Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 1.4: Describe the major types of e-commerce.

47) All of the following are platforms for C2C e-commerce except: A) Walmart.

B) Facebook Marketplace.

C) Craigslist.

D) Etsy.

Answer: A Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 1.4: Describe the major types of e-commerce.

48) All of the following are platforms for social e-commerce except: A) Instagram.

B) Facebook.

C) Y Combinator.

D) Pinterest.

Answer: C Difficulty: Easy AACSB: Application of knowledge Learning Objective: 1.4: Describe the major types of e-commerce.

49) It is estimated that by 2024, B2B e-commerce will generate _____ in revenues.

A) $980 million B) $9.8 billion C) $980 billion D) $9.8 trillion Answer: D Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 1.4: Describe the major types of e-commerce.

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50) M-commerce is the type of e-commerce that generates the most revenue.

Answer: FALSE Difficulty: Easy AACSB: Application of knowledge Learning Objective: 1.4: Describe the major types of e-commerce.

51) List and briefly explain the main types of e-commerce.

Answer: The main types of e-commerce are business-to-consumer (B2C), in which online businesses attempt to reach individual consumers; business-to-business (B2B), in which businesses focus on selling to other businesses; consumer-to-consumer (C2C), which provides a market in which consumers can sell goods to each other; mobile e-commerce (m-commerce), which refers to the use of wireless digital devices to enable online transactions; social ecommerce, which is commerce enabled by social networks and online social relationships; and local e-commerce, which is e-commerce that is focused on engaging the customer based on his or her geographical location.

Difficulty: Moderate AACSB: Application of knowledge; Written and oral communication Learning Objective: 1.4: Describe the major types of e-commerce.

52) Which of the following describes the basic web policy of large firms during the Invention period?

A) Integrate social networks and the mobile platform with website marketing.

B) Emphasize the necessity for the Web to generate profits.

C) Use the Web to sell complex goods and services online.

D) Maintain a basic, static website depicting the firm's brand.

Answer: D Difficulty: Moderate AACSB: Analytical thinking Learning Objective: 1.5: Understand the evolution of e-commerce from its early years to today.

53) All of the following can be considered a precursor to e-commerce except: A) the development of the smartphone.

B) Baxter Healthcare's PC-based remote order entry system.

C) the French Minitel.

D) the development of Electronic Data Interchange standards.

Answer: A Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 1.5: Understand the evolution of e-commerce from its early years to today.

54) ________ was the first truly large-scale digitally enabled transaction system in the B2C arena.

A) Telex B) The Baxter Healthcare system C) The French Minitel D) Electronic Data Interchange (EDI) Answer: C 13 Copyright © 2022 Pearson Education, Inc.

Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 1.5: Understand the evolution of e-commerce from its early years to today.

55) The text identifies which of the following years as the year e-commerce began?

A) 1983 B) 1985 C) 1995 D) 2001 Answer: C Difficulty: Easy AACSB: Application of knowledge Learning Objective: 1.5: Understand the evolution of e-commerce from its early years to today.

56) Which of the following is a characteristic of e-commerce during the Invention period?

A) mobile technology B) earnings and profit emphasis C) disintermediation D) extensive government surveillance Answer: C Difficulty: Difficult AACSB: Application of knowledge Learning Objective: 1.5: Understand the evolution of e-commerce from its early years to today.

57) All of the following are examples of Web 2.0 sites and applications except: A) photo-sharing sites.

B) blogs.

C) wikis.

D) auction sites.

Answer: D Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 1.5: Understand the evolution of e-commerce from its early years to today.

58) Which of the following is not a characteristic of a perfect competitive market?

A) Price, cost, and quality information are equally distributed.

B) A nearly infinite set of suppliers compete against one another.

C) Customers have access to all relevant information worldwide.

D) It is highly regulated.

Answer: D Difficulty: Difficult AACSB: Analytical thinking Learning Objective: 1.5: Understand the evolution of e-commerce from its early years to today.

59) All of the following were visions of e-commerce expressed during the early years of ecommerce except: A) a nearly perfect information marketspace.

B) friction-free commerce.

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C) disintermediation.

D) fast follower advantage.

Answer: D Difficulty: Difficult AACSB: Analytical thinking Learning Objective: 1.5: Understand the evolution of e-commerce from its early years to today.

60) Unfair competitive advantages occur when: A) one competitor has an advantage that others cannot purchase.

B) market middlemen are displaced.

C) information is equally distributed and transaction costs are low.

D) firms are able to gather monopoly profits.

Answer: A Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 1.5: Understand the evolution of e-commerce from its early years to today.

61) The early years of e-commerce were driven by all of the following factors except: A) an emphasis on exploiting traditional distribution channels.

B) a huge infusion of venture capital funds.

C) an emphasis on quickly achieving very high market visibility.

D) visions of profiting from new technology.

Answer: A Difficulty: Difficult AACSB: Analytical thinking Learning Objective: 1.5: Understand the evolution of e-commerce from its early years to today.

62) The early years of e-commerce are considered: A) the most promising time in history for the successful implementation of first mover advantages.

B) an economist's dream come true, where for a brief time, consumers had access to all relevant market information and transaction costs plummeted.

C) a stunning technological success as the Internet and the Web increased from a few thousand to billions of e-commerce transactions per year.

D) a dramatic business success as 85% of dot-coms formed since 1995 became flourishing businesses.

Answer: C Difficulty: Difficult AACSB: Analytical thinking Learning Objective: 1.5: Understand the evolution of e-commerce from its early years to today.

63) Which of the following best describes the early years of e-commerce?

A) They were a technological success but a mixed business success.

B) They were a technological success but a business failure.

C) They were a technological failure but a business success.

D) They were a mixed technological and business success.

Answer: A Difficulty: Difficult 15 Copyright © 2022 Pearson Education, Inc.

AACSB: Analytical thinking Learning Objective: 1.5: Understand the evolution of e-commerce from its early years to today.

64) Which of the following is a characteristic of the Reinvention phase of e-commerce?

A) massive proliferation of dot-com start-ups B) widespread adoption of broadband networks C) rapid growth of search engine advertising D) expansion of e-commerce to include services as well as goods Answer: D Difficulty: Difficult AACSB: Application of knowledge Learning Objective: 1.5: Understand the evolution of e-commerce from its early years to today.

65) Which of the following is a characteristic of the Consolidation phase of e-commerce?

A) predominance of pure online strategies B) emphasis on revenue growth versus profits C) brand extension and strengthening becomes more important than creating new brands D) shift to a technology-driven approach Answer: C Difficulty: Difficult AACSB: Application of knowledge Learning Objective: 1.5: Understand the evolution of e-commerce from its early years to today.

66) Which of the following is not true regarding e-commerce today?

A) Economists' visions of a friction-free market have not been realized.

B) Consumers are less price-sensitive than expected.

C) There remains considerable persistent price dispersion.

D) The market middlemen disappeared.

Answer: D Difficulty: Difficult AACSB: Analytical thinking Learning Objective: 1.5: Understand the evolution of e-commerce from its early years to today.

67) Which of the following statements is not true?

A) Information asymmetries are continually being introduced by merchants and marketers.

B) Intermediaries have not disappeared.

C) Overall transaction costs have dropped dramatically.

D) Brands remain very important in e-commerce.

Answer: C Difficulty: Difficult AACSB: Analytical thinking Learning Objective: 1.5: Understand the evolution of e-commerce from its early years to today.

68) Which of the following is an example of an e-commerce first mover that failed?

A) Etsy B) eToys C) eBay D) E*Trade 16 Copyright © 2022 Pearson Education, Inc.

Answer: B Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 1.5: Understand the evolution of e-commerce from its early years to today.

69) Which of the following refers to the practice of researching a product online before purchasing it at a physical store?

A) zooming B) grazing C) showrooming D) webrooming Answer: D Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 1.5: Understand the evolution of e-commerce from its early years to today.

70) Which of the following refers to the displacement of market middlemen and the creation of a new direct relationship between producers and consumers?

A) network effect B) disintermediation C) friction-free commerce D) first mover advantage Answer: B Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 1.5: Understand the evolution of e-commerce from its early years to today.

71) Which of the following is not an element of friction-free commerce?

A) Information is equally distributed.

B) Transaction costs are high.

C) Prices can be dynamically adjusted to reflect actual demand.

D) Unfair competitive advantages are eliminated.

Answer: B Difficulty: Difficult AACSB: Application of knowledge Learning Objective: 1.5: Understand the evolution of e-commerce from its early years to today.

C)72) The emergence of mobile, social, and local e-commerce occurred during the Consolidation period of e-commerce.

Answer: FALSE Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 1.5: Understand the evolution of e-commerce from its early years to today.

73) The Reinvention period of e-commerce is as much a sociological phenomenon as it is a technological or business phenomenon.

Answer: TRUE Difficulty: Moderate 17 Copyright © 2022 Pearson Education, Inc.

AACSB: Application of knowledge Learning Objective: 1.5: Understand the evolution of e-commerce from its early years to today.

74) Price dispersion has been eliminated in e-commerce.

Answer: FALSE Difficulty: Difficult AACSB: Application of knowledge Learning Objective: 1.5: Understand the evolution of e-commerce from its early years to today.

75) What is a first mover? Why was being a first mover considered to be important during the early years of e-commerce?

Answer: First movers are firms who are first to market in a particular area, and who move quickly to gather market share. First movers hope to establish a large customer base quickly, build brand name recognition early, and inhibit competitors by building in switching costs for their customers through proprietary interface designs and features. The thinking was that once customers became accustomed to using a company's unique web interface and feature set, they could not easily be switched to competitors. In the best case, the entrepreneurial firm would invent proprietary technologies and techniques that almost everyone adopted, creating a network effect, which occurs where all participants receive value from the fact that everyone else uses the same tool or product.

Difficulty: Moderate AACSB: Analytical thinking; Written and oral communication Learning Objective: 1.5: Understand the evolution of e-commerce from its early years to today.

76) Describe the visions and forces during the early days of e-commerce in terms of what the various interest groups hoped for: the computer science and information technology people; the economists; and the entrepreneurs, venture capitalists and marketers. Explain whether what each group envisioned came to fruition and why or why not.

Answer: The computer scientists and information technologists' vision included universal communications and a computing environment that everyone could access with inexpensive computers. Their interest was in creating a vast worldwide information collection from libraries, universities, governments, and scientific institutions that was ungoverned by any nation and free to all. They believed that the Internet, and by extension, the e-commerce that operated within the infrastructure, should be self-governed and self-regulated.

The economists envisioned a near-perfect competitive market where price, cost, and quality information are equally distributed. The marketspace would include a nearly infinite number of suppliers with equal access to hundreds of millions of customers, but where those consumers in turn would have access to all relevant market information—a hypercompetitive market. Market middlemen would disappear, resulting in lowered costs to consumers. This intensely competitive, disintermediated environment with lowered transaction costs would eliminate product brands as well as the possibility of monopoly profits based on brands, geography, or special access factors.

Unfair competitive advantages and the ability to reap returns on capital that far extended a fair market rate of return would be eliminated. Their vision was called friction-free commerce.

The entrepreneurs, venture capitalists, and marketers in turn saw e-commerce as an opportunity to earn great returns on invested capital. They saw the e-commerce marketspace and technologies as a powerful method of increasing their ability to even more precisely segment the 18 Copyright © 2022 Pearson Education, Inc.

market into groups with different price sensitivities. They believed that huge profits could be garnered by firms that quickly achieved high market visibility and that these successful first movers would become the new intermediaries of e-commerce, displacing the traditional retail merchants and content suppliers.

The computer scientists' vision of an ungoverned Internet has not come to fruition as governments have increasingly sought to regulate and control the technology to ensure that positive social benefits result. The economists' vision has also for the most part not materialized for a variety of reasons. Consumers have proven to be less price sensitive than expected and the importance of brand names to consumers' perceptions of quality and service has been extended rather than decreased or eliminated. Entrepreneurs have discovered new methods for differentiating products and services. New information asymmetries are continually being introduced by marketers. Disintermediation has also not occurred as new middlemen emerged.

The visions of the entrepreneurs, venture capitalists, and marketers have also largely not come to fruition as the first movers from the early years of e-commerce only rarely succeeded. The fast follower large traditional firms with the resources needed to develop mature markets are displacing most of the venture capitalist backed entrepreneurs.

Difficulty: Difficult AACSB: Analytical thinking; Written and oral communication Learning Objective: 1.5: Understand the evolution of e-commerce from its early years to today.

77) Above all, e-commerce is a ________ phenomenon.

A) technology driven B) finance-driven C) sociological D) government-driven Answer: A Difficulty: Moderate AACSB: Information technology Learning Objective: 1.6: Describe the major themes underlying the study of e-commerce.

78) Which business application is associated with the technological development of local area networks and client/server computing?

A) transaction automation (e.g., payroll) B) desktop automation (e.g., word processing) C) industrial system automation (e.g., supply chain management) D) workgroup automation (e.g., document sharing) Answer: D Difficulty: Difficult AACSB: Information technology Learning Objective: 1.6: Describe the major themes underlying the study of e-commerce.

79) Which of the following is an important societal issue related to e-commerce?

A) consumer behavior B) value webs C) cloud computing D) intellectual property Answer: D 19 Copyright © 2022 Pearson Education, Inc.

Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 1.6: Describe the major themes underlying the study of e-commerce.

80) E-commerce poses special challenges to methods used in the past to protect intellectual property rights.

Answer: TRUE Difficulty: Easy AACSB: Information technology Learning Objective: .6: Describe the major themes underlying the study of e-commerce.

81) What kind of problems does the global nature of e-commerce pose?

Answer: The global nature of e-commerce poses public policy issues of equity, equal access, content regulation, and taxation. For instance, in the United States, public telephone utilities are required under public utility and public accommodation laws to make basic service available at affordable rates, so everyone can have telephone service. Should these laws be extended to the Internet and the Web? If goods are purchased by a New York State resident from a website in California, shipped from a center in Illinois, and delivered to New York, what state has the right to collect a sales tax? Should some heavy Internet users who consume extraordinary amounts of bandwidth by streaming endless movies be charged extra for service, or should the Internet be neutral with respect to usage? What rights do nation-states and their citizens have with respect to the Internet, the Web, and e-commerce?

Difficulty: Moderate AACSB: Application of knowledge; Written and oral communication Learning Objective: 1.6: Describe the major themes underlying the study of e-commerce.

82) What are the major stages in the development of corporate computing, and how does the Internet and Web fit into this development trajectory?

Answer: The major stages of computer technology are the following Mainframe Computers (1950-1975); Minicomputers (1970-1980); Personal Computers (1980-present): Local Area Networks and Client/Server Computing (1980-present); Enterprise-wide Computing (1990present); and the Internet and Web/Mobile Platform/Cloud Computing era (1995-present). The Internet, while representing a sharp break from prior corporate computing and communications technologies, is nevertheless just the latest development in the evolution of corporate computing and part of the continuing chain of computer-based innovations in business.

Difficulty: Moderate AACSB: Application of knowledge; Written and oral communication Learning Objective: 1.6: Describe the major themes underlying the study of e-commerce.

83) Which of the following statements is not true?

A) No single academic perspective dominates research about e-commerce.

B) Economists take a purely technical approach to e-commerce.

C) There are two primary approaches to e-commerce: behavioral and technical.

D) Management scientists are interested in e-commerce as an opportunity to study how business firms can exploit the Internet to achieve more efficient business operations.

Answer: B Difficulty: Difficult AACSB: Analytical thinking 20 Copyright © 2022 Pearson Education, Inc.

Learning Objective: 1.7: Identify the major academic disciplines contributing to e-commerce.

84) The information systems discipline spans the technical and behavioral approaches to ecommerce.

Answer: TRUE Difficulty: Easy AACSB: Application of knowledge Learning Objective: 1.7: Identify the major academic disciplines contributing to e-commerce.

85) Which academic disciplines have a technical approach to e-commerce? What is each discipline interested in?

Answer: Computer scientists, operations management scientists, and certain technical groups within the information systems discipline all take a technical approach to e-commerce. Computer scientists are interested in e-commerce as an exemplary application of Internet technology. They are concerned with the development of computer hardware, software, and telecommunications systems, as well as standards, encryption, and database design and operation. Operations management scientists are primarily interested in building mathematical models of business processes and optimizing these processes. They are interested in e-commerce as an opportunity to study how business firms can exploit the Internet to achieve more efficient business operations. Technical groups within the information systems specialty focus on data mining, search engine design, and artificial intelligence.

Difficulty: Moderate AACSB: Application of knowledge; Written and oral communication Learning Objective: 1.7: Identify the major academic disciplines contributing to e-commerce.

21 Copyright © 2022 Pearson Education, Inc.

E-commerce 2021: business. technology. society., 16e (Laudon/Traver) Chapter 2 E-commerce Business Models and Concepts 1) ________ and ________ are typically the most easily identifiable aspects of a company's business model.

A) Market strategy; market opportunity B) Value proposition; revenue model C) Competitive advantage; competitive environment D) Revenue model; market opportunity Answer: B Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 2.1: Identify the key components of e-commerce business models.

2) Which of the following uses a subscription revenue model for books?

A) Spotify B) Amazon Kindle Unlimited C) eHarmony D) Pandora Answer: B Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 2.1: Identify the key components of e-commerce business models.

3) Which element of the business model addresses what a firm provides that other firms do not and cannot?

A) competitive environment B) competitive advantage C) market strategy D) value proposition Answer: D Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 2.1: Identify the key components of e-commerce business models.

4) Which element of the business model refers to the presence of substitute products in the market?

A) value proposition B) competitive environment C) competitive advantage D) market opportunity Answer: B Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 2.1: Identify the key components of e-commerce business models.

5) Which of the following are Amazon's primary value propositions?

A) personalization and customization 1 Copyright © 2022 Pearson Education, Inc.

B) selection and convenience C) reduction of price discovery cost D) management of product delivery Answer: B Difficulty: Easy AACSB: Analytical thinking Learning Objective: 2.1: Identify the key components of e-commerce business models.

6) A firm's ________ describes how a firm will produce a superior return on invested capital.

A) value proposition B) revenue model C) market strategy D) competitive advantage Answer: B Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 2.1: Identify the key components of e-commerce business models.

7) Which of the following does not use a subscription revenue model?

A) Apple Music B) eHarmony C) Ancestry D) Twitter Answer: D Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 2.1: Identify the key components of e-commerce business models.

8) Stickiness is an important attribute for which of the following revenue models?

A) advertising revenue model B) subscription revenue model C) transaction fee revenue model D) affiliate revenue model Answer: A Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 2.1: Identify the key components of e-commerce business models.

9) Which of the following companies uses a transaction fee revenue model?

A) Yahoo B) E*Trade C) Twitter D) Birchbox Answer: B Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 2.1: Identify the key components of e-commerce business models.

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10) Which of the following is an example of the affiliate revenue model?

A) Scribd B) eBay C) L.L. Bean D) MyPoints Answer: D Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 2.1: Identify the key components of e-commerce business models.

11) Which of the following involves a company giving away a certain level of product or service without charge, but then charging a fee for premium levels of the product or service?

A) advertising revenue model B) subscription revenue model C) freemium strategy D) premium strategy Answer: C Difficulty: Moderate AACSB: Analytical thinking Learning Objective: 2.1: Identify the key components of e-commerce business models.

12) Which of the following factors is not a significant influence on a company's competitive environment?

A) how many competitors are active B) what the market share of each competitor is C) the availability of supportive organizational structures D) how competitors price their products Answer: C Difficulty: Difficult AACSB: Application of knowledge Learning Objective: 2.1: Identify the key components of e-commerce business models.

13) All of the following can be considered a direct competitor of Priceline except: A) Travelocity.

B) Expedia.

C) Orbitz.

D) ESPN. Answer: D Difficulty: Easy AACSB: Analytical thinking Learning Objective: 2.1: Identify the key components of e-commerce business models.

14) The existence of many competitors in any one market segment may indicate: A) an untapped market niche.

B) the market is saturated.

C) no one firm has differentiated itself within that market.

D) a market that has already been tried without success.

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Answer: B Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 2.1: Identify the key components of e-commerce business models.

15) All of the following can be considered a direct or indirect competitor of Amazon except: A) eBay. B) Target.

C) Walmart.

D) Priceline.

Answer: D Difficulty: Moderate AACSB: Analytical thinking Learning Objective: 2.1: Identify the key components of e-commerce business models.

16) A perfect market is one in which: A) there are no competitive advantages or asymmetries because all firms have equal access to all the factors to production.

B) one firm develops an advantage based on a factor of production that other firms cannot purchase.

C) one participant in the market has more resources than the others.

D) competition is at a minimum, as each niche market within an industry is served by the company with the greatest competitive advantage.

Answer: A Difficulty: Difficult AACSB: Application of knowledge Learning Objective: 2.1: Identify the key components of e-commerce business models.

17) Organizations that typically provide an array of services to startup companies along with a small amount of funding are referred to as: A) angel investors.

B) crowdfunders.

C) incubators.

D) venture capital investors.

Answer: C Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 2.1: Identify the key components of e-commerce business models.

18) A ________ specifically details how you plan to find customers and to sell your product.

A) sales analysis B) business plan C) competitive strategy D) market strategy Answer: D Difficulty: Easy AACSB: Application of knowledge Learning Objective: 2.1: Identify the key components of e-commerce business models.

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19) Which of the following uses a subscription-based sales revenue model?

A) Yahoo B) eBay C) MyPoints D) Dollar Shave Club Answer: D Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 2.1: Identify the key components of e-commerce business models.

20) All of the following may lead to a competitive advantage except: A) less expensive suppliers.

B) better employees.

C) fewer products.

D) superior products.

Answer: C Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 2.1: Identify the key components of e-commerce business models.

21) Which of the following is an unfair competitive advantage?

A) brand name B) access to global markets C) lower product prices D) superior technology Answer: A Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 2.1: Identify the key components of e-commerce business models.

22) Which of the following gives a business model the most credibility with outside investors?

A) the firm's management team B) the firm's value proposition C) the firm's market opportunity D) the firm's market strategy Answer: A Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 2.1: Identify the key components of e-commerce business models.

23) Which of the following statements about Foursquare is not true?

A) Foursquare is one of the Internet’s largest location data tracking firms.

B) Foursquare initially struggled to find profitability.

C) The growth in Foursquare’s revenue has been driven primarily by significant increases in the numbers of users of its Swarm app.

D) Foursquare characterizes itself as a leader on privacy issues.

Answer: C 5 Copyright © 2022 Pearson Education, Inc.

Difficulty: Moderate AACSB: Analytical thinking Learning Objective: 2.1: Identify the key components of e-commerce business models.

24) Which type of investor typically becomes interested in a startup company after it has begun generating revenue?

A) incubators B) angel investors C) crowdfunders D) venture capital investors Answer: D Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 2.1: Identify the key components of e-commerce business models.

25) Which of the following is another name for a revenue model?

A) business model B) business strategy C) financial model D) financial statements Answer: C Difficulty: Easy AACSB: Application of knowledge Learning Objective: 2.1: Identify the key components of e-commerce business models.

26) All of the following can be considered examples of the market creator business model except: A) eBay. B) Priceline.

C) Uber.

D) Twitter.

Answer: D Difficulty: Easy AACSB: Application of knowledge Learning Objective: 2.1: Identify the key components of e-commerce business models.

27) ________ is defined by a company using its competitive advantage to gain in surrounding markets.

A) Market strategy B) Differentiation C) Leverage D) Focus Answer: C Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 2.1: Identify the key components of e-commerce business models.

28) A wealthy individual who invests personal funds in a startup in exchange for an equity share 6 Copyright © 2022 Pearson Education, Inc.

in the business is referred to as a(n): A) incubator.

B) angel investor.

C) venture capital investor.

D) crowdfunder.

Answer: B Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 2.1: Identify the key components of e-commerce business models.

29) Which of the following is not a key element of an elevator pitch?

A) exit strategy B) growth metrics C) legal structure D) market opportunity Answer: C Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 2.1: Identify the key components of e-commerce business models.

30) First movers often fail because: A) their competitive advantage is unfair.

B) they lack complementary resources needed to sustain their advantages.

C) they are operating in a perfect market.

D) they fail to leverage their competitive assets.

Answer: B Difficulty: Moderate AACSB: Analytical thinking Learning Objective: 2.1: Identify the key components of e-commerce business models.

31) Which of the following types of crowdfunding involves people making contributions to others with no expectation of any return?

A) donor-based crowdfunding B) rewards-based crowdfunding C) equity crowdfunding D) regulation crowdfunding Answer: A Difficulty: Easy AACSB: Application of knowledge Learning Objective: 2.1: Identify the key components of e-commerce business models.

32) A value proposition defines how a company's product or service will generate revenue for the firm.

Answer: FALSE Difficulty: Easy AACSB: Application of knowledge Learning Objective: 2.1: Identify the key components of e-commerce business models.

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33) Real markets are imperfect.

Answer: TRUE Difficulty: Easy AACSB: Application of knowledge Learning Objective: 2.1: Identify the key components of e-commerce business models.

34) Information asymmetries enable some firms to have an edge over others.

Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 2.1: Identify the key components of e-commerce business models.

35) Slow followers are sometimes more successful than first movers.

Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 2.1: Identify the key components of e-commerce business models.

36) In the subscription revenue model, a company primarily generates income from the display of ads.

Answer: FALSE Difficulty: Easy AACSB: Application of knowledge Learning Objective: 2.1: Identify the key components of e-commerce business models.

37) GoFundMe is a prominent example of a rewards-based crowdfunding site.

Answer: FALSE Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 2.1: Identify the key components of e-commerce business models.

38) Why is the management team such an important element of a business model?

Answer: A strong management team gives a model instant credibility to outside investors, immediate market-specific knowledge, and experience in implementing business plans. A strong management team may not be able to salvage a weak business model, but the team should be able to change the model and redefine the business as it becomes necessary.

Difficulty: Moderate AACSB: Application of knowledge; Written and oral communication Learning Objective: 2.1: Identify the key components of e-commerce business models.

39) Who are the e-commerce enablers and why are they important?

Answer: E-commerce enablers provide the hardware, operating system software, networks and communications technology, applications software, web design, consulting services, and other tools required for e-commerce. While these firms may not be conducting e-commerce per se (although in many instances, e-commerce in its traditional sense is in fact one of their sales channels), as a group they have perhaps profited the most from the development of e-commerce.

Difficulty: Moderate 8 Copyright © 2022 Pearson Education, Inc.

AACSB: Application of knowledge; Written and oral communication Learning Objective: 2.1: Identify the key components of e-commerce business models.

40) Define elevator pitch and describe its key elements.

Answer: An elevator pitch is a short two-to-three-minute presentation aimed at convincing investors to invest. The key elements of an elevator pitch are an introduction, in which you state your name and position, your company's name and a tagline in which you compare what your company does to a well-known company; background, in which you state the origin of your idea, and the problem you are trying to solve, the industry size/market opportunity, in which you provide brief facts about the size of the market; revenue model/numbers/growth metrics, in which you provide insight into your company's revenue model and results thus far, how fast it is growing, and early adopters, if there are any; funding, in which you state the amount of funds you are seeking and what it will help you achieve; and finally exit strategy, in which you explain how your investors will achieve a return on their investment.

Difficulty: Moderate AACSB: Application of knowledge; Written and oral communication Learning Objective: 2.1: Identify the key components of e-commerce business models.

41) Define organizational development and describe its importance in relation to the implementation of a business plan and strategy.

Answer: Organizational development is a plan that describes how the company will organize the work that needs to be accomplished in the business plan or strategy. Typically, work is divided into functional departments, such as production, shipping, marketing, customer support, and finance. Jobs within these functional areas are defined, and then recruitment begins for specific job titles and responsibilities. Typically, in the beginning, generalists who can perform multiple tasks are hired. As the company grows, recruiting becomes more specialized. For instance, at the outset, a business may have one marketing manager. But after two or three years of steady growth, that one marketing position may be broken down into seven separate jobs done by seven individuals.

All firms — new ones in particular — need an organization to efficiently implement their business plans and strategies. Many e-commerce firms and many traditional firms that attempt an e-commerce strategy have failed because they lacked the organizational structures and supportive cultural values required to support new forms of commerce.

Difficulty: Moderate AACSB: Analytical thinking; Written and oral communication Learning Objective: 2.1: Identify the key components of e-commerce business models.

42) Which of the following is not a community provider?

A) LinkedIn B) Facebook C) Blue Nile D) Pinterest Answer: C Difficulty: Easy AACSB: Application of knowledge Learning Objective: 2.2: Describe the major B2C business models.

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43) Which of the following is not a variation of the e-tailer business model?

A) bricks-and-clicks B) virtual merchant C) market creator D) manufacturer-direct Answer: C Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 2.2: Describe the major B2C business models.

44) Which of the following is an example of a company using the content provider model?

A) Priceline B) Netflix C) Dell D) eBay Answer: B Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 2.2: Describe the major B2C business models.

45) Which of the following is not an example of the bricks-and-clicks e-tailing business model?

A) Walmart B) Target C) Bluefly D) Staples Answer: C Difficulty: Easy AACSB: Application of knowledge Learning Objective: 2.2: Describe the major B2C business models.

46) In general, the key to becoming a successful content provider is to: A) own the content being provided.

B) own the technology by which content is created, presented, and distributed.

C) provide online content for free.

D) provide other services as well as online content.

Answer: A Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 2.2: Describe the major B2C business models.

47) All of the following primarily use an advertising revenue model except: A) Facebook.

B) Yahoo.

C) Google.

D) Walmart.

Answer: D Difficulty: Easy 10 Copyright © 2022 Pearson Education, Inc.

AACSB: Application of knowledge Learning Objective: 2.2: Describe the major B2C business models.

48) Which of the following is not considered a portal?

A) Yahoo B) MSN C) Amazon D) AOL Answer: C Difficulty: Easy AACSB: Application of knowledge Learning Objective: 2.2: Describe the major B2C business models.

49) Portals primarily generate revenue in all of the following ways except: A) charging advertisers for ad placement.

B) collecting transaction fees.

C) sales of goods.

D) charging subscription fees.

Answer: C Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 2.2: Describe the major B2C business models.

50) The basic value proposition of community providers is: A) they offer a fast, convenient one-stop site where users can focus on their most important concerns and interests.

B) they offer consumers valuable, convenient, time-saving, and low-cost alternatives to traditional service providers.

C) they create a digital environment for buyers and sellers to meet, agree on a price, and transact.

D) they increase customers' productivity by helping them get things done faster and more cheaply.

Answer: A Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 2.2: Describe the major B2C business models.

51) eBay uses all of the following business models except: A) B2C market creator.

B) C2C market creator.

C) content provider.

D) e-commerce infrastructure provider.

Answer: C Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 2.2: Describe the major B2C business models.

52) All of the following are business models employed in the online music industry except: A) subscription.

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B) peer-to-peer streaming.

C) download-and-own.

D) cloud streaming.

Answer: B Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 2.2: Describe the major B2C business models.

53) The financial services, travel services, and job placement services industries typically use the ________ business model.

A) community provider B) transaction broker C) market creator D) e-tailer Answer: B Difficulty: Easy AACSB: Application of knowledge Learning Objective: 2.2: Describe the major B2C business models.

54) In the ________ business model, a web-based business builds a digital environment in which buyers and sellers can meet, display products, search for products, and establish prices.

A) market creator B) community provider C) e-tailer D) portal Answer: A Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 2.2: Describe the major B2C business models.

55) On-demand service companies are characterized by the free sharing of resources between the company and consumers.

Answer: FALSE Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 2.2: Describe the major B2C business models.

56) Define and describe the transaction broker business model and discuss the eight components of the business model for this type of B2C firm.

Answer: The transaction broker business model is most commonly found in the financial services, travel services, and job placement services industries. The eight elements of a business model are value proposition, revenue model, market opportunity, competitive environment, competitive advantage, market strategy, organizational development, and management team.

The primary value proposition for a transaction broker is the saving of time and money. These sites also often provide timely information and opinion. They offer the consumer the opportunity to increase their individual productivity by helping them to get things done faster and more cheaply.

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The revenue model for these firms is based upon receiving commissions or transaction fees when a successful business deal is completed. Online stock trading firms receive either a flat fee for each transaction or a fee based on a sliding scale according to the size of the transaction. Job sites charge the employers a listing fee up front, rather than when the position is filled as traditional "head hunter" firms have done.

Market opportunities for transaction brokers in financial services are increasing due to the rising interest in receiving financial planning advice and conducting stock transactions online. Demand is also increasing for job placement help that is national and even global in nature and for purchasing travel services quickly and easily online. However, there is some market resistance due to consumers' fear of loss of privacy and loss of control over their personal financial information.

The competitive environment for financial services has become fierce as new entrants, including the traditional brokerage firms that have now entered the online marketspace, have flooded the market. To compete effectively, online traders must convince consumers that they have superior security and privacy procedures. The number of job placement sites has also multiplied, and the largest sites such as Monster, which have the greatest number of job listings, are the most likely to survive. Consolidation in all transaction broker markets is presently occurring, making the market opportunity and competitive environment for new firms looking to enter the marketspace bleak.

Achieving a competitive advantage is crucial to firms trying to enter these industries. Possible strategies are to lure well-known names in the industry away from their present positions to head a new endeavor, giving the firm instant credibility in the market. Experienced, knowledgeable, and well-known employees may be able to give a new firm a competitive edge.

The market strategies for such firms typically include expensive marketing campaigns to convince consumers to switch from their current provider or to choose their company over other more well-established competitors, also a daunting task in the present economic environment.

New companies may have to start out recruiting a specialized highly skilled staff, with an organizational development plan that is far more advanced than the typical startup.

A strong management team will attract investors and convince investors and consumers alike that a new firm has plenty of market-specific knowledge and the experience necessary to implement the business plan.

Difficulty: Difficult AACSB: Analytical thinking; Written and oral communication Learning Objective: 2.2: Describe the major B2C business models.

57) All of the following are examples of business-to-business (B2B) business models except: A) e-distributors.

B) e-procurement.

C) exchanges.

D) portals.

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Answer: D Difficulty: Easy AACSB: Application of knowledge Learning Objective: 2.3: Describe the major B2B business models.

58) What is the primary revenue model for an e-distributor?

A) sales B) transaction fee C) advertising D) subscription Answer: A Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 2.3: Describe the major B2B business models.

59) Grainger is an example of which of the following business models?

A) B2B service provider B) exchange C) e-distributor D) industry consortia Answer: C Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 2.3: Describe the major B2B business models.

60) Ariba Supplier Network is an example of a(n): A) e-distributor.

B) portal.

C) e-procurement firm.

D) industry consortium.

Answer: C Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 2.3: Describe the major B2B business models.

61) Which of the following may offer its customers value chain management software?

A) e-distributors B) e-procurement companies C) exchanges D) community providers Answer: B Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 2.3: Describe the major B2B business models.

62) Over the past decade, the number of exchanges has: A) greatly increased.

B) diminished sharply.

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C) stayed about the same.

D) increased slowly but steadily.

Answer: B Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 2.3: Describe the major B2B business models.

63) The Seam is an example of a(n): A) private industrial network.

B) exchange.

C) industry consortium.

D) e-distributor.

Answer: C Difficulty: Easy AACSB: Application of knowledge Learning Objective: 2.3: Describe the major B2B business models.

64) A ________ marketplace supplies products and services of interest to a particular industry.

A) perfect B) differentiated C) horizontal D) vertical Answer: D Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 2.3: Describe the major B2B business models.

65) SaaS and PaaS providers can typically provide services at lower costs through scale economies.

Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 2.3: Describe the major B2B business models.

66) What is a B2B exchange, and what benefits do they offer? Given those benefits, why are they currently only a small part of the overall B2B picture?

Answer: An exchange is an independent digital marketplace where hundreds of suppliers meet a smaller number of very large commercial purchasers. Exchanges are owned by independent, usually entrepreneurial startup firms whose business is making a market, and they generate revenue by charging a commission or fee based on the size of the transactions conducted among trading parties. They usually serve a single vertical industry and focus on the exchange of direct inputs to production and short-term contracts or spot purchasing.

For buyers, B2B exchanges make it possible to gather information, check out suppliers, collect prices, and keep up to date on the latest happenings all in one place. Sellers, on the other hand, benefit from expanded access to buyers. The greater the number of sellers and buyers, the lower the sales cost and the higher the chances of making a sale. In theory, exchanges make it significantly less expensive and time-consuming to identify potential suppliers, customers, and 15 Copyright © 2022 Pearson Education, Inc.

partners, and to do business with each other. As a result, they can lower transaction costs—the cost of making a sale or purchase.

Exchanges can also lower product costs and inventory-carrying costs—the cost of keeping a product on hand in a warehouse. However, B2B exchanges have had a difficult time convincing thousands of suppliers to move into singular digital markets where they face powerful price competition, and an equally difficult time convincing businesses to change their purchasing behavior away from trusted long-term trading partners. As a result, the number of exchanges has fallen significantly.

Difficulty: Moderate AACSB: Application of knowledge; Written and oral communication Learning Objective: 2.3: Describe the major B2B business models.

67) A ________ refers to a competitive strategy in which firms attempt to achieve lower business process costs.

A) strategy of cost competition B) scope strategy C) customer intimacy strategy D) focus/market niche strategy Answer: A Difficulty: Moderate AACSB: Analytical thinking Learning Objective: 2.4: Understand the key business concepts and strategies applicable to ecommerce.

68) Which of the following features of e-commerce technology changes industry structure by lowering barriers to entry but greatly expands the market at the same time?

A) global reach B) richness C) interactivity D) personalization Answer: A Difficulty: Moderate AACSB: Information technology Learning Objective: 2.4: Understand the key business concepts and strategies applicable to ecommerce.

69) Which of the following is not a primary activity in a firm value chain?

A) outbound logistics B) finance/accounting C) operations D) after-sales service Answer: B Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 2.4: Understand the key business concepts and strategies applicable to ecommerce.

16 Copyright © 2022 Pearson Education, Inc.

70) A ________ is a networked business ecosystem that coordinates a firm's suppliers, distributors, and delivery firms with its own production needs using an Internet-based supply chain management system.

A) value chain B) value system C) value web D) business strategy Answer: C Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 2.4: Understand the key business concepts and strategies applicable to ecommerce.

71) If you wished to leverage the ubiquitous nature of the Web to differentiate your product, you would: A) enable individual customization of the product by consumers.

B) implement a strategy of commoditization.

C) adopt a strategy of cost competition.

D) develop a scope strategy to compete within a narrower market segment.

Answer: A Difficulty: Difficult AACSB: Analytical thinking Learning Objective: 2.4: Understand the key business concepts and strategies applicable to ecommerce.

72) A strategy designed to compete within a narrow market or product segment is called a ________ strategy.

A) scope B) differentiation C) commoditization D) focus Answer: D Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 2.4: Understand the key business concepts and strategies applicable to ecommerce.

73) ________ technologies are technologies that enable the incremental improvement of products and services.

A) Sustaining B) Differentiating C) Disruptive D) Commodity Answer: A Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 2.4: Understand the key business concepts and strategies applicable to ecommerce.

17 Copyright © 2022 Pearson Education, Inc.

74) Innovative entrepreneurs and their business firms that destroy existing business models are referred to as: A) crowdfunders.

B) venture capitalists.

C) disruptors.

D) angel investors.

Answer: C Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 2.4: Understand the key business concepts and strategies applicable to ecommerce.

75) The term unfit fitness refers to a situation in which employees of a firm have the wrong skills for the current environment.

Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 2.4: Understand the key business concepts and strategies applicable to ecommerce.

76) Scale economies are efficiencies that result from increasing the size of the business.

Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 2.4: Understand the key business concepts and strategies applicable to ecommerce.

77) A company's strong linkages with its customers increase switching costs.

Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 2.4: Understand the key business concepts and strategies applicable to ecommerce.

78) The Internet's universal standards have changed industry structure by increasing barriers to entry and decreasing competition within an industry.

Answer: FALSE Difficulty: Difficult AACSB: Application of knowledge Learning Objective: 2.4: Understand the key business concepts and strategies applicable to ecommerce.

79) Interactivity that enables product customization alters industry structure by decreasing the threat of substitutes.

Answer: TRUE Difficulty: Difficult AACSB: Application of knowledge 18 Copyright © 2022 Pearson Education, Inc.

Learning Objective: 2.4: Understand the key business concepts and strategies applicable to ecommerce.

80) E-commerce has increased price competition in many markets.

Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 2.4: Understand the key business concepts and strategies applicable to ecommerce.

81) Social technologies change industry structure by weakening powerful sales channels and shifts bargaining power to consumers.

Answer: FALSE Difficulty: Difficult AACSB: Information technology Learning Objective: 2.4: Understand the key business concepts and strategies applicable to ecommerce.

82) Define the term industry structure and discuss the ways the Internet and e-commerce have changed the five forces that characterize industry structure.

Answer: The term industry structure refers to the general business environment in an industry and is defined by the nature of the players in the industry and their relative bargaining power. It is characterized by five forces: the rivalry among existing competitors, the threat of substitute products, the barriers to entry into the industry, the bargaining power of the suppliers, and the bargaining power of the buyers.

The competitive consequences of technological developments often change the market share positions among the players. New forms of distribution created by new market entrants can completely change the competitive forces in an industry. The Internet, the Web, and e-commerce have affected the structure of different industries in varying, yet often profound ways. In fact, the explosive emergence of the Internet as a major worldwide distribution channel for goods, services, and even for employment is powerfully changing economies, markets, and industry structures. The universal standards of the Internet have lowered the barrier to entry for many industries, bringing a flood of new entrants. Inter-firm rivalry is one area where e-commerce technology has had an impact on most industries.

The major consequence is that every business must become globally competitive, even if it manufactures or sells only within a local or regional market. The Internet has changed the scope of competition from local and regional to national and global, pitting firms that had previously been in separate geographic markets against one another. Consumers of all types of goods have access to global price information, putting pressure on many producers and suppliers in some industries to decrease their prices. On the other hand, it has also presented new opportunities for firms to differentiate their products or services from their competitors, driving prices and profits for those firms up.

The overall positive or negative effect of e-commerce technologies on firm profitability depends on the industry involved. In some industries, particularly those involved with information 19 Copyright © 2022 Pearson Education, Inc.

distribution such as newspapers, magazines, software distributors, music and publishing companies, e-commerce has completely changed the ways of doing business. New online challengers have intensified competition and increased the availability of substitute products.

In general, the bargaining power of consumers has grown relative to the providers, driving prices down and challenging the overall profitability of these industries. In other industries, particularly manufacturing, e-commerce has not greatly changed relationships with consumers but relationships with suppliers have been impacted by the aggregation of markets such as those created by B2B exchanges. Increasingly, manufacturing firms in entire industries have banded together to aggregate purchases, create industrial digital exchanges or marketplaces, and outsource industrial processes in order to obtain better prices from suppliers.

Difficulty: Difficult AACSB: Analytical thinking; Written and oral communication Learning Objective: 2.4: Understand the key business concepts and strategies applicable to ecommerce.

83) Discuss the implications of each of the unique features of e-commerce technology for the overall business environment.

Answer: The ubiquity of e-commerce creates new marketing channels and expands the size of the overall market. It also creates new efficiencies in industry operations and lowers the costs to firms of sales operations. By reducing the cost of information, the Internet provides each of the key players in the value chain for an industry with new opportunities to maximize their positions by lowering costs and/or raising prices. Manufacturers can develop direct relationships with their customers through their own websites and bypass the costs of distributors and retailers.

Distributors can develop highly efficient inventory management systems to reduce their costs, and retailers can develop efficient customer relations management systems to strengthen their service to customers. Customers can use the Web to search for the best quality, prices, and delivery methods, thus reducing their transaction costs and the prices they pay for goods.

The global reach of e-commerce lowers barriers to entry and expands the market at the same time. This lowers the costs of both industry and firm operations through production and sales efficiencies. When the operational efficiency of an entire industry increases, it helps the industry to compete with alternative industries and lowers prices and adds value to consumers.

The universal standards of e-commerce lower barriers to entry while at the same time intensifying competition within an industry. Universal standards also reduce the costs for communications and computing, enabling firms to engage in broad-scope strategies.

Communications efficiencies can also enable firms to outsource some primary and secondary activities to specialized, more efficient providers without affecting the consumer. The Internet can also be used to precisely coordinate the steps in the value chain for a firm, thus reducing overall costs.

The richness of e-commerce reduces the strength of powerful distribution channels. It also allows firms to reduce their reliance on traditional sales forces and can enhance post-sales support services.

The interactivity of e-commerce reduces the threat of substitutes through the enhanced use of 20 Copyright © 2022 Pearson Education, Inc.

customization. It also reduces industry and firm costs by enabling differentiation strategies. In their totality, the differentiation features of a product constitute the customer value proposition for a firm. The ability of the Web to personalize the shopping experience and to customize a product to the particular demands of each consumer are the most significant ways in which the interactivity of the Web can be used to differentiate products.

The use of Internet technology to personalize and customize a customer's experience or product reduces threats of substitutions, raises barriers to entry, reduces value chain costs by lessening reliance on sales forces, and enables personalized marketing strategies.

The information density on the Web weakens powerful sales channels, thus shifting bargaining power to the consumer, while also lowering the costs of obtaining, processing, and distributing information about suppliers and consumers.

The use of social technologies shifts programming and editorial decisions to consumers; creates substitute entertainment products; and energizes a large group of new suppliers.

E-commerce firms can also leverage the ubiquitous nature, the global reach, the interactivity, and the information density of the Web to differentiate products and services. Firms can make it possible for consumers to purchase a product from home, work, or on the road, anywhere in the world. They can create web-based experiences with unique interactive content and store and process product information, warranties, and helpful hints to differentiate their product and their firm from the competition.

Difficulty: Difficult AACSB: Analytical thinking; Written and oral communication Learning Objective: 2.4: Understand the key business concepts and strategies applicable to ecommerce.

84) Define value chain and explain the difference between a firm value chain, an industry value chain, and a value web.

Answer: A value chain is the set of activities performed that transforms raw inputs into final products and services. A firm value chain is the set of activities a firm engages in to create final products from raw inputs. The key steps and support activities in a firm's value chain are inbound logistics, operations, outbound logistics, sales and marketing, and after sales service. With an industry value chain, the chain broadens to include six generic players: suppliers, manufacturers, transporters, distributors, retailers, and customers. A value web coordinates a firm's suppliers with its own production needs using an Internet-based supply chain management system. It is a networked trans-business system that coordinates the value chains of several firms.

Difficulty: Moderate AACSB: Analytical thinking; Written and oral communication Learning Objective: 2.4: Understand the key business concepts and strategies applicable to ecommerce.

85) Describe the four stages involved in business model disruption.

Answer: In the first disruptive stage, disruptors, often funded by new sources of finance, introduce new products that are less expensive, less capable, and of poorer quality. These early products nevertheless find a niche in a market that incumbents do not serve or are unaware of. In the second stage, disruptors improve their products at a rapid pace, taking advantage of newer 21 Copyright © 2022 Pearson Education, Inc.

technologies at a faster pace than incumbents, expanding their niche market, and eventually attracting a larger customer base from the incumbents' market. In the third stage, the new products and business model become good enough, and even superior to products offered by incumbents. In the fourth stage, incumbent companies lose market share, and either go out of business or are consolidated into other more successful firms that serve a much more limited customer base. Some incumbents survive by finding new customers for their existing product, adopting some of the newer products and business models in separate divisions of their firms, or moving into other often nearby markets.

Difficulty: Moderate AACSB: Analytical thinking; Written and oral communication Learning Objective: 2.4: Understand the key business concepts and strategies applicable to ecommerce.

22 Copyright © 2022 Pearson Education, Inc.

E-commerce 2021: business. technology. society., 16e (Laudon/Traver) Chapter 3 E-commerce Infrastructure: The Internet, Web, and Mobile Platform 1) During which period of time did the Institutionalization phase of Internet development take place?

A) 1950-1960 B) 1961-1974 C) 1975-1995 D) 1995 to the present Answer: C Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 3.1: Discuss the origins of, and the key technology concepts behind, the Internet.

2) Which of the following occurred during the Commercialization phase of Internet development?

A) The fundamental building blocks of the Internet were realized in actual hardware and software.

B) Personal computers were invented.

C) The Domain Name System was introduced.

D) NSF privatized the operation of the Internet's backbone.

Answer: D Difficulty: Difficult AACSB: Application of knowledge Learning Objective: 3.1: Discuss the origins of, and the key technology concepts behind, the Internet.

3) During which phase of the development of the Internet was the Domain Name System (DNS) introduced?

A) Commercialization phase B) Institutional phase C) Innovation phase D) Consolidation phase Answer: B Difficulty: Difficult AACSB: Application of knowledge Learning Objective: 3.1: Discuss the origins of, and the key technology concepts behind, the Internet.

4) Which of the following is not one of the basic technological foundations of the Internet?

A) client/server computing B) FTP C) TCP/IP D) packet switching Answer: B Difficulty: Moderate 1 Copyright © 2022 Pearson Education, Inc.

AACSB: Information technology Learning Objective: 3.1: Discuss the origins of, and the key technology concepts behind, the Internet.

5) The process of slicing digital messages into parcels, sending them along different communication paths as they become available, and reassembling them at the destination point is called: A) routing.

B) hyperlinking.

C) packet switching.

D) transporting.

Answer: C Difficulty: Moderate AACSB: Information technology Learning Objective: 3.1: Discuss the origins of, and the key technology concepts behind, the Internet.

6) Which of the following is the core communications protocol for the Internet?

A) Telnet B) FTP C) TCP/IP D) TLS Answer: C Difficulty: Easy AACSB: Information technology Learning Objective: 3.1: Discuss the origins of, and the key technology concepts behind, the Internet.

7) The Transport Layer of TCP/IP is responsible for which of the following?

A) placing packets on and receiving them from the network medium B) addressing, packaging, and routing messages C) providing communication with the application by acknowledging and sequencing the packets to and from the application D) providing a variety of applications with the ability to access the services of the lower layers Answer: C Difficulty: Difficult AACSB: Information technology Learning Objective: 3.1: Discuss the origins of, and the key technology concepts behind, the Internet.

8) The Internet Layer of TCP/IP is responsible for which of the following?

A) placing packets on and receiving them from the network medium B) addressing, packaging, and routing messages C) providing communication with the application by acknowledging and sequencing the packets to and from the application D) providing a variety of applications with the ability to access the services of the lower layers Answer: B Difficulty: Difficult 2 Copyright © 2022 Pearson Education, Inc.

AACSB: Information technology Learning Objective: 3.1: Discuss the origins of, and the key technology concepts behind, the Internet.

9) An IPv4 address is expressed as a: A) 32-bit number that appears as a series of four separate numbers separated by semicolons.

B) 64-bit number that appears as a series of four separate numbers separated by semicolons.

C) 64-bit number that appears as a series of four separate numbers separated by periods.

D) 32-bit number that appears as a series of four separate numbers separated by periods.

Answer: D Difficulty: Difficult AACSB: Information technology Learning Objective: 3.1: Discuss the origins of, and the key technology concepts behind, the Internet.

10) The ________ allows a natural language expression, such as Google.com to represent a numeric IP address.

A) uniform resource locator system B) Internet protocol addressing schema C) domain name system D) assigned numbers and names (ANN) system Answer: C Difficulty: Moderate AACSB: Information technology Learning Objective: 3.1: Discuss the origins of, and the key technology concepts behind, the Internet.

11) The address used by a browser to identify the location of content on the Web is called: A) a domain name.

B) a Uniform Resource Locator.

C) an IP address.

D) a file path.

Answer: B Difficulty: Moderate AACSB: Information technology Learning Objective: 3.1: Discuss the origins of, and the key technology concepts behind, the Internet.

12) Which of the following is not an advantage of client/server computing over centralized mainframe computing?

A) It is easy to expand capacity by adding servers and clients.

B) Each client added to the network increases the network's overall capacity and transmission speeds.

C) Client/server networks are less vulnerable, in part because the processing load is balanced over many powerful smaller computers rather than concentrated in a single huge computer.

D) There is less risk that a system will completely malfunction because backup or mirror servers can pick up the slack if one server goes down.

Answer: B 3 Copyright © 2022 Pearson Education, Inc.

Difficulty: Moderate AACSB: Information technology Learning Objective: 3.1: Discuss the origins of, and the key technology concepts behind, the Internet.

13) ________ is a model of computing in computer processing, storage, software, and other services which are provided as a shared pool of virtualized resources over the Internet.

A) Client/server computing B) P2P computing C) Mobile computing D) Cloud computing Answer: D Difficulty: Difficult AACSB: Information technology Learning Objective: 3.1: Discuss the origins of, and the key technology concepts behind, the Internet.

14) Which of the following protocols is used to send mail to a server?

A) SMTP B) FTP C) HTTP D) SSL Answer: A Difficulty: Moderate AACSB: Information technology Learning Objective: 3.1: Discuss the origins of, and the key technology concepts behind, the Internet.

15) Where does TLS operate within TCP/IP? A) between the Internet Layer and the Transport Layer B) between the Transport Layer and the Application Layer C) between the Network Interface Layer and the Transport Layer D) between the Internet Layer and the Application Layer Answer: B Difficulty: Difficult AACSB: Information technology Learning Objective: 3.1: Discuss the origins of, and the key technology concepts behind, the Internet.

16) Which of the following statements about cloud computing is not true?

A) A public cloud is typically used by companies with stringent privacy and security requirements.

B) Dropbox is an example of a public cloud.

C) Hybrid clouds offer both public and private cloud options.

D) A private cloud may be hosted internally or externally.

Answer: A Difficulty: Moderate AACSB: Information technology 4 Copyright © 2022 Pearson Education, Inc.

Learning Objective: 3.1: Discuss the origins of, and the key technology concepts behind, the Internet.

17) Which of the following is rarely used today, due to security concerns.

A) Telnet B) SFTP C) TCP D) TLS Answer: A Difficulty: Moderate AACSB: Information technology Learning Objective: 3.1: Discuss the origins of, and the key technology concepts behind, the Internet.

18) ________ is a utility program that allows you to check the connection between your client and a TCP/IP network.

A) Ping B) Telnet C) Tracert D) Finger Answer: A Difficulty: Moderate AACSB: Information technology Learning Objective: 3.1: Discuss the origins of, and the key technology concepts behind, the Internet.

19) Which of the following technologies has enabled the Internet to grow exponentially to support millions of users, without overloading the network architecture?

A) fiber optics B) Wi-Fi C) FTP D) client/server computing Answer: D Difficulty: Moderate AACSB: Information technology Learning Objective: 3.1: Discuss the origins of, and the key technology concepts behind, the Internet.

20) Which of the following are specialized computers that transmit message parcels along available Internet communication paths and on to their destinations?

A) routers B) Web servers C) IP servers D) packet servers Answer: A Difficulty: Moderate AACSB: Information technology Learning Objective: 3.1: Discuss the origins of, and the key technology concepts behind, the 5 Copyright © 2022 Pearson Education, Inc.

Internet.

21) Which of the following is a set of rules for transferring data?

A) protocol B) packet C) router D) IP address Answer: A Difficulty: Moderate AACSB: Information technology Learning Objective: 3.1: Discuss the origins of, and the key technology concepts behind, the Internet.

22) Which of the following is not a basic type of cloud computing service?

A) IaaS B) PaaS C) SaaS D) FiOS Answer: D Difficulty: Moderate AACSB: Information technology Learning Objective: 3.1: Discuss the origins of, and the key technology concepts behind, the Internet.

23) Which of the following are central directories that list all domain names currently in use for specific domains?

A) Web servers B) root servers C) client servers D) DNS servers Answer: B Difficulty: Difficult AACSB: Information technology Learning Objective: 3.1: Discuss the origins of, and the key technology concepts behind, the Internet.

24) Which of the following was the original purpose of the Internet?

A) to provide a network that would allow businesses to connect with consumers B) to link large mainframe computers on different college campuses C) to develop a military communications system that could withstand nuclear war D) to enable government agencies to track civilian communications Answer: B Difficulty: Moderate AACSB: Information technology Learning Objective: 3.1: Discuss the origins of, and the key technology concepts behind, the Internet.

25) Which of the following is a utility program that allows you to track the path of a message 6 Copyright © 2022 Pearson Education, Inc.

sent from a client computer to a remote computer on the Internet?

A) Telnet B) Ping C) IMAP D) Tracert Answer: D Difficulty: Moderate AACSB: Information technology Learning Objective: 3.1: Discuss the origins of, and the key technology concepts behind, the Internet.

26) Which of the following protocols enables the exchange of routing information among different autonomous systems on the Internet?

A) HTTP B) BGP C) FTP D) SMTP Answer: B Difficulty: Moderate AACSB: Information technology Learning Objective: 3.1: Discuss the origins of, and the key technology concepts behind, the Internet.

27) In the United States, about ________ of Internet traffic now occurs over Internet Protocol version 6 (IPv6).

A) 10% B) 15% C) 45% D) 65% Answer: C Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 3.1: Discuss the origins of, and the key technology concepts behind, the Internet.

28) The term latency refers to a delay that can be experienced in packet-switched networks.

Answer: TRUE Difficulty: Easy AACSB: Information technology Learning Objective: 3.1: Discuss the origins of, and the key technology concepts behind, the Internet.

29) Edge computing improves response time and saves bandwidth.

Answer: TRUE Difficulty: Moderate AACSB: Information technology Learning Objective: 3.1: Discuss the origins of, and the key technology concepts behind, the Internet.

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30) A private cloud is operated for the benefit of multiple firms.

Answer: FALSE Difficulty: Easy AACSB: Information technology Learning Objective: 3.1: Discuss the origins of, and the key technology concepts behind, the Internet.

31) Amazon Web Services is an example of a private cloud.

Answer: FALSE Difficulty: Moderate AACSB: Information technology Learning Objective: 3.1: Discuss the origins of, and the key technology concepts behind, the Internet.

32) HTTP/2 is supported by almost all the leading web browsers.

Answer: TRUE Difficulty: Easy AACSB: Information technology Learning Objective: 3.1: Discuss the origins of, and the key technology concepts behind, the Internet.

33) In a hybrid cloud computing model, firms use their own infrastructure for their most essential core activities.

Answer: TRUE Difficulty: Moderate AACSB: Information technology Learning Objective: 3.1: Discuss the origins of, and the key technology concepts behind, the Internet.

34) What are the essential characteristics of cloud computing?

Answer: The U.S. National Institute of Standards and Technology (NIST) defines cloud computing as having the following essential characteristics: on-demand self-service (consumers can obtain computing capabilities such as server time or network storage as needed automatically on their own); ubiquitous network access (cloud resources can be accessed using standard network and Internet devices, including mobile platforms); Location-independent resource pooling (the pooling of computing resources to serve multiple users, with different virtual resources dynamically assigned according to user demand); rapid elasticity (computing resources can be rapidly provisioned, increased, or decreased to meet changing user demand); and measured service (charges for cloud resources are based on the amount of resources actually used).

Difficulty: Moderate AACSB: Analytical thinking; Information technology; Written and oral communication Learning Objective: 3.1: Discuss the origins of, and the key technology concepts behind, the Internet.

35) What are the implications of cloud computing for e-commerce?

8 Copyright © 2022 Pearson Education, Inc.

Answer: Cloud computing has many significant implications for e-commerce. For e-commerce firms, cloud computing radically reduces the cost of building and operating websites because the necessary hardware infrastructure and software can be licensed as a service from cloud service providers at a fraction of the cost of purchasing these services as products. This means firms can adopt "pay-as-you-go" and "pay-as-you-grow" strategies when building out their websites. For instance, according to Amazon, hundreds of thousands of customers use Amazon Web Services.

For individuals, cloud computing means you no longer need a powerful laptop or desktop computer to engage in e-commerce or other activities. Instead, you can use much less-expensive tablet computers or smartphones that cost far less. For corporations, cloud computing means that a significant part of hardware and software costs (infrastructure costs) can be reduced because firms can obtain these services online for a fraction of the cost of owning, and they don't have to hire an IT staff to support the infrastructure.

Difficulty: Moderate AACSB: Analytical thinking; Information technology; Written and oral communication Learning Objective: 3.1: Discuss the origins of, and the key technology concepts behind, the Internet.

36) List and briefly describe each of the three important concepts behind the Federal Networking Council's definition of the term Internet.

Answer: The three important concepts in the Federal Networking Council's definition of the Internet are packet switching, the TCP/IP communications protocol, and client/server computing.

Packet switching is a method of slicing digital messages up into parcels that are sent along different communications paths as they become available. The packets travel from router computer to router computer and are then reassembled at their destination point. These routers are special purpose computers that interconnect the thousands of computer networks that make up the Internet. Since this method does not require a dedicated circuit, it makes use of any available spare capacity on any one of several hundred circuits enabling nearly full use of available communication lines and capacity.

Transmission Control Protocol/Internet Protocol (TCP/IP) is the universally agreed upon method for breaking the messages up, routing them to their destination, and reassembling them. The TCP protocol, or set of rules, specifies how messages should be formatted, ordered, compressed, and error-checked. It also stipulates which method the network will use to indicate that they have stopped sending and/or receiving messages and sometimes specifies the transmission speed as well. The IP protocol provides the addressing scheme for the Internet. Each computer connected to the Internet must be assigned an Internet Protocol address so that it can send and receive TCP packets. At present, each time home users sign on to the Internet they are temporarily assigned an IP address by their ISP. Client/server computing involves very powerful personal computers connected in a network along with one or more server computers. These client computers can display rich graphics, store large files, and process graphic and sound files. The server computers are specifically allocated to common functions that all client computers need such as storing files and supplying software applications, and utility programs.

Difficulty: Difficult AACSB: Analytical thinking; Information technology; Written and oral communication Learning Objective: 3.1: Discuss the origins of, and the key technology concepts behind, the 9 Copyright © 2022 Pearson Education, Inc.

Internet.

37) Which of the following organizations focuses on the evolution of the Internet?

A) IRTF B) ISOC C) W3C D) ICANN Answer: A Difficulty: Difficult AACSB: Application of knowledge Learning Objective: 3.2: Explain the current structure of the Internet.

38) TCP/IP operates in which layer of Internet architecture?

A) Network Technology Substrate layer B) Middleware Services layer C) Transport Services and Representation Standards layer D) Applications layer Answer: C Difficulty: Moderate AACSB: Information technology Learning Objective: 3.2: Explain the current structure of the Internet.

39) The Web runs in which layer of Internet architecture?

A) Network Technology Substrate layer B) Middleware Services layer C) Transport Services and Representation Standards layer D) Applications layer Answer: D Difficulty: Moderate AACSB: Information technology Learning Objective: 3.2: Explain the current structure of the Internet.

40) The layer of Internet architecture that ties the applications to the communications network and includes security and authentication services is called the: A) Network Technology Substrate layer.

B) Middleware Services layer.

C) Transport Services and Representation Standards layer.

D) Applications layer.

Answer: B Difficulty: Moderate AACSB: Information technology Learning Objective: 3.2: Explain the current structure of the Internet.

41) The backbone of the Internet is formed by: A) Internet Exchange Points (IXPs).

B) Tier 1 ISPs. C) Network Access Points (NAPs).

D) Metropolitan Area Exchanges (MAEs).

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Answer: B Difficulty: Moderate AACSB: Information technology Learning Objective: 3.2: Explain the current structure of the Internet.

42) When talking about the physical elements of the Internet, the term redundancy refers to: A) transmitting multiple copies of a single packet to safeguard against data loss.

B) the use of tiered high-speed switching computers to connect the backbone to regional and local networks.

C) delays in messages caused by the uneven flow of information through the network.

D) multiple duplicate devices and paths in a network built so that data can be rerouted if a breakdown occurs.

Answer: D Difficulty: Moderate AACSB: Information technology Learning Objective: 3.2: Explain the current structure of the Internet.

43) The ________ is a consortium of corporations, government agencies, and nonprofit organizations that monitors Internet policies and practices.

A) Internet Engineering Steering Group (IESG) B) World Wide Web Consortium (W3C) C) Internet Engineering Task Force (IETF) D) Internet Society (ISOC) Answer: D Difficulty: Difficult AACSB: Application of knowledge Learning Objective: 3.2: Explain the current structure of the Internet.

44) The ________ helps define the overall structure of the Internet.

A) IAB B) IESG C) W3C D) ITU Answer: A Difficulty: Difficult AACSB: Application of knowledge Learning Objective: 3.2: Explain the current structure of the Internet.

45) Which of the following is not true about the mobile platform?

A) Most smartphones use Intel chips.

B) Smartphones and tablet computers are the primary means to access the Internet, both in the United States and worldwide.

C) Most smartphones use either Google's Android or Apple's iOS operating systems.

D) Smartphones use flash memory chips.

Answer: A Difficulty: Difficult AACSB: Application of knowledge Learning Objective: 3.2: Explain the current structure of the Internet.

11 Copyright © 2022 Pearson Education, Inc.

46) In 2016, the United States gave up control of which of the following organizations involved with Internet governance?

A) ICANN B) IGF C) NTIA D) IANA Answer: D Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 3.2: Explain the current structure of the Internet.

47) Which of the following is not a concern about IoT? A) the falling cost of sensors B) interoperability C) security D) privacy Answer: A Difficulty: Easy AACSB: Information technology Learning Objective: 3.2: Explain the current structure of the Internet.

48) Which of the following is Google hoping to use to provide Internet access to remote parts of the world?

A) unused, low-powered television channels B) high-altitude balloons C) WLANs D) EDI Answer: B Difficulty: Moderate AACSB: Information technology Learning Objective: 3.2: Explain the current structure of the Internet.

49) Which of the following statements about fiber-optic cable is not true?

A) It transmits more data at faster speeds than coaxial or twisted pair cable.

B) It is thinner and lighter than coaxial or twisted pair cable.

C) Most U.S. homes have fiber connections.

D) Long-haul fiber optic networks are typically owned by firms referred to as Tier I ISPs. Answer: C Difficulty: Moderate AACSB: Information technology Learning Objective: 3.2: Explain the current structure of the Internet.

50) The major technologies used with wireless local area networks are: A) Wi-Fi and Bluetooth.

B) Wi-Fi and WiMax. C) Bluetooth and 3G. D) WiMax and 3G. 12 Copyright © 2022 Pearson Education, Inc.

Answer: A Difficulty: Moderate AACSB: Information technology Learning Objective: 3.2: Explain the current structure of the Internet.

51) Which of the following standards provide for high-speed short-range Wi-Fi? A) WiGig B) WiMax C) Bluetooth D) Wi-Fi 6 Answer: A Difficulty: Difficult AACSB: Information technology Learning Objective: 3.2: Explain the current structure of the Internet.

52) All of the following are involved in the effort to create standards for IoT except: A) AllSeen Alliance.

B) Industrial Internet Consortium.

C) Open Connectivity Foundation.

D) W3C. Answer: D Difficulty: Moderate AACSB: Information technology Learning Objective: 3.2: Explain the current structure of the Internet.

53) Which of the following IEEE standards has been labeled by the Wi-Fi Alliance as Wi-Fi 6?

A) IEEE 802.11ac B) IEEE 802.11ad C) IEEE 802.11ax D) IEEE 802.11ay Answer: C Difficulty: Difficult AACSB: Information technology Learning Objective: 3.2: Explain the current structure of the Internet.

54) Microsoft's pilot program to provide broadband Internet access to rural areas uses which of the following technologies?

A) satellites B) drones C) unused, low-powered television channels D) high-altitude balloons Answer: C Difficulty: Moderate AACSB: Information technology Learning Objective: 3.2: Explain the current structure of the Internet.

55) T1 and T3 refer to international telephone standards for digital communication.

Answer: TRUE 13 Copyright © 2022 Pearson Education, Inc.

Difficulty: Easy AACSB: Information technology Learning Objective: 3.2: Explain the current structure of the Internet.

56) Bluetooth is a high-speed, fixed broadband wireless local area network for commercial and residential use.

Answer: FALSE Difficulty: Moderate AACSB: Information technology Learning Objective: 3.2: Explain the current structure of the Internet.

57) Tier 1 ISPs provide Internet access to consumers and businesses.

Answer: FALSE Difficulty: Easy AACSB: Information technology Learning Objective: 3.2: Explain the current structure of the Internet.

58) The United States has the world’s highest average Internet connection speed.

Answer: FALSE Difficulty: Moderate AACSB: Information technology Learning Objective: 3.2: Explain the current structure of the Internet.

59) WLAN-based Internet access derives from the same technological foundations as telephonebased wireless Internet access.

Answer: FALSE Difficulty: Moderate AACSB: Information technology Learning Objective: 3.2: Explain the current structure of the Internet.

60) Identify and describe the two types of ISP service, along with the Internet connection methods, in use today.

Answer: There are two types of ISP service: narrowband and broadband. Narrowband service is the traditional telephone modem connection now operating at 56.6 Kbps (although the actual throughput hovers around 30 Kbps due to line noise that causes extensive resending of packets).

This used to be the most common form of connection worldwide but has been replaced by broadband connections in most of the United States, Europe, and Asia.

Broadband service is based on DSL, cable modem, telephone (T1 and T3 lines), and satellite technologies. Broadband — in the context of Internet service — refers to any communication technology that permits clients to play streaming audio and video files at acceptable speeds — generally anything above .5 Mbps. Digital Subscriber Line (DSL) service is a telephone technology for delivering high-speed access to the Internet through ordinary telephone lines found in a home or business. Cable Internet refers to a cable television technology that provides digital access to the Internet using the same analog or digital video cable providing television signals to a home. T1 and T3 are international telephone standards for digital communication.

These are leased, dedicated, guaranteed lines suitable for corporations, government agencies, and businesses such as ISPs requiring high-speed guaranteed service levels. Additionally, some 14 Copyright © 2022 Pearson Education, Inc.

satellite companies offer high-speed broadband Internet access primarily to homes and offices located in rural areas where DSL or cable Internet access is not available. Access speeds and monthly costs are comparable to DSL and cable.

Difficulty: Moderate AACSB: Analytical thinking; Information technology; Written and oral communication Learning Objective: 3.2: Explain the current structure of the Internet.

61) Describe and discuss 5G. Answer: 5G is a cellular standard for high-bandwidth mobile broadband. 5G provides for speeds reaching 10 Gbps or more, support for up to 100,000 connections per square kilometer (known as massive machine-to-machine (M2M) connections), and ultra-low latency (less than 10 milliseconds) communications. Full deployment of 5G is expected to take several years, utilizing a new part of the wireless spectrum (shorter millimeter waves in the 30 GHz to 300 GHz range), and including the development of a transmission infrastructure involving tens of thousands of small cell and distributed antenna systems installed on utility poles, as well as additional investments in fiber optic networks. Telecommunications companies are expected to invest up to $5 billion. The first pre-official 5G devices were launched in 2018, with more being in 2019.

Prior to the Covid-19 pandemic, Verizon, AT&T, and T-Mobile expected to begin rolling out 5G networks that feature slightly faster speeds and reduced latency compared to their 4G networks in 2020 and cellphone manufacturers expected to introduce a number of models that would be 5G-compatible, such as Samsung’s Galaxy S20 line of phones. However, it is likely that some of these plans may be delayed due to the pandemic.

Difficulty: Moderate AACSB: Analytical thinking; Information technology; Written and oral communication Learning Objective: 3.2: Explain the current structure of the Internet.

62) What are some of the issues related to the Internet of Things (IoT)?

Answer: Interoperability remains a major concern with IoT. As with many technologies in the early stages of development, many organizations are fighting to create the standards that participants in the market will follow. The AllSeen Alliance, formed by Qualcomm with 50 other companies, including Microsoft and Cisco, was one group that hoped to create an open source standard. Membership in the Alliance soared after its initial founding and by 2016, it had over 200 members. Another group, the Open Interconnect Consortium, formed by Intel, Broadcom, Dell, and others apparently not happy with the AllSeen effort, also reached over 200 members. In late 2016, these two groups put their differences aside and merged to create the Open Connectivity Foundation. A different group, the Industrial Internet Consortium, was formed by AT&T, Cisco, GE, IBM, and Intel to focus on engineering standards for industrial assets. As with many other types of Internet-related technology, Google with its Android operating system and Apple with AirPlay wireless streaming protocol may be trying to create their own standards.

Other concerns include security and privacy. Security experts believe that IoT devices could potentially be a security disaster, with the potential for malware being spread through a connected network, and difficulty in issuing patches to devices, leaving them vulnerable. Data from standalone smart devices can reveal much personal detail about a consumer's life, and if those devices are all ultimately interconnected, there will be little that is truly private.

Difficulty: Moderate AACSB: Analytical thinking; Information technology; Written and oral communication Learning Objective: 3.2: Explain the current structure of the Internet.

15 Copyright © 2022 Pearson Education, Inc.

63) The first web browser to make it possible to view documents on the Web with colored background, images, and animations was: A) Netscape Navigator.

B) Mosaic.

C) Mozilla.

D) Internet Explorer.

Answer: B Difficulty: Moderate AACSB: Information technology Learning Objective: 3.3: Understand how the Web works.

64) In the address http://www.company.com/clients.html, which of the following is the toplevel domain?

A) .com B) company.com C) www D) http Answer: A Difficulty: Moderate AACSB: Information technology Learning Objective: 3.3: Understand how the Web works.

65) You could expect to find all of the following services in a web server software package except: A) security services.

B) FTP. C) search engine.

D) an RSS aggregator.

Answer: D Difficulty: Moderate AACSB: Information technology Learning Objective: 3.3: Understand how the Web works.

66) Which of the following was the most popular mobile web browser as of June 2020?

A) Internet Explorer B) Safari C) Chrome D) Firefox Answer: C Difficulty: Moderate AACSB: Information technology Learning Objective: 3.3: Understand how the Web works.

67) The concept behind document formatting had its roots in which of the following?

A) XML B) SGML C) HTML 16 Copyright © 2022 Pearson Education, Inc.

D) GML Answer: D Difficulty: Moderate AACSB: Information technology Learning Objective: 3.3: Understand how the Web works.

68) All of the following statements about HTML5 are true except: A) HTML5 has become the de facto web page development standard.

B) HTML5 is an important tool for both response web design and adaptive web delivery.

C) HTML5 apps work just like web pages.

D) HTML5 stores page content into mobile device hardware rather loading into the browser from a web server.

Answer: D Difficulty: Moderate AACSB: Information technology Learning Objective: 3.3: Understand how the Web works.

69) HTML defines the structure of a web page.

Answer: TRUE Difficulty: Moderate AACSB: Information technology Learning Objective: 3.3: Understand how the Web works.

70) The major hubs in the United States where the Internet backbone intersects with regional and local networks are now commonly referred to as Internet Exchange Points (IXPs).

Answer: TRUE Difficulty: Moderate AACSB: Information technology Learning Objective: 3.3: Understand how the Web works.

71) Briefly describe the development of the Web including the key players.

Answer: The Web was invented between 1989 and 1991 when Dr. Tim Berners-Lee and his associates at CERN Laboratories built on the ideas of several earlier researchers and developed the initial versions of HTML, HTTP, a web server, and a web browser, the four essential components of the Web. Information being shared on the Web remained text-based until Marc Andreessen and others at NCSA (National Center for Supercomputing Applications) created a web browser with a graphical user interface. This made it possible to view documents on the Web that included colored backgrounds, images, and primitive animations. In 1994 Andreessen and Jim Clark founded Netscape, which created the first commercial browser. In 1995 Microsoft released the first version of Internet Explorer and the Web began to take off.

Difficulty: Moderate AACSB: Analytical thinking; Information technology; Written and oral communication Learning Objective: 3.3: Understand how the Web works.

72) Which of the following was the first to launch an intelligent digital assistant?

A) Facebook B) Apple C) Amazon 17 Copyright © 2022 Pearson Education, Inc.

D) Google Answer: B Difficulty: Moderate AACSB: Information technology Learning Objective: 3.4: Describe how Internet and web features and services support ecommerce.

73) Which of the following enables Internet users to communicate with each other, although not in real time?

A) mobile messaging B) online forum C) SMS messaging D) VoIP Answer: B Difficulty: Easy AACSB: Information technology Learning Objective: 3.4: Describe how Internet and web features and services support ecommerce.

74) Which of the following is not a mobile messaging application?

A) Kik B) WhatsApp C) Viber D) Feedly Answer: D Difficulty: Moderate AACSB: Information technology Learning Objective: 3.4: Describe how Internet and web features and services support ecommerce.

75) A(n) ________ allows users to easily add and edit content on a web page.

A) wiki B) podcast C) blog D) RSS feed Answer: A Difficulty: Moderate AACSB: Information technology Learning Objective: 3.4: Describe how Internet and web features and services support ecommerce.

76) The protocol that enables the transmission of voice and other forms of audio communication over the Internet is called: A) VoIP. B) IPTP. C) VTP. D) IP. Answer: A 18 Copyright © 2022 Pearson Education, Inc.

Difficulty: Moderate AACSB: Information technology Learning Objective: 3.4: Describe how Internet and web features and services support ecommerce.

77) Snapchat’s Lenses feature is an example of which of the following?

A) artificial digital assistant B) virtual reality C) augmented reality D) mixed reality Answer: C Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 3.4: Describe how Internet and web features and services support ecommerce.

78) About 75% of U.S. smart speaker users make voice-based purchases using those devices.

Answer: FALSE Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 3.4: Describe how Internet and web features and services support ecommerce.

79) Why is VoIP considered to be a disruptive technology?

Answer: In the past, voice and fax were the exclusive provenance of the regulated telephone networks. With the convergence of the Internet and telephony, however, this dominance is already starting to change, with local and long-distance telephone providers and cable companies becoming ISPs, and ISPs getting into the phone market. In the United States, almost 60% of all wired phones are now using VoIP, and this number continues to expand as cable systems provide telephone service as part of their “triple play”: voice, Internet, and TV as a single package. This number is dwarfed, however, by the number of mobile VoIP subscribers, which has grown explosively over the last several years, fueled by the rampant growth of mobile messaging apps that now also provide free VoIP services, such as Skype, Facebook Messenger, WhatsApp (also owned by Facebook), Viber (owned by Japanese e-commerce giant Rakuten), WeChat, Line, KakaoTalk, and others. According to Microsoft, in 2020, more than 500 million people are using VoIP services such as Skype. Difficulty: Moderate AACSB: Analytical thinking; Information technology; Written and oral communication Learning Objective: 3.4: Describe how Internet and web features and services support ecommerce.

80) Explain how the Internet and the Web make e-commerce possible, and briefly discuss how email, messaging applications, search engines, and streaming media support e-commerce.

Answer: The Internet and the Web have made e-commerce possible because they have brought about an extraordinary expansion of digital services to millions of amateur computer users. The Web makes nearly all elements of rich human expression including color, text, images, photos, animations, sound, and video available, creating a unique environment in which to establish a commercial marketplace. Many of the Web's services and features support e-commerce, including communication tools such as e-mail and messaging applications, search engines and 19 Copyright © 2022 Pearson Education, Inc.

streaming media.

E-mail, for example, can be used as a very effective marketing tool. E-commerce sites can buy email lists from various sources and collate them with lists of their current customers to create a targeted advertising message that can be quickly and economically delivered and will produce a creditable response.

Messaging applications such as mobile messaging apps are increasingly being used by companies to market their brands.

Search engines have also become a crucial tool on e-commerce sites, providing a method for customers to quickly locate the product category or a specific product they are looking for.

Streaming media enables online video, music, video, and other large-bandwidth files to be sent to users in a variety of ways that enable the user to play back the files. Online advertisers increasingly use video to attract viewers. Streaming audio and video segments used in online ads and news stories are perhaps the most frequently used streaming services.

Difficulty: Difficult AACSB: Analytical thinking; Information technology; Written and oral communication Learning Objective: 3.4: Describe how Internet and web features and services support ecommerce.

81) Which of the following statements about mobile apps is not true?

A) Mobile apps have usurped television as the most popular entertainment medium.

B) iOS apps are cross-platform, open-source applications.

C) In 2019, over 200 billion apps were downloaded from the Apple App Store.

D) Almost all the top 100 brands have a presence in at least one of the major app stores.

Answer: B Difficulty: Moderate AACSB: Information technology Learning Objective: 3.5: Understanding the impact of mobile applications.

82) Which of the following is a programming language introduced by Apple specifically for developing iOS applications?

A) Objective-C B) C C) C++ D) Swift Answer: D Difficulty: Moderate AACSB: Information technology Learning Objective: 3.5: Understanding the impact of mobile applications.

83) Applications for Android operating system-based smartphones are typically written in which of the following?

A) Swift B) Java C) ActiveX 20 Copyright © 2022 Pearson Education, Inc.

D) ColdFusion Answer: B Difficulty: Moderate AACSB: Information technology Learning Objective: 3.5: Understanding the impact of mobile applications.

84) The only way apps can be purchased is via either the Apple App Store or from Google Play.

Answer: FALSE Difficulty: Moderate AACSB: Information technology Learning Objective: 3.5: Understanding the impact of mobile applications.

85) Discuss the implications of the app ecosystem for e-commerce.

Answer: The implications of the app ecosystem for e-commerce are significant. The smartphone and tablet computer become not only a general-purpose computer, but also an always-present shopping tool, as well as an entirely new marketing and advertising platform for vendors. Early e-commerce applications using desktops and laptops were celebrated as allowing people to shop at home in their pajamas. Smartphones and tablets extend this range to far beyond the home.

People can now shop anywhere, everywhere, and all the time, in between talking, texting, watching video, and listening to music. Almost all of the top 100 brands have a presence in at least one of the major app stores, and more than 90% have an app in the Apple App Store. Mcommerce in the form of purchases of retail and travel products and services via a mobile device is expected to generate almost $360 billion in 2020 in the United States.

Difficulty: Moderate AACSB: Analytical thinking; Information technology; Written and oral communication Learning Objective: 33.5: Understanding the impact of mobile applications.

21 Copyright © 2022 Pearson Education, Inc.

E-commerce 2021: business. technology. society., 16e (Laudon/Traver) Chapter 4 Building an E-commerce Presence: Websites, Mobile Sites, and Apps 1) Which of the following is a simple but powerful method for describing a firm’s strengths and weaknesses?

A) benchmarking B) SLDC C) SWOT analysis D) DevOps Answer: C Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 4.1: Understand the questions you must ask and answer, and the steps you should take, in developing an e-commerce presence.

2) The cost of hardware, software, and telecommunications services needed to build a website have ________ over the last decade.

A) increased dramatically B) increased moderately C) decreased dramatically D) decreased slightly Answer: C Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 4.1: Understand the questions you must ask and answer, and the steps you should take, in developing an e-commerce presence.

3) Which of the following types of e-commerce presence is best suited for creating an ongoing conversation with one's customers?

A) website B) e-mail C) social media D) offline media Answer: C Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 4.1: Understand the questions you must ask and answer, and the steps you should take, in developing an e-commerce presence.

4) In developing an e-commerce presence, what questions must be asked and answered about the firm's target audience?

Answer: Without a clear understanding of a firm's target audience, it is difficult to develop a successful e-commerce presence. There are two primary questions: who is the target audience and where can they best be reached? A target audience can be described in several ways: demographics, behavior patterns (lifestyle), current consumption patterns (online vs. offline purchasing), digital usage patterns, content creation preferences (blogs, social networks, sites like Pinterest), and buyer personas (profiles of your customer). Understanding the demographics 1 Copyright © 2022 Pearson Education, Inc.

of the firm's target audience is usually the first step. Demographic information includes age, income, gender, and location.

Difficulty: Moderate AACSB: Application of knowledge; Written and oral communication Learning Objective: 4.1: Understand the questions you must ask and answer, and the steps you should take, in developing an e-commerce presence.

5) What are the phases, activities, and milestones for developing an e-commerce presence for a typical start-up website over a one-year period?

Answer: A one-year e-commerce presence timeline might include the following phases, activities, and milestones. Phase 1/Planning, in which an e-commerce presence would be envisaged and personnel developed, with a milestone of creating a mission statement; Phase 2/Website development, in which content would be acquired, a site design developed, and hosting arranged for the site, with a milestone of creating a website plan; Phase 3/Web implementation, in which keywords and metatags would be developed, search engine optimization strategies deployed, and potential sponsors identified, with a creation of a functional website as the milestone; Phase 4/Social media plan, in which appropriate social platforms and content for products and services would be identified, with the creation of a social media plan as the milestone; Phase 5/Social media implementation, in which a Facebook, Twitter, Pinterest and other social media presence would be developed, with a functioning social media presence as the milestone; and Phase 6/Mobile plan, in which a mobile plan would be developed with options for porting the website to the mobile platform considered, and with a mobile media plan as the relevant milestone. Phase 6/Mobile plan might also be the first phase for a firm that wanted to employ mobile first design. It is important to note that it is possible to launch an e-commerce presence in a much shorter timeframe, by being pragmatic and launching with a more limited offering.

Difficulty: Moderate AACSB: Application of knowledge; Written and oral communication Learning Objective: 4.1: Understand the questions you must ask and answer, and the steps you should take, in developing an e-commerce presence.

6) Your e-commerce design company has received an RFP to help create an e-commerce presence for Tucci's, a renowned gourmet and specialty butcher that now wishes to sell goods over the Internet. Describe the elements you will include in your proposal to Tucci's.

Answer: Student answers will vary, but should include the following: Elements that will be in the proposal include the (1) business goals, or vision, or mission statement, (2) identification of the target audience, (3) description of the marketspace, (4) a strategic analysis or SWOT analysis, (5) the content to be included, (6) a development timeline, and (7) a budget. Other recommendations that the student should mention include using social, local, or mobile marketing.

Difficulty: Moderate AACSB: Analytical thinking; Information technology; Written and oral communication Learning Objective: 4.1: Understand the questions you must ask and answer, and the steps you should take, in developing an e-commerce presence.

7) What are the two most important management challenges in building a successful e-commerce presence?

A) developing a clear understanding of business objectives and knowing how to choose the right 2 Copyright © 2022 Pearson Education, Inc.

technology to achieve those objectives B) having an accurate understanding of your business environment and an achievable business plan C) building a team with the right skill sets and closely managing the development process D) identifying the key components of your business plan and selecting the right software, hardware, and infrastructure for your site Answer: A Difficulty: Difficult AACSB: Application of knowledge Learning Objective: 4.2: Explain the process that should be followed in building an e-commerce presence.

8) In order from beginning to end, the major steps in the SDLC are: A) systems analysis/planning; systems design; building the system; testing; and implementation.

B) systems design; testing; building the system; and implementation.

C) systems analysis/planning; systems design; building the system; implementation; and testing.

D) systems analysis/planning; implementation; building the system; and testing.

Answer: A Difficulty: Difficult AACSB: Application of knowledge Learning Objective: 4.2: Explain the process that should be followed in building an e-commerce presence.

9) ________ are the types of information systems capabilities needed to meet business objectives.

A) Information requirements B) System functionalities C) System design specifications D) Physical design specifications Answer: B Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 4.2: Explain the process that should be followed in building an e-commerce presence.

10) Which of the following basic system functionalities is used to display goods on a website?

A) product database B) digital catalog C) shopping cart system D) customer database system Answer: B Difficulty: Moderate AACSB: Information technology Learning Objective: 4.2: Explain the process that should be followed in building an e-commerce presence.

11) Which system functionality must your website have to be able to personalize or customize a product for a client?

3 Copyright © 2022 Pearson Education, Inc.

A) an ad server B) a site tracking and reporting system C) an inventory management system D) customer on-site tracking Answer: D Difficulty: Difficult AACSB: Information technology Learning Objective: 4.2: Explain the process that should be followed in building an e-commerce presence.

12) Which of the following are the two main components of a systems design?

A) logical design and physical design B) behavioral design and technological design C) business objectives and technology requirements D) front-end systems and back-end systems Answer: A Difficulty: Moderate AACSB: Information technology Learning Objective: 4.2: Explain the process that should be followed in building an e-commerce presence.

13) Which of the following helps you engage your customers in a conversation?

A) shopping cart B) product database C) on-site blog D) site tracking and reporting system Answer: C Difficulty: Moderate AACSB: Information technology Learning Objective: 4.2: Explain the process that should be followed in building an e-commerce presence.

14) Which of the following is not one of the basic business objectives for an e-commerce site?

A) display goods B) execute a transaction C) provide production and supplier links D) optimize system architecture Answer: D Difficulty: Moderate AACSB: Information technology Learning Objective: 4.2: Explain the process that should be followed in building an e-commerce presence.

15) All of the following are basic information requirements for a product database except: A) product descriptions.

B) stock numbers.

C) customer ID numbers.

D) inventory levels.

4 Copyright © 2022 Pearson Education, Inc.

Answer: C Difficulty: Moderate AACSB: Information technology Learning Objective: 4.2: Explain the process that should be followed in building an e-commerce presence.

16) Which of the following typically includes a data flow diagram to describe the flow of information for an e-commerce site?

A) physical design B) logical design C) testing plan D) co-location plan Answer: B Difficulty: Moderate AACSB: Information technology Learning Objective: 4.2: Explain the process that should be followed in building an e-commerce presence.

17) Which of the following details the actual hardware components to be used in a system?

A) architecture plan B) system functionalities plan C) logical design D) physical design Answer: D Difficulty: Moderate AACSB: Information technology Learning Objective: 4.2: Explain the process that should be followed in building an e-commerce presence.

18) Which of the following verifies that the business objectives of the system are in fact working?

A) system testing B) acceptance testing C) unit testing D) implementation testing Answer: B Difficulty: Moderate AACSB: Information technology Learning Objective: 4.2: Explain the process that should be followed in building an e-commerce presence.

19) Which of the following involves testing a site's program modules one at a time?

A) system testing B) acceptance testing C) unit testing D) implementation testing Answer: C Difficulty: Moderate 5 Copyright © 2022 Pearson Education, Inc.

AACSB: Information technology Learning Objective: 4.2: Explain the process that should be followed in building an e-commerce presence.

20) Most of the time required to maintain an e-commerce site is spent on: A) debugging code.

B) responding to emergency situations.

C) general administration and making changes and enhancements to the system.

D) changes in reports, data files, and links to backend databases.

Answer: C Difficulty: Moderate AACSB: Information technology Learning Objective: 4.2: Explain the process that should be followed in building an e-commerce presence.

21) All of the following are simple steps for optimizing web page content except: A) reducing unnecessary HTML comments.

B) segmenting computer servers to perform dedicated functions.

C) using more efficient graphics.

D) avoiding unnecessary links to other pages on the site.

Answer: B Difficulty: Moderate AACSB: Information technology Learning Objective: 4.2: Explain the process that should be followed in building an e-commerce presence.

22) Which of the following is the minimum system architecture requirement for an e-commerce website that processes orders?

A) single-tier architecture B) two-tier architecture C) three-tier architecture D) multi-tier architecture Answer: B Difficulty: Moderate AACSB: Information technology Learning Objective: 4.2: Explain the process that should be followed in building an e-commerce presence.

23) The concept of a “sprint” is related to which of the following development methodologies?

A) prototyping B) Scrum C) component-based development D) DevOps Answer: B Difficulty: Moderate AACSB: Information technology Learning Objective: 4.2: Explain the process that should be followed in building an e-commerce presence.

6 Copyright © 2022 Pearson Education, Inc.

24) Which of the following involves creating a skeleton version that focuses on functionality rather than design?

A) web services B) wireframing C) Scrum D) DevOps Answer: B Difficulty: Moderate AACSB: Information technology Learning Objective: 4.2: Explain the process that should be followed in building an e-commerce presence.

25) Which of the following is the preferred method of implementing a service-oriented architecture?

A) prototyping B) Scrum C) web services D) DevOps Answer: C Difficulty: Moderate AACSB: Information technology Learning Objective: 4.2: Explain the process that should be followed in building an e-commerce presence.

26) Which form of testing compares a control page with one that is very different?

A) template test B) new concept test C) funnel test D) system test Answer: B Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 4.2: Explain the process that should be followed in building an e-commerce presence.

27) A template test is a form of which type of testing?

A) unit testing B) system testing C) acceptance testing D) A/B testing Answer: D Difficulty: Moderate AACSB: Information technology Learning Objective: 4.2: Explain the process that should be followed in building an e-commerce presence.

7 Copyright © 2022 Pearson Education, Inc.

28) When using multivariate testing, if you wish to test three elements, such as an image, a button, and a piece of text, each with two different versions, how many combinations will you need to test?

A) 2 B) 4 C) 6 D) 8 Answer: D Difficulty: Difficult AACSB: Application of knowledge Learning Objective: 4.2: Explain the process that should be followed in building an e-commerce presence.

29) The process of comparing a website with that of its competitors in terms of response speed, quality of layout, and design is known as: A) split testing.

B) funnel testing.

C) benchmarking.

D) system testing.

Answer: C Difficulty: Moderate AACSB: Information technology Learning Objective: 4.2: Explain the process that should be followed in building an e-commerce presence.

30) The SDLC methodology helps developers to understand the business objectives of a system and design an appropriate solution.

Answer: TRUE Difficulty: Moderate AACSB: Information technology Learning Objective: 4.2: Explain the process that should be followed in building an e-commerce presence.

31) Scrum is a type of agile development.

Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 4.2: Explain the process that should be followed in building an e-commerce presence.

32) Using prebuilt templates is typically one of the most inexpensive options when building an ecommerce site.

Answer: TRUE Difficulty: Easy AACSB: Information technology Learning Objective: 4.2: Explain the process that should be followed in building an e-commerce presence.

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33) In general, the annual system maintenance cost will roughly parallel the development cost.

Answer: TRUE Difficulty: Moderate AACSB: Information technology Learning Objective: 4.2: Explain the process that should be followed in building an e-commerce presence.

34) A multi-tier architecture includes a web and database server.

Answer: FALSE Difficulty: Difficult AACSB: Information technology Learning Objective: 4.2: Explain the process that should be followed in building an e-commerce presence.

35) Microservices are a very granular implementation of SOA. Answer: TRUE Difficulty: Moderate AACSB: Information technology Learning Objective: 4.2: Explain the process that should be followed in building an e-commerce presence.

36) Describe the major issues surrounding the decision to build and/or host your own ecommerce site or to outsource some aspects of site development. Include the advantages and disadvantages of each decision.

Answer: If you decide to build an e-commerce site in-house, you will need a multi-skilled staff including programmers, graphic artists, web designers, and project managers. You will also have to select and purchase software and hardware. Building a site from scratch involves a great deal of risk, and the costs can be high because many of the required elements of an e-commerce site such as shopping carts, credit card authentication and processing, inventory management, and order processing are quite complex. Specialized firms have already perfected these tools and your staff will often have to learn to build these features themselves. The advantage is that you and your staff may be able to build a site that exactly suits the specific needs of your company.

Another advantage is that you will be developing a skilled staff and consequently acquiring an invaluable supply of in-house knowledge that will enable your firm to change the site if necessary due to the rapidly changing business environment.

If, on the other hand, you decide to purchase an expensive site-building package, you will have to evaluate different packages to decide which one will be best suited to your firm's needs. This can be a lengthy process and some packages may have to be modified. Additional vendors may have to be hired to execute the modifications, and this can cause the costs to mount rapidly.

You can also purchase less expensive, prebuilt templates, but you will be limited to the functionality already built into the template. You can choose templates from merchant-solution vendors such as Shopify or from a site-building tool such as Weebly, Wix, or WordPress. Bricksand-mortar retailers can generally design a site themselves because they have a skilled staff in place and have made large investments in information technology, such as databases and telecommunications. They will usually use outside vendors to build the e-commerce applications for the site. Medium-size startups will often purchase a prepackaged site-building tool and make 9 Copyright © 2022 Pearson Education, Inc.

modifications as necessary. Small startups that only require a simple virtual storefront will usually use a template.

The hosting decision is independent from the building decision, but the two are usually considered at the same time. Most businesses choose to outsource hosting because it is generally less expensive than it would be for them to purchase the hardware and the physical space, lease the communications lines, and hire the staff. Large hosting firms can build the telecommunication links and emergency power supplies and achieve economies of scale by establishing huge "server farms" in strategic locations around the country. If you host your own site, you must also build the security and backup capabilities yourself.

Another option is co-location in which a firm purchases or leases a web server and has total control over its operation, but the server is located in the vendor's physical facility. In a colocation agreement, the vendor maintains the facility, the machinery, and the communication lines. Small ISPs may not be able to provide service that is as reliable as the large providers. The disadvantage of outsourcing hosting is that as your business grows, you may need more power or services than the hosting company can provide. This is the main reason that firms will decide to host their own sites, but the costs will almost always be higher than if they had chosen an outsourcing firm.

Difficulty: Moderate AACSB: Analytical thinking; Information technology; Written and oral communication Learning Objective: 4.2: Explain the process that should be followed in building an e-commerce presence.

37) All of the following might be part of a website's middle-tier layer except: A) a database server.

B) an ad server.

C) legacy corporate applications.

D) a mail server.

Answer: C Difficulty: Moderate AACSB: Information technology Learning Objective: 4.3: Identify and understand the major considerations involved in choosing web server and e-commerce merchant server software.

38) The leading web server software is: A) Apache.

B) Microsoft Internet Information Server.

C) Sun Solaris.

D) Google Enterprise Server.

Answer: A Difficulty: Moderate AACSB: Information technology Learning Objective: 4.3: Identify and understand the major considerations involved in choosing web server and e-commerce merchant server software.

39) All of the following are basic functionality provided by web servers except: A) site management tools.

10 Copyright © 2022 Pearson Education, Inc.

B) data capture tools.

C) security services.

D) a shopping cart.

Answer: D Difficulty: Moderate AACSB: Information technology Learning Objective: 4.3: Identify and understand the major considerations involved in choosing web server and e-commerce merchant server software.

40) Which of the following would you use to verify that links on web pages are valid?

A) HTTP B) FTP C) data capture tools D) site management tools Answer: D Difficulty: Moderate AACSB: Information technology Learning Objective: 4.3: Identify and understand the major considerations involved in choosing web server and e-commerce merchant server software.

41) All of the following are examples of an open source content management system (CMS) except: A) Joomla.

B) Drupal.

C) Dreamweaver CC. D) WordPress.

Answer: C Difficulty: Moderate AACSB: Information technology Learning Objective: 4.3: Identify and understand the major considerations involved in choosing web server and e-commerce merchant server software.

42) Advantages of dynamic page generation include all of the following except: A) lowered menu costs.

B) market segmentation.

C) nearly cost-free price discrimination.

D) client-side execution of programming.

Answer: D Difficulty: Difficult AACSB: Information technology Learning Objective: 4.3: Identify and understand the major considerations involved in choosing web server and e-commerce merchant server software.

43) Which of the following cannot be used to retrieve objects from a database?

A) Node.js B) ASP.NET C) JSP 11 Copyright © 2022 Pearson Education, Inc.

D) HTML Answer: D Difficulty: Moderate AACSB: Information technology Learning Objective: 4.3: Identify and understand the major considerations involved in choosing web server and e-commerce merchant server software.

44) Which of the following monitors and controls access to a main web server, and implements firewall protection?

A) proxy server B) list server C) groupware server D) mail server Answer: A Difficulty: Moderate AACSB: Information technology Learning Objective: 4.3: Identify and understand the major considerations involved in choosing web server and e-commerce merchant server software.

45) Which of the following technologies is used to separate the design and presentation of content from the content creation process?

A) SOA B) proxy server C) shopping cart D) CMS Answer: D Difficulty: Moderate AACSB: Information technology Learning Objective: 4.3: Identify and understand the major considerations involved in choosing web server and e-commerce merchant server software.

46) MySQL is which of the following?

A) open source database software B) scripting language embedded in HTML documents C) web server software D) website analytics software Answer: A Difficulty: Moderate AACSB: Information technology Learning Objective: 4.3: Identify and understand the major considerations involved in choosing web server and e-commerce merchant server software.

47) All of the following are basic functionality provided by e-commerce merchant server software except: A) a product catalog.

B) marketing analytics.

C) a shopping cart.

D) credit card processing.

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Answer: B Difficulty: Moderate AACSB: Information technology Learning Objective: 4.3: Identify and understand the major considerations involved in choosing web server and e-commerce merchant server software.

48) ________ are a kind of middleware software that provides the glue connecting traditional corporate systems to the customer as well as all the functionality needed to conduct e-commerce.

A) Application servers B) Web page servers C) Database servers D) Content management servers Answer: A Difficulty: Moderate AACSB: Information technology Learning Objective: 4.3: Identify and understand the major considerations involved in choosing web server and e-commerce merchant server software.

49) Which of the following is a standard that makes it possible to access data from any application regardless of the database and operating system software being used?

A) CGI B) ODBC C) MySQL D) HTTP Answer: B Difficulty: Difficult AACSB: Information technology Learning Objective: 4.3: Identify and understand the major considerations involved in choosing web server and e-commerce merchant server software.

50) The web server software used has a significant impact on how a website's web pages look on a user's computer.

Answer: FALSE Difficulty: Easy AACSB: Information technology Learning Objective: 4.3: Identify and understand the major considerations involved in choosing web server and e-commerce merchant server software.

51) DHMTL is used to generate dynamic web pages.

Answer: FALSE Difficulty: Moderate AACSB: Information technology Learning Objective: 4.3: Identify and understand the major considerations involved in choosing web server and e-commerce merchant server software.

52) Dynamic page generation enables price discrimination.

Answer: TRUE Difficulty: Moderate 13 Copyright © 2022 Pearson Education, Inc.

AACSB: Application of knowledge Learning Objective: 4.3: Identify and understand the major considerations involved in choosing web server and e-commerce merchant server software.

53) Objects can be retrieved from a database using Java Server Pages.

Answer: TRUE Difficulty: Moderate AACSB: Information technology Learning Objective: 4.3: Identify and understand the major considerations involved in choosing web server and e-commerce merchant server software.

54) Explain the main functionalities included in e-commerce merchant server software and the decision-making process for a manager choosing from among the various e-commerce merchant server software packages.

Answer: E-commerce merchant server software includes an online catalog, order taking capabilities using an online shopping cart, and online credit card processing. Merchant server software typically includes a database and the capability to post lists, product descriptions, product photographs, and in larger sites even sound, animations, videos, or interactivities with product demonstrations and customer service representatives.

Online shopping carts enable customers to set aside items they wish to purchase while they continue to shop at the site. Online shopping cart capabilities must also include the ability for consumers to review the items they have set aside and delete or edit items as necessary. Finally, the customer must be able to click a button to begin the order processing system. Credit card processing must work in conjunction with the shopping cart so that the customer's credit card can be verified, the charge can be debited to the card, and a credit to the firm's account can be made.

Merchant server software/e-commerce suites offer an integrated environment that promises to provide most, or all, of the functionality and capabilities you will need to develop a sophisticated, customer-centric site. E-commerce suites come in three general ranges of price and functionality: basic, mid-range, and high-end.

Key factors to consider when selecting a package include functionality, support for different business models, business process modeling tools, visual site management tools and reporting, performance and scalability, connectivity to existing business systems, compliance with standards, global and multicultural capability, and local sales tax and shipping rules.

For instance, although e-commerce suites promise to do everything, your business may require special functionality. You will need a list of business functionality requirements. Your business may involve several different business models. Be sure the package can support all of your business models. You may wish to change your business processes, such as order taking and order fulfillment. Does the suite contain tools for modeling business process and work flows?

Understanding how your site works will require visual reporting tools that make its operation transparent to many different people in your business. A poorly designed software package will drop off significantly in performance as visitors and transactions increase. Check for performance and scalability by stress testing a pilot edition or obtaining data from the vendor about performance under load. You will have to connect the e-commerce suite to your traditional business systems. How will this connection to existing systems be made, and is your staff skilled 14 Copyright © 2022 Pearson Education, Inc.

in making the connection? Because of the changing technical environment — in particular, changes in mobile commerce platforms — it is important to document exactly what standards the suite supports now, and what the migration path will be toward the future. Finally, your ecommerce site may have to work both globally and locally. You may need a foreign language edition using foreign currency denominations. And you will have to collect sales taxes across many local, regional, and national tax systems. Does the e-commerce suite support this level of globalization and localization?

Difficulty: Difficult AACSB: Analytical thinking; Information technology; Written and oral communication Learning Objective: 4.3: Identify and understand the major considerations involved in choosing web server and e-commerce merchant server software.

55) The term stateless refers to the fact that: A) no one government entity controls the Internet.

B) the server does not have to maintain an ongoing dedicated interaction with the client computer.

C) system performance degrades as more simultaneous users require service.

D) web servers may maintain multiple instances of server software to handle requests.

Answer: B Difficulty: Moderate AACSB: Information technology Learning Objective: 4.4: Understand the issues involved in choosing the most appropriate hardware for an e-commerce site.

56) Which of the following types of sites typically require a high percentage of secure pages?

A) web services B) customer self-service C) trading D) publishing/subscription Answer: C Difficulty: Difficult AACSB: Application of knowledge Learning Objective: 4.4: Understand the issues involved in choosing the most appropriate hardware for an e-commerce site.

57) Which of the following is not a main factor in determining the overall demand on an ecommerce site?

A) file sizes of web pages being served B) number of simultaneous users in peak periods C) speed of legacy applications that are needed to supply data to web pages D) whether content is dynamic or static Answer: A Difficulty: Difficult AACSB: Information technology Learning Objective: 4.4: Understand the issues involved in choosing the most appropriate hardware for an e-commerce site.

58) All of the following are steps one can take to right-size a website's hardware platform and 15 Copyright © 2022 Pearson Education, Inc.

meet demands for service except: A) scaling hardware vertically.

B) scaling hardware horizontally.

C) replacing static pages with dynamically generated pages.

D) improving processing architecture.

Answer: C Difficulty: Difficult AACSB: Information technology Learning Objective: 4.4: Understand the issues involved in choosing the most appropriate hardware for an e-commerce site.

59) All of the following are methods of improving the processing architecture of a website except: A) separating static content from dynamic content.

B) optimizing ASP code.

C) optimizing the database schema.

D) adding web servers.

Answer: D Difficulty: Difficult AACSB: Information technology Learning Objective: 4.4: Understand the issues involved in choosing the most appropriate hardware for an e-commerce site.

60) Upgrading a server from a single processor to multiple processors is an example of scaling a site vertically.

Answer: TRUE Difficulty: Difficult AACSB: Information technology Learning Objective: 4.4: Understand the issues involved in choosing the most appropriate hardware for an e-commerce site.

61) Storing HTML pages in RAM rather than on a server's hard drive is an expensive way to fine-tune the processing architecture of a website.

Answer: FALSE Difficulty: Difficult AACSB: Information technology Learning Objective: 4.4: Understand the issues involved in choosing the most appropriate hardware for an e-commerce site.

62) Explain both demand and supply-side considerations when choosing the hardware platform for an e-commerce site. Include a discussion of I/O-intensive vs. CPU-intensive operations and scalability.

Answer: The hardware platform refers to the underlying computing equipment that a system will need to perform all of the necessary e-commerce functions. You must have enough platform capacity to meet peak demand, without overinvesting in unnecessary and expensive equipment.

The question is: How much computing and telecommunications capacity will be enough to meet that peak demand?

16 Copyright © 2022 Pearson Education, Inc.

On the demand side, the first factor to consider is the maximum number of simultaneous users your site experiences. System performance will degrade as more simultaneous users request service. Processing HTTP requests for static pages is an I/O or input/output intensive operation, meaning that it does not require heavy-duty processing power. However, as customers request more advanced services such as searching the site, registering with the site, filling a shopping cart and checking out, and particularly downloading large multimedia files, much more processing power is required, and site performance can deteriorate rapidly. The user profile on your site will help to determine the necessary hardware platform.

What types of requests will users on your site make, for how many pages, and for what kind of service? Another factor to consider is the nature of the content on your site. If your site uses dynamic page generation and business logic, as does the shopping cart, the load on the processor increases rapidly. These types of requests are CPU-intensive operations, meaning that they require a great deal of processing power. Any user interactions that require interfacing with a database, such as filling out forms, adding items to the shopping cart, making purchases, or filling out customer questionnaires, require lots of processing power. The final factor to consider on the demand side is the telecommunication link your site has to the Web. The number of hits your site can handle per second depends on the bandwidth connections between your server and the Web. The larger the available bandwidth, the more simultaneous users your site can handle.

The connection to the client is also a consideration. As consumers embrace broadband connections, they will be able to make far more frequent requests and will demand richer content from your site. This increased demand will mean that additional capacity requirements may be needed.

After you have estimated the present and future demands you expect your site to have, you will have to look at supply side considerations. First and foremost is scalability. How will your site be able to increase in size as demand warrants? You can scale your site vertically by upgrading the servers from single processor to multiple processors. The drawbacks are that this can become expensive with each growth cycle and that the site becomes overly dependent on just a small number of powerful machines. You can also scale your site horizontally by adding multiple single processor servers and balancing the load among many servers.

Scaling horizontally can be less expensive since you can use older PCs that would otherwise be discarded. In addition, you will have to purchase special load-balancing software. The main drawbacks of scaling horizontally are that the size of the physical facility will have to increase, and that there is added management complexity. Perhaps the best method for meeting the demands for service on your site is to improve the processing architecture of your site by splitting the workload up into I/O-intensive and CPU-intensive operations. Then you can finetune the servers to handle each type of workload. You can add RAM to servers that will store the HTML pages, reducing the load on the hard drives, and move the CPU-intensive activities to high-end multiple processor servers that are dedicated to handling a particular task, such as order processing and accessing the necessary databases. These steps will enable you to reduce the number of servers required to handle your peak demand.

Difficulty: Moderate AACSB: Analytical thinking; Information technology; Written and oral communication Learning Objective: 4.4: Understand the issues involved in choosing the most appropriate hardware for an e-commerce site.

17 Copyright © 2022 Pearson Education, Inc.

63) Django is based on which of the following?

A) PHP B) Python C) Perl D) Ruby on Rails Answer: B Difficulty: Moderate AACSB: Information technology Learning Objective: 4.5: Identify additional tools that can improve website performance.

64) Ruby on Rails is based on which of the following philosophies?

A) SLDC B) CoC C) LAMP D) Ajax Answer: B Difficulty: Moderate AACSB: Information technology Learning Objective: 4.5: Identify additional tools that can improve website performance.

65) Which of the following is the most commonly used server-side scripting language?

A) Ruby on Rails B) Django C) PHP D) Perl Answer: C Difficulty: Moderate AACSB: Information technology Learning Objective: 4.5: Identify additional tools that can improve website performance.

66) All of the following are website design features that annoy customers except: A) slow-loading pages.

B) pop-under ads.

C) splash pages.

D) multi-browser functionality.

Answer: D Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 4.5: Identify additional tools that can improve website performance.

67) All of the following are important factors in search engine optimization except: A) selecting keywords and page titles.

B) encouraging other sites to link to your site.

C) buying search engine ads.

D) adhering to privacy policies.

Answer: D Difficulty: Easy 18 Copyright © 2022 Pearson Education, Inc.

AACSB: Information technology Learning Objective: 4.5: Identify additional tools that can improve website performance.

68) ________ scripts have become obsolete, due to security and other concerns and have been replaced by more modern and secure methods.

A) CGI B) ColdFusion C) JavaScript D) ASP.NET Answer: A Difficulty: Moderate AACSB: Information technology Learning Objective: 4.5: Identify additional tools that can improve website performance.

69) ________ is a programming language invented by Netscape used to control the objects on an HTML page and handle interactions with the browser.

A) Python B) ASP C) ColdFusion D) JavaScript Answer: D Difficulty: Moderate AACSB: Information technology Learning Objective: 4.5: Identify additional tools that can improve website performance.

70) The primary way a website is able to personalize the content presented to a visitor is through the use of: A) privacy policies.

B) cookies.

C) accessibility rules.

D) site management tools.

Answer: B Difficulty: Easy AACSB: Information technology Learning Objective: 4.5: Identify additional tools that can improve website performance.

71) Which of the following is not part of the LAMP open source web development model?

A) Linux B) Apache C) Microsoft IIS D) PHP Answer: C Difficulty: Moderate AACSB: Information technology Learning Objective: 4.5: Identify additional tools that can improve website performance.

72) Django follows the ________ programming principle.

A) CoC 19 Copyright © 2022 Pearson Education, Inc.

B) WYSIWYG C) DRY D) LAMP Answer: C Difficulty: Difficult AACSB: Information technology Learning Objective: 4.5: Identify additional tools that can improve website performance.

73) The current versions of most web browsers no longer support Java applets.

Answer: TRUE Difficulty: Moderate AACSB: Information technology Learning Objective: 4.5: Identify additional tools that can improve website performance.

74) What are widgets and how are they used? How do they differ from mashups?

Answer: A widget is a small, prebuilt chunk of code that executes automatically in an HTML web page to perform a specific task. Many are free. Social networks and blogs use widgets to present users with content drawn from around the Web including news headlines, announcements, press releases, calendars, clocks, weather, live TV, games, and other functionality. Mashups are a little more complicated and involve pulling functionality and data from one program and including it in another. The most common mashup involves using Google Maps data and software and combining it with other data.

Difficulty: Easy AACSB: Information technology; Written and oral communication Learning Objective: 4.5: Identify additional tools that can improve website performance.

75) List and briefly describe the eight most important factors in successful e-commerce site design.

Answer: The eight most important factors in successful e-commerce site design include functionality (pages that work, load quickly, and point the customer toward product offerings); being informational (including links that customers can easily find to discover more about the firm and its products); ease of use (simple foolproof navigation); providing redundant navigation (alternative navigation to the same content); ease of purchase (one or two clicks to purchase); multi-browser functionality (site works with most popular browsers); simple graphics (avoiding distracting graphics and sounds that the user cannot control); and legible text (avoiding backgrounds that distort text or make it illegible).

Difficulty: Moderate AACSB: Information technology; Written and oral communication Learning Objective: 4.5: Identify additional tools that can improve website performance.

76) What tools or technologies are available for providing interactivity and active content on a website and what functionality do they add? Briefly describe at least five.

Answer: Among the tools that are available for providing interactivity on a website are Java, Java Server Pages, JavaScript, Node.js, and other tools based on JavaScript, Active Server Pages (ASP) and ASP.Net, Cold Fusion, PHP, Ruby on Rails, and Django, as well as widgets and mashups.

Java is a programming language that allows programmers to create interactivity on the user's 20 Copyright © 2022 Pearson Education, Inc.

client computer. Today, Java remains one of the most popular programming languages, with many critical technologies, such as the Google Android mobile platform, leveraging aspects of the language.

Java Server Pages (JSP) is a web page coding standard. Developers use a combination of HTML, JSP scripts, and Java to dynamically generate web pages. Java servlets (small programs) are specified in the web page and run on the web server to modify pages before they are sent to the user. JSP is supported by most of the popular application servers on the market today.

JavaScript is a programming language invented by Netscape that is used to control objects on HTML pages as well as the interactions with the browser. It is much more acceptable to corporations because it is more stable than Java and it is restricted to the operation of requested web pages. It is used for many common, yet crucial functions such as verifying and validating customer input. For example, it is used to verify that a valid phone number or e-mail address has been entered. JavaScript is also used as part of Node.js, a cross-platform environment for serverside applications (including mobile).

Node.js has become one of the most popular server-side developer frameworks, resulting in JavaScript remaining a vital language not just for web development, but also for platform-as-aservice (PaaS).

There are also a number of other tools based on JavaScript that help automate the process of creating web applications. React and Vue are open source JavaScript libraries for building user interfaces. AngularJS (sometimes also referred to as Angular.js) is another popular tool.

AngularJS is a JavaScript-based open source front-end web application framework that extends the functionality of HTML. D3.js (short for Data Driven Documents) is a JavaScript library for visualizing data with HTML, SVG, and CSS. jQuery is a cross-platform JavaScript library designed to simplify the client-side scripting of HTML. Ajax (asynchronous JavaScript and XML) uses a variety of different tools, including JavaScript, to allow web pages to be updated asynchronously (i.e., updating only parts of the page rather than having to reload the entire page to change just part of the content). TypeScript is an open-source programming language developed and maintained by Microsoft, designed for the development of large applications. It is included in Microsoft’s Visual Studio software development package. Typescript is a superset of JavaScript, building on JavaScript, but with extra development tools. Existing JavaScript programs are also valid TypeScript programs. TypeScript can be used to develop both client-side and server-side Java applications.

Active Server Pages (ASP) and its successor, ASP.NET, are Microsoft's versions of server-side programming. ASP and ASP.NET enable web developers to easily create and open records from a database and execute programs within an HTML page. They also handle all forms of interactivity found on e-commerce sites.

ColdFusion is an integrated server-side environment for developing interactive web applications.

It combines an intuitive tag-based scripting language and a tag-based server scripting language (CFML) that lowers the cost of creating interactive features. It provides visual design, debugging, and deployment tools that make it a complete web application development platform.

PHP is an open source, general purpose scripting language that is most frequently used in serverside web applications to generate dynamic web page content, although it can also be used for 21 Copyright © 2022 Pearson Education, Inc.

client-side graphical user interface applications. PHP is also a part of many web application development frameworks, such as CakePHP, CodeIgniter, and others, and is also part of the LAMP (Linux, Apache, MySQL, PHP) open source web development model for building dynamic websites and web applications (Perl and Python are sometimes substituted for PHP in some LAMP projects).

Ruby on Rails (RoR or Rails) is an open source web application framework based on the Ruby programming language. RoR is based on a philosophy known as convention over configuration, or coding by convention (CoC), which means that the framework provides a structured layout that minimizes the number of decisions that the programmer needs to make, thereby simplifying and speeding development. JavaScript and Ajax are highly integrated into RoR, which makes it easy to handle Ajax requests for page updates.

Django is also an open source web application framework based on the Python programming language. Django is optimized for the creation of complex, database-driven websites. It allows for fast development, focuses on automating as much as possible, emphasizes the reusability of various components, and follows the DRY (Don't Repeat Yourself) programming principle.

Widgets are small chunks of code that execute automatically in your HTML web page. They typically present users with dynamic content such as news headlines, calendars, clocks, weather, live TV, games, and other functionality. Mashups pull functionality from one website and include it in another, such as a real-estate agent incorporating Google Maps data in her own website.

Difficulty: Difficult AACSB: Application of knowledge; Information technology; Written and oral communication Learning Objective: 4.5: Identify additional tools that can improve website performance.

77) All of the following are key design principles of responsive web design except: A) flexible grid-based layouts.

B) media queries.

C) coding by convention.

D) flexible images and media.

Answer: C Difficulty: Moderate AACSB: Information technology Learning Objective: 4.6: Understand the important considerations involved in developing a mobile website and building mobile applications.

78) Which of the following is a server-side technique that detects the attributes of the device making the request, and using predefined templates, loads a version of a site optimized for the device?

A) LAMP B) AWD C) mobile first design D) RoR Answer: B Difficulty: Moderate 22 Copyright © 2022 Pearson Education, Inc.

AACSB: Information technology Learning Objective: 4.6: Understand the important considerations involved in developing a mobile website and building mobile applications.

79) Which of the following statements about responsive web design (RWD) is not true?

A) RWD works best for sites that have complex functionality.

B) RWD tools include HTML5 and CSS3.

C) RWD makes it possible to design a website that automatically adjusts its layout and display according to the screen resolution of the device on which it is being viewed.

D) RWD can be costly.

Answer: A Difficulty: Difficult AACSB: Information technology Learning Objective: 4.6: Understand the important considerations involved in developing a mobile website and building mobile applications.

80) Building which of the following is the least expensive path to creating a mobile presence?

A) native app B) mobile website C) mobile web app D) hybrid HTTP Answer: B Difficulty: Moderate AACSB: Information technology Learning Objective: 4.6: Understand the important considerations involved in developing a mobile website and building mobile applications.

81) Which of the following statements about mobile websites is not true?

A) Mobile websites run on a firm's servers, just like a traditional website.

B) Mobile websites can be built using standard web tools such as server-side HTML, Linux, PHP and SQL. C) Generally, mobile websites operate more quickly than traditional websites viewed on a desktop computer connected to a broadband office network.

D) Most large firms today have mobile websites.

Answer: C Difficulty: Difficult AACSB: Information technology Learning Objective: 4.6: Understand the important considerations involved in developing a mobile website and building mobile applications.

82) Beginning the e-commerce development process with a mobile presence rather than a desktop website is referred to as which of the following?

A) RWD B) AWD C) mobile first design D) RESS Answer: C Difficulty: Moderate 23 Copyright © 2022 Pearson Education, Inc.

AACSB: Application of knowledge Learning Objective: 4.6: Understand the important considerations involved in developing a mobile website and building mobile applications.

83) An HTML5 app is one designed to specifically operate using a mobile device's hardware and operating system.

Answer: FALSE Difficulty: Moderate AACSB: Information technology Learning Objective: 4.6: Understand the important considerations involved in developing a mobile website and building mobile applications.

84) Native web apps need to be developed for different mobile platforms.

Answer: TRUE Difficulty: Moderate AACSB: Information technology Learning Objective: 4.6: Understand the important considerations involved in developing a mobile website and building mobile applications.

85) Discuss some of the unique features that must be considered when designing a mobile web presence.

Answer: Designing a mobile web presence is somewhat different from designing a website that will be accessed via a traditional desktop computer. For instance, mobile hardware is smaller, and there are more resource constraints on data storage and processing power. The mobile platform is also constrained by slower connection speeds than provided by traditional desktop computers. As a result, file sizes should be kept smaller, and the number of files sent to the user reduced. Mobile displays are much smaller and require simplification, and some screens are not as easily visible in sunlight. Touch screen technology also introduces new interaction routines that are different from the traditional mouse and keyboard. The mobile platform is not as easy to use as a data entry tool, and therefore choice boxes and lists should be used more frequently so that the user can easily scroll and touch-select options, rather than type them in. You will also want to determine whether to create a mobile-friendly version of your e-commerce site or implement responsive web design or adaptive web design, or create an entirely new mobile app.

You can choose to build a mobile web app, a native app, or a hybrid app. Building a mobile web app that uses the mobile device's browser requires more effort and cost than developing a mobile website, suffers from the same limitations as any browser-based application, but does offer some advantages such as better graphics, more interactivity, and faster local calculations. Building a native app, which is programmed for specific mobile operating systems, requires much more programming; however, it will allow you much greater creative rein in making a unique customer experience. You can also choose to create a hybrid, cross-platform mobile app with various low-cost or open source app development toolkits.

Difficulty: Moderate AACSB: Analytical thinking; Information technology; Written and oral communication Learning Objective: 4.6: Understand the important considerations involved in developing a mobile website and building mobile applications.

24 Copyright © 2022 Pearson Education, Inc.

E-commerce 2021: business. technology. society., 16e (Laudon/Traver) Chapter 5 E-commerce Security and Payment Systems 1) Confidentiality is sometimes confused with: A) privacy.

B) authenticity.

C) integrity.

D) nonrepudiation.

Answer: A Difficulty: Easy AACSB: Application of knowledge Learning Objective: 5.1: Understand the scope of e-commerce crime and security problems, the key dimensions of e-commerce security, and the tension between security and other values.

2) ________ is the ability to ensure that e-commerce participants do not deny their online actions.

A) Nonrepudiation B) Authenticity C) Availability D) Integrity Answer: A Difficulty: Moderate AACSB: Information technology Learning Objective: 5.1: Understand the scope of e-commerce crime and security problems, the key dimensions of e-commerce security, and the tension between security and other values.

3) ________ is the ability to identify the person or entity with whom you are dealing on the Internet.

A) Nonrepudiation B) Authenticity C) Availability D) Integrity Answer: B Difficulty: Moderate AACSB: Information technology Learning Objective: 5.1: Understand the scope of e-commerce crime and security problems, the key dimensions of e-commerce security, and the tension between security and other values.

4) Which of the following is an example of an integrity violation of e-commerce security?

A) A website is not actually operated by the entity the customer believes it to be.

B) A merchant uses customer information in a manner not intended by the customer.

C) A customer denies that he is the person who placed the order.

D) An unauthorized person intercepts an online communication and changes its contents.

Answer: D Difficulty: Moderate AACSB: Analytical thinking Learning Objective: 5.1: Understand the scope of e-commerce crime and security problems, the 1 Copyright © 2022 Pearson Education, Inc.

key dimensions of e-commerce security, and the tension between security and other values.

5) ________ is the ability to ensure that an e-commerce site continues to function as intended.

A) Nonrepudiation B) Authenticity C) Availability D) Integrity Answer: C Difficulty: Moderate AACSB: Information technology Learning Objective: 5.1: Understand the scope of e-commerce crime and security problems, the key dimensions of e-commerce security, and the tension between security and other values.

6) Which of the following is an example of an online privacy violation?

A) your e-mail being read by a hacker B) your online purchasing history being sold to other merchants without your consent C) your computer being used as part of a botnet D) your e-mail being altered by a hacker Answer: B Difficulty: Moderate AACSB: Analytical thinking Learning Objective: 5.1: Understand the scope of e-commerce crime and security problems, the key dimensions of e-commerce security, and the tension between security and other values.

7) ________ is the ability to ensure that messages and data are only available to those authorized to view them.

A) Confidentiality B) Integrity C) Privacy D) Availability Answer: A Difficulty: Moderate AACSB: Information technology Learning Objective: 5.1: Understand the scope of e-commerce crime and security problems, the key dimensions of e-commerce security, and the tension between security and other values.

8) Which of the following is not a key factor for establishing e-commerce security?

A) data integrity B) technology C) organizational policies D) laws and industry standards Answer: A Difficulty: Moderate AACSB: Information technology Learning Objective: 5.1: Understand the scope of e-commerce crime and security problems, the key dimensions of e-commerce security, and the tension between security and other values.

2 Copyright © 2022 Pearson Education, Inc.

9) According to Ponemon Institute's 2019 survey, which of the following was not among the causes of the costliest cybercrimes?

A) malicious insiders B) web-based attacks C) denial of service D) botnets Answer: D Difficulty: Moderate AACSB: Information technology Learning Objective: 5.1: Understand the scope of e-commerce crime and security problems, the key dimensions of ecommerce security, and the tension between security and other values.

10) Typically, the more security measures added to an e-commerce site, the slower and more difficult it becomes to use.

Answer: TRUE Difficulty: Moderate AACSB: Information technology Learning Objective: 5.1: Understand the scope of e-commerce crime and security problems, the key dimensions of e-commerce security, and the tension between security and other values.

11) Why is it difficult to accurately estimate the actual amount of cybercrime?

Answer: It is difficult to accurately estimate the actual amount of cybercrime, in part, because many companies are hesitant to report it due to the fear of losing the trust of their customers, and because even if crime is reported, it may be difficult to quantify the actual dollar amount of the loss.

Difficulty: Easy AACSB: Analytical thinking; Written and oral communication Learning Objective: 5.1: Understand the scope of e-commerce crime and security problems, the key dimensions of e-commerce security, and the tension between security and other values.

12) Which of the following statements about data breaches in 2019 is not true?

A) According to the Identity Theft Resource Center, the number of breaches in 2019 increased by 17% from 2018.

B) According to the Identity Theft Resource Center, the breaches exposed almost 165 million sensitive records, such as social security numbers and financial account data.

C) According to the Identity Theft Resource Center, employee error was the leading cause of data breaches.

D) According to the Identity Theft Resource Center, data breaches involving the business sector represented about 44% of all breaches.

Answer: C Difficulty: Difficult AACSB: Application of knowledge Learning Objective: 5.2: Identify the key security threats in the e-commerce environment.

13) Which of the following is a brute force attack which hackers launch via botnets and automated tools using known user name and password combinations?

A) credential stuffing 3 Copyright © 2022 Pearson Education, Inc.

B) phishing C) pharming D) MitM attack Answer: A Difficulty: Moderate AACSB: Information technology Learning Objective: 5.2: Identify the key security threats in the e-commerce environment.

14) Which of the following did the Internet Advertising Bureau urge advertisers to abandon?

A) HTML B) HTML5 C) Adobe Flash D) Adobe Acrobat Answer: C Difficulty: Moderate AACSB: Information technology Learning Objective: 5.2: Identify the key security threats in the e-commerce environment.

15) Accessing data without authorization on Dropbox is an example of a: A) social network security issue.

B) cloud security issue.

C) mobile platform security issue.

D) sniffing issue.

Answer: B Difficulty: Moderate AACSB: Information technology Learning Objective: 5.2: Identify the key security threats in the e-commerce environment.

16) Conficker is an example of a: A) virus.

B) worm.

C) Trojan horse.

D) botnet.

Answer: B Difficulty: Moderate AACSB: Information technology Learning Objective: 5.2: Identify the key security threats in the e-commerce environment.

17) Which of the following is the leading cause of data breaches?

A) theft of a computer B) accidental disclosures C) hackers D) DDoS attacks Answer: C Difficulty: Moderate AACSB: Information technology Learning Objective: 5.2: Identify the key security threats in the e-commerce environment.

4 Copyright © 2022 Pearson Education, Inc.

18) Software that is used to obtain private user information such as a user's keystrokes or copies of e-mail is referred to as: A) spyware.

B) a backdoor.

C) a browser parasite.

D) adware.

Answer: A Difficulty: Moderate AACSB: Information technology Learning Objective: 5.2: Identify the key security threats in the e-commerce environment.

19) Which of the following technologies is aimed at reducing e-mail address spoofing and phishing?

A) TLS B) WPA C) DMARC D) MFA Answer: C Difficulty: Moderate AACSB: Information technology Learning Objective: 5.2: Identify the key security threats in the e-commerce environment.

20) What is the most frequent cause of stolen credit cards and card information today?

A) lost cards B) the hacking and looting of corporate servers storing credit card information C) sniffing programs D) phishing attacks Answer: B Difficulty: Moderate AACSB: Information technology Learning Objective: 5.2: Identify the key security threats in the e-commerce environment.

21) Which dimensions of security is spoofing a threat to?

A) integrity and confidentiality B) availability and authenticity C) integrity and authenticity D) availability and integrity Answer: C Difficulty: Difficult AACSB: Analytical thinking Learning Objective: 5.2: Identify the key security threats in the e-commerce environment.

22) Which of the following is not an example of malicious code?

A) scareware B) Trojan horse C) bot D) sniffer 5 Copyright © 2022 Pearson Education, Inc.

Answer: D Difficulty: Moderate AACSB: Information technology Learning Objective: 5.2: Identify the key security threats in the e-commerce environment.

23) The attack against Dyn servers is an example of a(n): A) SQL injection attack.

B) Browser parasite.

C) DDoS attack.

D) MitM attack.

Answer: C Difficulty: Moderate AACSB: Information technology Learning Objective: 5.2: Identify the key security threats in the e-commerce environment.

24) Beebone is an example of which of the following?

A) worm B) botnet C) phishing D) hacktivism Answer: B Difficulty: Moderate AACSB: Information technology Learning Objective: 5.2: Identify the key security threats in the e-commerce environment.

25) Malware that comes with a downloaded file requested by a user is called a: A) Trojan horse.

B) backdoor.

C) drive-by download.

D) PUP. Answer: C Difficulty: Moderate AACSB: Information technology Learning Objective: 5.2: Identify the key security threats in the e-commerce environment.

26) Which of the following is not an example of a potentially unwanted program (PUP)?

A) adware B) browser parasite C) drive-by download D) spyware Answer: C Difficulty: Difficult AACSB: Information technology Learning Objective: 5.2: Identify the key security threats in the e-commerce environment.

27) Which of the following was designed to cripple Iranian nuclear centrifuges?

A) Stuxnet B) Shamoon 6 Copyright © 2022 Pearson Education, Inc.

C) Snake D) Storm Answer: A Difficulty: Moderate AACSB: Information technology Learning Objective: 5.2: Identify the key security threats in the e-commerce environment.

28) Automatically redirecting a web link to a different address is an example of which of the following?

A) sniffing B) social engineering C) pharming D) DDoS attack Answer: C Difficulty: Moderate AACSB: Information technology Learning Objective: 5.2: Identify the key security threats in the e-commerce environment.

29) Which of the following types of attacks enabled hackers to take control of the Twitter accounts of dozens of America’s most prominent political, entertainment and technology leaders?

A) DDoS attack B) ransomware C) social engineering D) sniffing Answer: C Difficulty: Moderate AACSB: Information technology Learning Objective: 5.2: Identify the key security threats in the e-commerce environment.

30) ________ typically attack governments, organizations, and sometimes individuals for political purposes.

A) Crackers B) Tiger teams C) Bounty hunters D) Hacktivists Answer: D Difficulty: Moderate AACSB: Information technology Learning Objective: 5.2: Identify the key security threats in the e-commerce environment.

31) A Trojan horse appears to be benign, but then does something other than expected.

Answer: TRUE Difficulty: Moderate AACSB: Information technology Learning Objective: 5.2: Identify the key security threats in the e-commerce environment.

32) Phishing attacks rely on browser parasites.

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Answer: FALSE Difficulty: Moderate AACSB: Information technology Learning Objective: 5.2: Identify the key security threats in the e-commerce environment.

33) WannaCry is an example of ransomware.

Answer: TRUE Difficulty: Moderate AACSB: Information technology Learning Objective: 5.2: Identify the key security threats in the e-commerce environment.

34) Spoofing is the attempt to hide a hacker's true identity by using someone else's e-mail or IP address.

Answer: TRUE Difficulty: Difficult AACSB: Information technology Learning Objective: 5.2: Identify the key security threats in the e-commerce environment.

35) Exploit kits can be purchased by users to protect their computers from malware.

Answer: FALSE Difficulty: Moderate AACSB: Information technology Learning Objective: 5.2: Identify the key security threats in the e-commerce environment.

36) A drive-by download is malware that comes with a downloaded file that a user intentionally or unintentionally requests.

Answer: TRUE Difficulty: Difficult AACSB: Information technology Learning Objective: 5.2: Identify the key security threats in the e-commerce environment.

37) FREAK is an example of a software vulnerability.

Answer: TRUE Difficulty: Moderate AACSB: Information technology Learning Objective: 5.2: Identify the key security threats in the e-commerce environment.

38) What is the Internet of Things (IoT) and what security issues and challenges does it raise?

Answer: The Internet of Things (IoT) involves the use of the Internet to connect a wide variety of sensors, devices, and machines, and is powering the development of a multitude of smart connected things, such as home electronics (smart TVs, thermostats, home security systems, and more). IoT also includes connected cars, medical devices and industrial equipment that supports manufacturing, energy, transportation, and other industrial sectors.

Unfortunately, IoT raises a host of security issues similar to existing security challenges, but even more challenging, given the need to deal with a wider range of devices, operating in a less controlled, and global environment. In a world of connected things, the devices, the data produced and used by the devices, and the systems and applications supported by those devices, 8 Copyright © 2022 Pearson Education, Inc.

can all potentially be attacked. For instance, many IoT devices, such as sensors, are intended to be deployed on a much greater scale than traditional Internet-connected devices, creating a vast quantity of interconnected links that can be exploited. Existing tools, methods, and strategies need to be developed to deal with this unprecedented scale. Many instances of IoT consist of collections of identical devices that all have the same characteristics, which magnifies the potential impact of security vulnerabilities.

Many IoT devices are anticipated to have a much longer service life than typical equipment, which raises the possibility that devices may "outlive" the manufacturer, leaving them without long-term support that creates persistent vulnerabilities. Many IoT devices are intentionally designed without the ability to be upgraded, or the upgrade process is difficult, which raises the possibility that vulnerable devices cannot or will not be fixed, leaving them perpetually vulnerable. Many IoT devices do not provide the user with visibility into the workings of the device or the data being produced, nor alert the user when a security problem arises, so users may believe an IoT device is functioning as intended when in fact, it may be performing in a malicious manner. Finally, some IoT devices, such as sensors, are unobtrusively embedded in the environment such that a user may not even be aware of the device, so a security breach might persist for a long time before being noticed.

Difficulty: Moderate AACSB: Analytical thinking; Information technology; Written and oral communication Learning Objective: 5.2: Identify the key security threats in the e-commerce environment.

39) What is a sniffing attack and how does it differ from a MitM attack?

Answer: A sniffer is a type of eavesdropping program that monitors information traveling over a network. When used legitimately in a sniffing attack, hackers use sniffers to steal proprietary information from a network, including passwords, e-mail messages, company files, and confidential reports. A man-in-the-middle (MitM) attack also involves eavesdropping but is more active than a sniffing attack, which typically involves passive monitoring. In a MitM attack, the attacker can intercept communications between two parties who believe they are directly communicating with one another, when in fact the attacker is controlling the communications.

Difficulty: Moderate AACSB: Analytical thinking; Information technology; Written and oral communication Learning Objective: 5.2: Identify the key security threats in the e-commerce environment.

40) List and briefly describe the various types of malicious code and how they work. Include the different types of viruses.

Answer: Malicious code includes a variety of threats such as viruses, worms, ransomware, Trojan horses, and bot programs. A virus is a computer program that can replicate or make copies of itself and spread to other files. Viruses can range in severity from simple programs that display a message or graphic as a "joke" to more malevolent code that will destroy files or reformat the hard drive of a computer, causing programs to run incorrectly. Worms are designed to spread not only from file to file but from computer to computer and do not necessarily need to be activated in order to replicate. Ransomware is a type of malware (often a worm) that locks your computer or files to stop you from accessing them. A Trojan horse is not itself a virus because it does not replicate but it is a method by which viruses or other malicious code can be introduced into a computer system. It appears benign and then suddenly does something harmful.

For example, it may appear to be only a game and then it will steal passwords and mail them to 9 Copyright © 2022 Pearson Education, Inc.

another person. A backdoor is a feature of worms, viruses, and Trojans that allow attackers to remotely access compromised computers. Bot programs are a type of malicious code that can be covertly installed on a computer when it is attached to the Internet. Once installed, the bot responds to external commands sent by the attacker, and many bots can be coordinated by a hacker into a botnet.

Difficulty: Moderate AACSB: Analytical thinking; Information technology; Written and oral communication Learning Objective: 5.2: Identify the key security threats in the e-commerce environment.

41) Next generation firewalls provide all of the following except: A) an application-centric approach to firewall control.

B) the ability to identify applications regardless of the port, protocol, or security evasion tools used.

C) the ability to automatically update applications on a client computer with security patches.

D) the ability to identify users regardless of the device or IP address.

Answer: C Difficulty: Difficult AACSB: Information technology Learning Objective: 5.3: Describe how technology helps secure Internet communications channels and protect networks, servers, and clients.

42) Asymmetric key cryptography is also known as: A) public key cryptography.

B) secret key cryptography.

C) PGP. D) PKI. Answer: A Difficulty: Moderate AACSB: Information technology Learning Objective: 5.3: Describe how technology helps secure Internet communications channels and protect networks, servers, and clients.

43) All the following statements about symmetric key cryptography are true except: A) in symmetric key cryptography, both the sender and the receiver use the same key to encrypt and decrypt a message.

B) the Data Encryption Standard is a symmetric key encryption system.

C) symmetric key cryptography is computationally slower.

D) symmetric key cryptography is a key element in digital envelopes.

Answer: C Difficulty: Difficult AACSB: Information technology Learning Objective: 5.3: Describe how technology helps secure Internet communications channels and protect networks, servers, and clients.

44) The Data Encryption Standard uses a(n) ________-bit key.

A) 8 B) 56 C) 256 10 Copyright © 2022 Pearson Education, Inc.

D) 512 Answer: B Difficulty: Difficult AACSB: Information technology Learning Objective: 5.3: Describe how technology helps secure Internet communications channels and protect networks, servers, and clients.

45) All of the following statements about public key cryptography are true except: A) public key cryptography uses two mathematically related digital keys.

B) public key cryptography ensures authentication of the sender.

C) public key cryptography does not ensure message integrity.

D) public key cryptography is based on the idea of irreversible mathematical functions.

Answer: B Difficulty: Difficult AACSB: Information technology Learning Objective: 5.3: Describe how technology helps secure Internet communications channels and protect networks, servers, and clients.

46) All of the following are features of WPA3 except: A) it implements a more robust key exchange protocol.

B) it enables the creation of a VPN. C) it provides a more secure way to connect IoT devices.

D) it features expanded encryption for public networks.

Answer: B Difficulty: Moderate AACSB: Information technology Learning Objective: 5.3: Describe how technology helps secure Internet communications channels and protect networks, servers, and clients.

47) All of the following statements about PKI are true except: A) the term PKI refers to the certification authorities and digital certificate procedures that are accepted by all parties.

B) PKI is not effective against insiders who have a legitimate access to corporate systems including customer information.

C) PKI guarantees that the verifying computer of the merchant is secure.

D) the acronym PKI stands for public key infrastructure.

Answer: C Difficulty: Difficult AACSB: Information technology Learning Objective: 5.3: Describe how technology helps secure Internet communications channels and protect networks, servers, and clients.

48) A digital certificate contains all of the following except the: A) subject's private key.

B) subject's public key.

C) digital signature of the certification authority.

D) digital certificate serial number.

Answer: A 11 Copyright © 2022 Pearson Education, Inc.

Difficulty: Difficult AACSB: Information technology Learning Objective: 5.3: Describe how technology helps secure Internet communications channels and protect networks, servers, and clients.

49) Which of the following dimensions of e-commerce security is not provided for by encryption?

A) confidentiality B) availability C) message integrity D) nonrepudiation Answer: B Difficulty: Difficult AACSB: Information technology Learning Objective: 5.3: Describe how technology helps secure Internet communications channels and protect networks, servers, and clients.

50) All of the following are methods of securing channels of communication except: A) TLS. B) digital certificates.

C) VPN. D) FTP. Answer: D Difficulty: Moderate AACSB: Information technology Learning Objective: 5.3: Describe how technology helps secure Internet communications channels and protect networks, servers, and clients.

51) A ________ is hardware or software that acts as a filter to prevent unwanted packets from entering a network.

A) firewall B) virtual private network C) proxy server D) PPTP Answer: A Difficulty: Easy AACSB: Information technology Learning Objective: 5.3: Describe how technology helps secure Internet communications channels and protect networks, servers, and clients.

52) Proxy servers are also known as __________ because they have two network interfaces.

A) firewalls B) application gateways C) dual home systems D) packet filters Answer: C Difficulty: Moderate AACSB: Information technology 12 Copyright © 2022 Pearson Education, Inc.

Learning Objective: 5.3: Describe how technology helps secure Internet communications channels and protect networks, servers, and clients.

53) All of the following are used for authentication except: A) digital signatures.

B) certificates of authority.

C) biometric devices.

D) packet filters.

Answer: D Difficulty: Moderate AACSB: Information technology Learning Objective: 5.3: Describe how technology helps secure Internet communications channels and protect networks, servers, and clients.

54) An intrusion detection system can perform all of the following functions except: A) examining network traffic.

B) setting off an alarm when suspicious activity is detected.

C) checking network traffic to see if it matches certain patterns or preconfigured rules.

D) blocking suspicious activity.

Answer: D Difficulty: Moderate AACSB: Information technology Learning Objective: 5.3: Describe how technology helps secure Internet communications channels and protect networks, servers, and clients.

55) Which of the following is not an example of an access control?

A) firewalls B) proxy servers C) digital signatures D) login passwords Answer: C Difficulty: Moderate AACSB: Information technology Learning Objective: 5.3: Describe how technology helps secure Internet communications channels and protect networks, servers, and clients.

56) Which of the following statements is not true?

A) A VPN provides both confidentiality and integrity.

B) A VPN uses both authentication and encryption.

C) A VPN uses a dedicated secure line.

D) The primary use of VPNs is to establish secure communications among business partners.

Answer: C Difficulty: Moderate AACSB: Information technology Learning Objective: 5.3: Describe how technology helps secure Internet communications channels and protect networks, servers, and clients.

57) Which of the following statements is not true?

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A) Apple's Touch ID stores a digital replica of a user's actual fingerprint in Apple's iCloud.

B) Biometric devices reduce the opportunity for spoofing.

C) A retina scan is an example of a biometric device.

D) Biometric data stored on an iPhone is encrypted.

Answer: A Difficulty: Moderate AACSB: Information technology Learning Objective: 5.3: Describe how technology helps secure Internet communications channels and protect networks, servers, and clients.

58) Face ID is an example of which of the following?

A) biometrics B) encryption C) IDS D) firewall Answer: A Difficulty: Moderate AACSB: Information technology Learning Objective: 5.3: Describe how technology helps secure Internet communications channels and protect networks, servers, and clients.

59) Which of the following is the most common protocol for securing a digital channel of communication?

A) DES B) TLS C) VPN D) HTTP Answer: B Difficulty: Moderate AACSB: Information technology Learning Objective: 5.3: Describe how technology helps secure Internet communications channels and protect networks, servers, and clients.

60) Most computers and mobile devices today have built-in encryption software that users can enable.

Answer: TRUE Difficulty: Difficult AACSB: Information technology Learning Objective: 5.3: Describe how technology helps secure Internet communications channels and protect networks, servers, and clients.

61) The easiest and least expensive way to prevent threats to system integrity is to install antivirus software.

Answer: TRUE Difficulty: Moderate AACSB: Information technology Learning Objective: 5.3: Describe how technology helps secure Internet communications channels and protect networks, servers, and clients.

14 Copyright © 2022 Pearson Education, Inc.

62) Explain the difference between symmetric key cryptography and public key cryptography.

Which dimensions of e-commerce security does encryption address?

Answer: Symmetric key cryptography involves the use of a secret cipher that transforms plain text into cipher text. Both the sender and the receiver use the same key to encrypt and decrypt the message. The possibilities for simple substitution and transposition ciphers are endless, but there are several flaws in these types of systems that make them inadequate for use today. First, for the sender and the receiver to have the same key, it must be sent over a communication medium that is insecure or they must meet in person to exchange the key. If the secret key is lost or stolen, the encryption system fails. This method can be used effectively for data storage protection but is less convenient for e-mail since the correspondents must pass the secret key to one another over another secure medium prior to commencing the communication. Second, in the digital age, computers are so fast and powerful that these ancient encryption techniques can be quickly and easily broken. Modern digital encryption systems must use keys with between 56 and 512 binary digits to ensure that decryption would be unlikely. Third, for commercial use on an e-commerce site each of the parties in a transaction would need a secret key. In a population of millions of Internet users, thousands of millions of keys would be needed to accommodate all e-commerce customers.

Public key cryptography solves the problem of exchanging keys. In this method every user has a pair of numeric keys: private and public. The public key is not secret; on the contrary, it is supposed to be disseminated widely. Public keys may be published in company catalogs or on online. The public key is used by outside parties to encrypt the messages addressed to you. The private or secret key is used by the recipient to decipher incoming messages. The main advantage of a public key cryptographic system is its ability to begin secure correspondence over the Internet without prior exchanging of the keys and, therefore, without the need for a meeting in person or using conventional carriers for key exchange.

Encryption can provide four of the six key dimensions of e-commerce security. It can provide assurance that the message has not been altered (integrity), prevent the user from denying that he/she has sent the message (nonrepudiation), provide verification of the identity of the message (authentication), and give assurance that the message has not been read by others (confidentiality).

Difficulty: Moderate AACSB: Analytical thinking; Information technology; Written and oral communication Learning Objective: 5.3: Describe how technology helps secure Internet communications channels and protect networks, servers, and clients.

63) What dimensions do digital signatures and hash digests add to public key cryptography and how do they work?

Answer: Digital signatures and hash digests can add authentication, nonrepudiation, and integrity when used with public key encryption. Encryption technology also allows for digital signatures and authentication. The sender encrypts the message yet again using their private key to produce a digital signature.

To check the confidentiality of a message and ensure it has not been altered in transit, a hash function is used first to create a digest of the message. A hash function is an algorithm that produces a fixed-length number called a hash or message digest. To ensure the authenticity of the message and to ensure nonrepudiation, the sender encrypts the entire block of cipher text one 15 Copyright © 2022 Pearson Education, Inc.

more time using the sender's private key. This produces a digital signature or "signed" cipher text. The result of this double encryption is sent over the Internet to the recipient. Then, the recipient first uses the sender's public key to authenticate the message. Once authenticated, the recipient uses his or her private key to obtain the hash result and original message. As a final step, the recipient applies the same hash function to the original text and compares the result with the result sent by the sender. If the results are the same, the recipient now knows the message has not been changed during transmission. The message has integrity.

Difficulty: Difficult AACSB: Analytical thinking; Information technology; Written and oral communication Learning Objective: 5.3: Describe how technology helps secure Internet communications channels and protect networks, servers, and clients.

64) Discuss the security of communications channels. Include definitions and explanations for the terms Secure Sockets Layer (SSL), Transport Layer Security (TLS), secure negotiated session, session key, HTTPS, and VPN. Answer: Secure Sockets Layer was the original protocol enabling securing communications over the Internet. Today it has been replaced by the Transport Layer Security Protocol (TLS). When you receive a message from a web server then you will be communicating through a secure channel; this means that TLS will be used to establish a secure negotiated session. A secure negotiated session is a client-server session in which the URL of the requested document, its contents, and the contents of the forms filled out by the user on the page, as well as the cookies that are exchanged, are all encrypted. The browser and the server exchange digital certificates with one another, determine the strongest shared form of encryption, and begin communicating using a unique symmetric encryption key, agreed upon for just this encounter. This is called a session key. TLS provides data encryption, server authentication, optional client authentication, and message integrity for the TCP/IP connections between two computers.

TLS addresses the threat of authenticity by allowing users to verify another user's identity or the identity of a server. It also protects the integrity of the messages exchanged. However, once the merchant receives the encrypted credit and order information, that information is typically stored in unencrypted format on the merchant's servers. While /TLS provides secure transactions between merchant and consumer, it only guarantees server-side authentication. Client authentication is optional. In addition, In addition, TLS cannot provide irrefutability — consumers can order goods or download information products and then claim the transaction never occurred.

TLS is used in conjunction with HTTPS, a secure version of the HTTP protocol that uses TLS for encryption and authentication. It is implemented by a server adopting the HTTP Strict Transport Security (HSTS) feature, which forces browsers to only access the server using HTTPS. Virtual private networks (VPNs) enable remote users to access an internal network from the Internet. They use protocols to create a private connection between a user on a local ISP and a private network. This process is called tunneling because it creates a private connection by adding an encrypted wrapper around the message to hide its content. It is called virtual because it appears to be a dedicated secure line when in fact it is a temporary secure line. VPNs are used primarily for transactions between business partners because dedicated connections can be very expensive. The Internet and VPNs can be used to significantly reduce the costs of secure 16 Copyright © 2022 Pearson Education, Inc.

communications.

Difficulty: Moderate AACSB: Analytical thinking; Information technology; Written and oral communication Learning Objective: 5.3: Describe how technology helps secure Internet communications channels and protect networks, servers, and clients.

65) What is the first step in developing an e-commerce security plan?

A) Create a security organization.

B) Develop a security policy.

C) Perform a risk assessment.

D) Perform a security audit.

Answer: C Difficulty: Moderate AACSB: Information technology Learning Objective: 5.4: Appreciate the importance of policies, procedures, and laws in creating security.

66) To allow lower-level employees access to the corporate network while preventing them from accessing private human resources documents, you would use: A) a firewall.

B) an authorization management system.

C) security tokens.

D) an authorization policy.

Answer: B Difficulty: Easy AACSB: Information technology Learning Objective: 5.4: Appreciate the importance of policies, procedures, and laws in creating security.

67) Which of the following statements is not true?

A) A majority of states require companies that maintain personal data on their residents to publicly disclose when a security breach affecting those residents has occurred.

B) The USA Patriot Act broadly expanded law enforcement's investigative and surveillance powers.

C) The Cybersecurity Information Sharing Act was strongly supported by most large technology companies and privacy advocates.

D) The Federal Trade Commission has asserted that it has authority over corporations' data security practices.

Answer: C Difficulty: Difficult AACSB: Application of knowledge Learning Objective: 5.4: Appreciate the importance of policies, procedures, and laws in creating security.

68) Zero trust is a cybersecurity framework based on the principle of maintaining strict access controls and not trusting anyone or anything by default, even those behind a corporate firewall.

Answer: TRUE Difficulty: Easy 17 Copyright © 2022 Pearson Education, Inc.

AACSB: Application of knowledge Learning Objective: 5.4: Appreciate the importance of policies, procedures, and laws in creating security.

69) How do multi-factor authentication tools provide security?

Answer: Multi-factor authentication (MFA) tools require users to have multiple credentials to verify their identify. Authentication credentials might include something the user knows, such as a password; something the user possesses, such as a smartphone or YUBIkey USB device; and something that the user “is”, such as a physical characteristic. Two-factor authentication (2FA) is a subset of MFA that requires two credentials. Many MFA systems use mobile phones and involve either texting a one-time dynamic secure passcode to the phone or pushing an authentication request to an app on the phone that the user can confirm via a built-in biometric authenticator, such as TouchID, as further discussed later. However, MFA tools can still be compromised, using malware such as Trickbot, which can intercept the one-time codes sent by an app, by phishing attacks, as well as by other methods.

Difficulty: Moderate AACSB: Application of knowledge; Information technology; Written and oral communication Learning Objective: 5.4: Appreciate the importance of policies, procedures, and laws in creating security.

70) Which of the following statements about blockchain is not true?

A) A blockchain system is composed of a distributed network of computers.

B) A blockchain system is inherently centralized.

C) A blockchain system is a transaction processing system.

D) Cryptocurrencies are based on blockchain technology.

Answer: B Difficulty: Moderate AACSB: Information technology Learning Objective: 5.5: Identify the major e-commerce payment systems in use today.

71) All of the following statements about Apple Pay are true except which of the following?

A) Apple Pay is the most popular alternative payment method in the United States.

B) Apple Pay is an example of a universal proximity mobile wallet.

C) Apple Pay can be used for mobile payments at the point of sale at a physical store.

D) Apple Pay has more users than either Google Pay or Samsung Pay. Answer: A Difficulty: Moderate AACSB: Information technology Learning Objective: 5.5: Identify the major e-commerce payment systems in use today.

72) PayPal is an example of which of the following types of payment system?

A) online stored value payment system B) digital checking system C) accumulating balance system D) digital credit card system Answer: A Difficulty: Moderate AACSB: Information technology 18 Copyright © 2022 Pearson Education, Inc.

Learning Objective: 5.5: Identify the major e-commerce payment systems in use today.

73) PCI-DSS is a standard established by which of the following?

A) the banking industry B) the credit card industry C) the federal government D) the retail industry Answer: B Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 5.5: Identify the major e-commerce payment systems in use today.

74) Which of the following is not a major trend in e-commerce payments in 2020-2021?

A) Online payment volume decreases due to the Covid-19 pandemic.

B) PayPal remains the most popular alternative payment method.

C) Large banks enter the mobile wallet and P2P payments market.

D) Payment by credit and/or debit card remains the dominant form of online payment.

Answer: A Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 5.5: Identify the major e-commerce payment systems in use today.

75) All of the following are limitations of the existing online credit card payment system except: A) poor security.

B) cost to consumers.

C) cost to merchant.

D) social equity.

Answer: B Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 5.5: Identify the major e-commerce payment systems in use today.

76) Which of the following statements about Bitcoin is not true?

A) The computational power required to mine Bitcoins has increased over time.

B) Bitcoins are completely secure.

C) Bitcoins are illegal in some countries.

D) Bitcoin mining uses more energy than the entire amount consumed by Switzerland.

Answer: B Difficulty: Moderate AACSB: Information technology Learning Objective: 5.5: Identify the major e-commerce payment systems in use today.

77) Which of the following is a set of short-range wireless technologies used to share information among devices within about two inches of each other?

A) DES B) NFC C) IM D) text messaging 19 Copyright © 2022 Pearson Education, Inc.

Answer: B Difficulty: Difficult AACSB: Information technology Learning Objective: 5.5: Identify the major e-commerce payment systems in use today.

78) All of the following are examples of cryptocurrencies except: A) Ethereum.

B) Ripple.

C) Zelle.

D) Monero.

Answer: C Difficulty: Moderate AACSB: Information technology Learning Objective: 5.5: Identify the major e-commerce payment systems in use today.

79) Zelle is an example of a P2P mobile payment app.

Answer: TRUE Difficulty: Easy AACSB: Application of knowledge Learning Objective: 5.5: Identify the major e-commerce payment systems in use today.

80) Bluetooth is the primary enabling technology for mobile wallets.

Answer: FALSE Difficulty: Easy AACSB: Information technology Learning Objective: 5.5: Identify the major e-commerce payment systems in use today.

81) There is a finite number of Bitcoins that can be created.

Answer: TRUE Difficulty: Moderate AACSB: Information technology Learning Objective: 5.5: Identify the major e-commerce payment systems in use today.

82) Briefly describe the three primary types of mobile wallet apps and identify the examples of each type.

Answer: There are three primary types of mobile wallet apps: universal proximity wallets, branded store proximity wallets, and P2P apps. Universal proximity mobile wallets, such as Apple Pay, Google Pay, and Samsung Pay, that can be used at a variety of merchants for pointof-sale transactions if the merchant supports that service (e.g., has an Apple merchant app and can accept such payments), are the most-well known and common type. Branded store proximity mobile wallets are mobile apps that can be used only at a single merchant. For instance, Walmart, Target, Starbucks, and Dunkin Donuts all have very successful mobile wallet apps.

P2P mobile payment apps, such as Venmo, Zelle, and Square Cash, are used for payments among individuals who have the same app.

Difficulty: Moderate AACSB: Application of knowledge; Information technology; Written and oral communication Learning Objective: 5.5: Identify the major e-commerce payment systems in use today.

20 Copyright © 2022 Pearson Education, Inc.

83) Mint Bills is an example of which of the following EBPP business models?

A) biller-direct B) online banking C) consolidator D) mobile Answer: C Difficulty: Difficult AACSB: Application of knowledge Learning Objective: 5.6: Describe the features and functionality of electronic billing presentment and payment systems.

84) According to the most recent Fiserv survey, 65% of consumers in the United States have used online bill payment.

Answer: TRUE Difficulty: Moderate AACSBL Application of knowledge Learning Objective: 5.6: Describe the features and functionality of electronic billing presentment and payment systems.

85) Define and explain how electronic billing presentment and payment systems (EBPP) systems work. Describe each of the main EBPP business models.

Answer: EBPP refers to electronic billing presentment and payment systems, which are systems that enable the online delivery and payment of monthly bills. EBPP services allow consumers to view bills electronically using either their desktop PC or mobile device and pay them through electronic funds transfers from bank or credit card accounts. More and more companies are choosing to issue statements and bills electronically, rather than mailing out paper versions, especially for recurring bills such as utilities, insurance, and subscriptions.

There are four main types of EBPP business models: online banking, biller-direct, mobile, and consolidator. The online banking model is the most widely used today. Consumers establish an online payment service with their banks and use it to pay bills as they come due or automatically make payments for, say, rent. The payments are made directly to the seller's bank account. This model has the advantage of convenience for the consumer because the payments are deducted automatically, usually with a notice from the bank or the merchant that their account has been debited. In the biller-direct model, consumers are sent bills by e-mail notification, and go to the merchant's website to make payments using their banking credentials. This model has the advantage of allowing the merchant to engage with the consumer by sending coupons or rewards.

The biller-direct model is a two-step process, and less convenient for consumers. The mobile model allows consumers to make payments using mobile apps, once again relying on their bank credentials as the source of funds. Consumers are notified of a bill by text message and authorize the payment. An extension of this is the social-mobile model, where social networks like Facebook integrate payment into their messaging services. The mobile model has several advantages, not least of which is the convenience for consumers of paying bills while using their phones, but also the speed with which bills can be paid in a single step. This is the fastest growing form of EBPP. For instance, Facebook Messenger enables users to send and receive P2P payments to and from friends and family with either a debit card or PayPal account. Facebook 21 Copyright © 2022 Pearson Education, Inc.

does not charge for these transfers.

In the consolidator model, a third party, such as a financial institution or a focused portal such as Intuit's Paytrust, Fiserv's MyCheckFree, Mint Bills, and others, aggregates all bills for consumers and permits one-stop bill payment. This model has the advantage of allowing consumers to see all their bills at one website or app. However, because bills come due at different times, consumers need to check their portals often. The consolidator model faces several challenges.

For billers, using the consolidator model means an increased time lag between billing and payment, and inserts an intermediary between the company and its customer.

Supporting these primary business models are infrastructure providers such as Fiserv, Yodlee, FIS Global, ACI Worldwide, MasterCard RPPS (Remote Payment and Presentment Service), and others that provide the software to create the EBPP system or handle billing and payment collection for the biller.

Difficulty: Moderate AACSB: Analytical thinking; Information technology; Written and oral communication Learning Objective: 5.6: Describe the features and functionality of electronic billing presentment and payment systems.

22 Copyright © 2022 Pearson Education, Inc.

E-commerce 2021: business. technology. society., 16e (Laudon/Traver) Chapter 6 E-commerce Marketing and Advertising Concepts 1) Which of the following statements about Internet usage in the United States is not true?

A) In 2020, around 290 million people of all ages had access to the Internet.

B) In 2020, the growth in the number of new online users was around 1.5%.

C) Over 90% of all U.S. Internet users access the Internet using a mobile device.

D) Adults in the 25-to-54-age group have the highest percentage of Internet use.

Answer: D Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 6.1: Understand the key features of the Internet audience, the basic concepts of consumer behavior and purchasing, and how consumers behave online.

2) Which of the following is not one of the main stages of the online purchasing process?

A) post-purchase service and loyalty B) awareness C) engagement D) conversation Answer: D Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 6.1: Understand the key features of the Internet audience, the basic concepts of consumer behavior and purchasing, and how consumers behave online.

3) What was the approximate Internet penetration rate in 2019 for individuals that have attained less than a high-school education?

A) 51% B) 61% C) 71% D) 81% Answer: C Difficulty: Difficult AACSB: Application of knowledge Learning Objective: 6.1: Understand the key features of the Internet audience, the basic concepts of consumer behavior and purchasing, and how consumers behave online.

4) All of the following are online communications used to support the evaluation of alternatives stages of the consumer decision process except: A) search engines.

B) online catalogs.

C) social networks.

D) targeted banner ads.

Answer: D Difficulty: Difficult AACSB: Application of knowledge Learning Objective: 6.1: Understand the key features of the Internet audience, the basic concepts of consumer behavior and purchasing, and how consumers behave online.

1 Copyright © 2022 Pearson Education, Inc.

5) Approximately ________ of U.S. Internet users research online but do not buy.

A) 7.5% B) 10% C) 25% D) 80% Answer: B Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 6.1: Understand the key features of the Internet audience, the basic concepts of consumer behavior and purchasing, and how consumers behave online.

6) In modeling online consumer behavior, the concept of "consumer skills" refers to the: A) education level of the consumer.

B) communication skills of the consumer.

C) knowledge consumers have about how to conduct online transactions.

D) product evaluation skills of the consumer.

Answer: C Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 6.1: Understand the key features of the Internet audience, the basic concepts of consumer behavior and purchasing, and how consumers behave online.

7) Research shows the two key factors shaping the decision to purchase online are utility and trust.

Answer: TRUE Difficulty: Easy AACSB: Application of knowledge Learning Objective: 6.1: Understand the key features of the Internet audience, the basic concepts of consumer behavior and purchasing, and how consumers behave online.

8) A roughly equal percentage of men and women in the United States use the Internet today.

Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 6.1: Understand the key features of the Internet audience, the basic concepts of consumer behavior and purchasing, and how consumers behave online.

9) Consumers choose the online channel primarily due to social media influence.

Answer: FALSE Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 6.1: Understand the key features of the Internet audience, the basic concepts of consumer behavior and purchasing, and how consumers behave online.

10) Online traffic is partially driven by offline brands and traditional shopping.

Answer: TRUE Difficulty: Easy AACSB: Application of knowledge 2 Copyright © 2022 Pearson Education, Inc.

Learning Objective: 6.1: Understand the key features of the Internet audience, the basic concepts of consumer behavior and purchasing, and how consumers behave online.

11) The majority of online shoppers find vendors by clicking on display ads.

Answer: FALSE Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 6.1: Understand the key features of the Internet audience, the basic concepts of consumer behavior and purchasing, and how consumers behave online.

12) Some people still don’t shop online. Why? Answer: About 7.5% of Internet users do not shop or buy online. One of the most important factors cited by those who don’t shop or buy online is the “trust factor,” the fear that online merchants will cheat you, lose your credit card information, or use personal information you give them to invade your personal privacy, bombarding you with unwanted e-mail and pop-up ads.

Secondary factors can be summarized as “hassle factors,” like shipping costs, returns, and inability to touch and feel the product.

Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 6.1: Understand the key features of the Internet audience, the basic concepts of consumer behavior and purchasing, and how consumers behave online.

13) Which of the following online advertising formats attracted the least amount of spending in 2020?

A) search B) classifieds C) rich media D) e-mail Answer: D Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 6.2: Identify and describe the basic digital commerce marketing and advertising strategies and tools.

14) Google introduced which of the following changes to its search algorithm to weed out low quality sites from search results?

A) Penguin B) Hummingbird C) Panda D) Knowledge Graph Answer: C Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 6.2: Identify and describe the basic digital commerce marketing and advertising strategies and tools.

15) Which of the following forms of online advertising is expected to grow the most between 3 Copyright © 2022 Pearson Education, Inc.

2020 and 2024?

A) paid search B) sponsorships C) search engines D) video Answer: D Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 6.2: Identify and describe the basic digital commerce marketing and advertising strategies and tools.

16) Which of the following is not one of the four main methods advertisers use to behaviorally target ads?

A) Nielsen ratings B) data collected from social networks C) integration of online data with offline data D) clickstream data Answer: A Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 6.2: Identify and describe the basic digital commerce marketing and advertising strategies and tools.

17) Which of the following search engine algorithm updates targets websites that violate Google’s guidelines?

A) Panda B) Penguin C) Hummingbird D) Fred Answer: D Difficulty: Difficult AACSB: Application of knowledge Learning Objective: 6.2: Identify and describe the basic digital commerce marketing and advertising strategies and tools.

18) Which of the following is a Google algorithm update related to local search?

A) Penguin B) Hummingbird C) Panda D) Possum Answer: D Difficulty: Moderate AACSB: Information technology Learning Objective: 6.2: Identify and describe the basic digital commerce marketing and advertising strategies and tools.

19) Pinterest’s Lens is an example of which of the following?

A) keyword advertising 4 Copyright © 2022 Pearson Education, Inc.

B) SEO C) voice search D) visual search Answer: D Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 6.2: Identify and describe the basic digital commerce marketing and advertising strategies and tools.

20) Which of the following is not a practice that degrades the results and usefulness of search engines?

A) social search B) link farms C) content farms D) click fraud Answer: A Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 6.2: Identify and describe the basic digital commerce marketing and advertising strategies and tools.

21) Amazon's Associates program is an example of which of the following?

A) viral marketing B) local marketing C) affiliate marketing D) lead generation marketing Answer: C Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 6.2: Identify and describe the basic digital commerce marketing and advertising strategies and tools.

22) Ad blockers operate in a manner similar to which of the following?

A) anti-virus software B) firewalls C) Flash cookies D) anonymous browsing Answer: B Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 6.2: Identify and describe the basic digital commerce marketing and advertising strategies and tools.

23) Which of the following is not a primary source of ad fraud?

A) browser extensions that insert ads into a premium publisher's website and then list the ads as available on a programmatic ad exchange B) ad targeting firms that create bots that imitate the behavior of real shoppers and then charge advertisers 5 Copyright © 2022 Pearson Education, Inc.

C) botnets hired by publishers to click on web pages to create phony traffic D) native advertising that is displayed on a social media site Answer: D Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 6.2: Identify and describe the basic digital commerce marketing and advertising strategies and tools.

24) The percentage of all e-mail that is spam averaged around ________ in 2020.

A) 55% B) 65% C) 75% D) 85% Answer: A Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 6.2: Identify and describe the basic digital commerce marketing and advertising strategies and tools.

25) Which of the following statements about CAN-SPAM is not true?

A) CAN-SPAM went into effect in January 2004.

B) CAN-SPAM prohibits unsolicited e-mail (spam).

C) CAN-SPAM prohibits the use of deceptive subject lines and false headers.

D) Large spammers are among CAN-SPAM's biggest supporters.

Answer: B Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 6.2: Identify and describe the basic digital commerce marketing and advertising strategies and tools.

26) Which of the following statements about Canada's anti-spam law is not true?

A) Canada's law is based on an opt-in model.

B) The law has no impact on companies located within the United States.

C) The first phase of the law went into effect in 2014.

D) The law applies to e-mail, texts, and social media messaging.

Answer: B Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 6.2: Identify and describe the basic digital commerce marketing and advertising strategies and tools.

27) Which of the following is the most important tool in establishing a relationship with the customer?

A) company website B) company CRM system C) Facebook D) search engine display ads Answer: A 6 Copyright © 2022 Pearson Education, Inc.

Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 6.2: Identify and describe the basic digital commerce marketing and advertising strategies and tools.

28) All of the following are "traditional" online marketing tools except: A) affiliate marketing.

B) e-mail and permission marketing.

C) social marketing.

D) sponsorship marketing.

Answer: C Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 6.2: Identify and describe the basic digital commerce marketing and advertising strategies and tools.

29) All of the following are among those most frequently affected by ad-blocking except: A) gaming sites.

B) newsgroup/forums.

C) social network sites.

D) online retailers.

Answer: D Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 6.2: Identify and describe the basic digital commerce marketing and advertising strategies and tools.

30) The NIKEiD program is an example of which of the following marketing techniques?

A) customer co-production B) transactive content C) price discrimination D) permission marketing Answer: A Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 6.2: Identify and describe the basic digital commerce marketing and advertising strategies and tools.

31) The incremental cost of building the next unit of a good is called the: A) Law of One Price.

B) variable cost.

C) marginal cost.

D) fixed cost.

Answer: C Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 6.2: Identify and describe the basic digital commerce marketing and advertising strategies and tools.

7 Copyright © 2022 Pearson Education, Inc.

32) Which of the following statements about a free pricing strategy is not true?

A) Free products and services can knock out potential and actual competitors.

B) The free pricing strategy was born in the early days of the Web. C) It is difficult to convert free customers into paying customers.

D) Free products and services can help build market awareness.

Answer: B Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 6.2: Identify and describe the basic digital commerce marketing and advertising strategies and tools.

33) Creating multiple variations of information goods and selling these to different market segments at different prices is called: A) bundling.

B) customization.

C) dynamic pricing.

D) versioning.

Answer: D Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 6.2: Identify and describe the basic digital commerce marketing and advertising strategies and tools.

34) All of the following are fixed price strategies except: A) bundling.

B) versioning.

C) free pricing.

D) yield management.

Answer: D Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 6.2: Identify and describe the basic digital commerce marketing and advertising strategies and tools.

35) Which of the following involves getting customers to pass along a company's marketing message to friends, family, and colleagues?

A) affiliate marketing B) viral marketing C) native advertising D) lead generation marketing Answer: B Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 6.2: Identify and describe the basic digital commerce marketing and advertising strategies and tools.

36) Group M, the world’s largest advertising buyer, requires which of the following in order for 8 Copyright © 2022 Pearson Education, Inc.

an ad to be considered viewable?

A) 50% of the pixels must be in view for at least one second.

B) 50% of the pixels must be in view for at least two seconds.

C) 100% of the pixels must be in view for at least one second D) 100% of the pixels must be in view for at least two seconds Answer: C Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 6.2: Identify and describe the basic digital commerce marketing and advertising strategies and tools.

37) Which of the following is based on the idea of complete price transparency in a perfect information marketplace?

A) the Law of One Price B) dynamic pricing C) price discrimination D) versioning Answer: A Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 6.2: Identify and describe the basic digital commerce marketing and advertising strategies and tools.

38) Which of the following industries accounted for the highest percentage of spending on online advertising in 2019?

A) financial services B) retail C) automotive D) entertainment Answer: B Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 6.2: Identify and describe the basic digital commerce marketing and advertising strategies and tools.

39) Which of the following statements about native advertising is not true?

A) Almost all of social network ad spending is native advertising.

B) Most consumers are able to easily distinguish editorial content from native advertising.

C) Native advertising’s share of mobile display revenues has grown to 85% in 2020.

D) Consumers look at native ads more frequently than they look at display ads.

Answer: B Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 6.2: Identify and describe the basic digital commerce marketing and advertising strategies and tools.

40) Which of the following is an automated, auction-based method for matching demand and supply for online display ads?

9 Copyright © 2022 Pearson Education, Inc.

A) retargeting B) behavioral targeting C) programmatic advertising D) keyword advertising Answer: C Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 6.2: Identify and describe the basic digital commerce marketing and advertising strategies and tools.

41) Research has found that most of the ad impressions served across display advertising platforms are not viewable.

Answer: TRUE Difficulty: Difficult AACSB: Application of knowledge Learning Objective: 6.2: Identify and describe the basic digital commerce marketing and advertising strategies and tools.

42) The highest amount of online advertising spending is for online video ads.

Answer: FALSE Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 6.2: Identify and describe the basic digital commerce marketing and advertising strategies and tools.

43) Evidence suggests that real-time customer chat increases the dollar value of transactions.

Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 6.2: Identify and describe the basic digital commerce marketing and advertising strategies and tools.

44) A significant percentage of online ad impressions served are not actually viewed or even viewable.

Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 6.2: Identify and describe the basic digital commerce marketing and advertising strategies and tools.

45) Lead generation marketing firms specialize in inbound marketing.

Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 6.2: Identify and describe the basic digital commerce marketing and advertising strategies and tools.

10 Copyright © 2022 Pearson Education, Inc.

46) The concept of "customer satisfaction" is broader than the concept of "customer experience."

Answer: FALSE Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 6.2: Identify and describe the basic digital commerce marketing and advertising strategies and tools.

47) Bundling is the process of selling two or more products together for a price that is less than the sum of the two product's individual prices.

Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 6.2: Identify and describe the basic digital commerce marketing and advertising strategies and tools.

48) How are blogs being used for marketing?

Answer: Blogs have been around for a decade and are a part of the mainstream online culture.

Around 30 million people write blogs, and around 85 million read blogs. Blogs play a vital role in online marketing. Although more firms use Facebook, Instagram, and Twitter, these sites have not replaced blogs, and in fact often point to blogs for long-form content. Because blog readers and creators tend to be more educated, have higher incomes, and be opinion leaders, blogs are ideal platforms for ads for many products and services that cater to this kind of audience.

Because blogs are based on the personal opinions of the writers, they are also an ideal platform to start a viral marketing campaign. Advertising networks that specialize in blogs provide some efficiency in placing ads, as do blog networks, which are collections of a small number of popular blogs, coordinated by a central management team, and which can deliver a larger audience to advertisers.

Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 6.2: Identify and describe the basic digital commerce marketing and advertising strategies and tools.

49) How do the Interactive Advertising Bureau’s standard ad unit portfolio and guidelines released in 2017 differ from its earlier guidelines for display ads?

Answer: For many years, IAB categorized display ads based on fixed pixel sizes, such as a medium rectangle (300 x 250 pixels), large rectangle (336 x 280 pixels), leaderboard (728 x 90 pixels), and wide skyscraper (100 x 600 pixels) (the top performing sizes, according to Google).

However, in 2017, the IAB released the final version of its new standard ad unit portfolio, based on aspect ratio and size range, rather than fixed pixel size, allowing for flexible sizing and delivery of a more consistent ad experience across multiple screen sizes and devices. Ad types are now identified as horizontal (typically placed at the top or bottom of the screen), vertical (typically placed on the right or left edge of the screen), tiles (typically placed in a grid layout), or full page (which cover the full screen of the device in either a portrait or landscape layout).

The guidelines are based on HTML5 technology and cover all types of display ads, as well as new ad experiences such as augmented reality, virtual reality, 360-degree ads, and emoji ads, among others. Another important aspect of the guidelines is their incorporation of LEAN principles. LEAN is an acronym that stands for lightweight, encrypted, AdChoices-supported, and non-invasive advertising. In an attempt to enhance consumer acceptance of advertising, the 11 Copyright © 2022 Pearson Education, Inc.

standard contains guidelines with respect to animations, ad expansions, close buttons, user initiation, interstitials (ads that appear before, in-between, or after the primary content), video and auto-play video and audio. LEAN also includes a list of disruptive ad experiences that are no longer permitted, such as pop-up ads (ads that overlay or cover the content after the user has started viewing the content), auto expansion (ads that expand without user initiation), auto-play video with audio, and flashing animations.

Difficulty: Moderate AACSB: Analytical thinking; Information technology; Written and oral communication Learning Objective: 6.2: Identify and describe the basic digital commerce marketing and advertising strategies and tools.

50) Discuss the changes that Google has made to its search algorithms to improve search results and user experience.

Answer: Google makes frequent changes to their search algorithms to improve search results and user experience. Google, for instance, reportedly makes over 600 search engine changes in a year. Most are small unannounced tweaks. Major changes have included Panda, Penguin, Hummingbird, Knowledge Graph, an unnamed algorithm that has been nicknamed Mobilegeddon, and Possum. Panda was introduced to weed out low quality sites from search results. Those sites with thin content, duplicate content, content copied from elsewhere on the Web, and content that did not attract high-quality hits from other sources were systematically pushed down in the search results. Google introduced Penguin to punish websites and their SEO marketing firms who were manipulating links to their site in order to improve their rankings. The Google search engine rewards sites that have links from many other sites. What some marketers discovered is that Google could not tell the quality of these back links, and they began to manufacture links by putting their clients onto list sites, creating multiple blogs to link to their clients' site, and paying others to link to their clients' sites. Penguin evaluates the quality of links to a site and pushes down in the rankings those sites that have poor-quality back links. Rather than evaluate each word separately in a search, Google's semantically informed Hummingbird will try to evaluate an entire sentence.

Semantic search more closely follows conversational search, or search as you would ordinarily speak it to another human being. Google developed Knowledge Graph as an effort to anticipate what you might want to know more about as you search on a topic or answer questions you might not thought of asking. Results of Knowledge Graph appear on the right of the screen and contain more information about the topic or person you are searching on. Not all search terms have a Knowledge Graph result. Google displays information based on what other users have searched for in the past, as well as its database on over 1 billion objects (people, places, and things), and more than 70 billion facts. In 2015, Google released a new algorithm update (nicknamed Mobilegeddon) that made the "mobile-friendliness" of websites a much stronger ranking factor for mobile searches. Websites that are not optimized for mobile now have a much lower ranking in mobile search results. Google also lowers the search rank of mobile websites that display an ad that obscures the screen and asks users whether they would like to install the site's mobile app, because such ads are less mobile-friendly. In 2016, Google introduced Possum, an algorithm update that varies search results based on the user's location; so, for example, the closer a user is to a business's address, the more likely it is to appear among the local results. In 2017, Google released the Fred algorithm, which targets websites that violate Google's guidelines, primarily blogs with low-value, ad-centered content. Since then, Google has released a number of unnamed core algorithm updates, about which it has not provided many details.

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Difficulty: Moderate AACSB: Analytical thinking; Information technology; Written and oral communication Learning Objective: 6.2: Identify and describe the basic digital commerce marketing and advertising strategies and tools.

51) Which of the following is an open source software framework used to collect and analyze a company's big data?

A) data warehouse B) Hadoop C) SQL D) profiling Answer: B Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 6.3: Identify and describe the main technologies that support online marketing.

52) Which of the following statements about the Internet's impact on marketing is not true?

A) The Internet has broadened the scope of marketing communications.

B) The Internet has decreased the impact of brands.

C) The Internet has increased the richness of marketing communications.

D) The Internet has expanded the information intensity of the marketplace.

Answer: B Difficulty: Difficult AACSB: Application of knowledge Learning Objective: 6.3: Identify and describe the main technologies that support online marketing.

53) Which of the following features of e-commerce technology enables marketers to engage customers in a dialog and dynamically adjust the experience to the consumer?

A) ubiquity B) richness C) information density D) interactivity Answer: D Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 6.3: Identify and describe the main technologies that support online marketing.

54) Which of the following features of e-commerce technology decreases the cost of delivering marketing messages and receiving feedback from users?

A) personalization/customization B) universal standards C) ubiquity D) interactivity Answer: B Difficulty: Moderate 13 Copyright © 2022 Pearson Education, Inc.

AACSB: Application of knowledge Learning Objective: 6.3: Identify and describe the main technologies that support online marketing.

55) The richness made possible by e-commerce technologies does which of the following?

A) It reduces the cost of delivering marketing messages and receiving feedback from users.

B) It allows consumers to become co-producers of the goods and services being sold.

C) It allows video, audio, and text to be integrated into a single marketing message and consuming experience.

D) It enables worldwide customer service and marketing communications.

Answer: C Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 6.3: Identify and describe the main technologies that support online marketing.

56) All of the following statements about cookies are true except: A) cookies can be used to create cross-site profiles of users.

B) the data typically stored in cookies includes a unique ID and e-mail address.

C) cookies make shopping carts possible by allowing a site to keep track of a user's actions.

D) the more cookies are deleted, the less accurate ad server metrics become.

Answer: B Difficulty: Moderate AACSB: Information technology Learning Objective: 6.3: Identify and describe the main technologies that support online marketing.

57) A web beacon is: A) a cookie that carries a virus.

B) an executable cookie.

C) an automated applet for performing web searches.

D) a tiny graphics file embedded in an e-mail or web page.

Answer: D Difficulty: Easy AACSB: Application of knowledge Learning Objective: 6.3: Identify and describe the main technologies that support online marketing.

58) ________ is an open source database that can store and analyze both structured and unstructured data.

A) ASP B) PHP C) Hadoop D) JSP Answer: C Difficulty: Easy AACSB: Information technology 14 Copyright © 2022 Pearson Education, Inc.

Learning Objective: 6.3: Identify and describe the main technologies that support online marketing.

59) A ________ is a repository of customer information that records all contacts that a customer has with a firm and generates a customer profile available to everyone in the firm with a need to know the customer.

A) customer service chat system B) CRM system C) data warehouse D) transactive content system Answer: B Difficulty: Easy AACSB: Information technology Learning Objective: 6.3: Identify and describe the main technologies that support online marketing.

60) The marketing technique known as ________ involves merchants offering many products for which there is little demand.

A) long tail marketing B) flash marketing C) yield management D) bait-and-switch Answer: A Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 6.3: Identify and describe the main technologies that support online marketing.

61) Which of the following provides web marketers with a very quick means of identifying a customer and understanding his or her behavior at a site?

A) transaction logs B) cookies C) registration forms D) data warehouses Answer: B Difficulty: Moderate AACSB: Information technology Learning Objective: 6.3: Identify and describe the main technologies that support online marketing.

62) Transaction logs are built into client software and not the web server software.

Answer: FALSE Difficulty: Easy AACSB: Information technology Learning Objective: 6.3: Identify and describe the main technologies that support online marketing.

63) Regular in-app cookies can be shared between apps.

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Answer: FALSE Difficulty: Moderate AACSB: Information technology Learning Objective: 6.3: Identify and describe the main technologies that support online marketing.

64) What are two methods being developed to track consumers across devices?

Answer: Two methods being developed to track consumers across devices are deterministic cross-device tracking and probabilistic cross-device tracking. Deterministic cross-device tracking relies on personally identifiable information such as e-mail address used to log into an app and website on different devices. Facebook, Google, Apple, Twitter, and other companies that have very large user bases and have both desktop and mobile properties that require logins are the most likely to be able to effectively exploit deterministic matching. Probabilistic cross-device tracking uses algorithms to analyze thousands of anonymous data points, such as device type, operating system, and IP address, to create a possible match. This type of matching is less accurate than deterministic matching.

Difficulty: Moderate AACSB: Information technology Learning Objective: 6.3: Identify and describe the main technologies that support online marketing.

65) What is big data and why are marketers interested in it?

Answer: Big data usually refers to very large data sets in the petabyte and exabyte range—in other words, billions to trillions of records, often from different sources. Big data is produced in much larger quantities and much more rapidly than traditional data collection mechanisms. Even though tweets are limited to 140 characters each, Twitter generates more than eight terabytes of data daily. According to technology research firm IDC, data is more than doubling every two years, so the amount of data available to organizations is skyrocketing. The next frontier will be data derived from the Internet of Things (IoT). Making sense out of big data quickly to gain a market advantage is critical.

Marketers are interested in big data because it allows them to link huge amounts of data from a variety of different sources, which in the past they were unable to do, and mine if for patterns of consumer behavior, with the potential to derive new insights into customer behavior, financial market activity, or other phenomena. For instance, Evrythng, an IoT platform company, partnered with Trueffect, a digital ad firm, to develop ways that marketers can use data generated by connected appliances and other devices to directly communicate with and target advertising with consumers. However, to derive business value from this data, organizations need new technologies and analytic tools capable of managing and analyzing nontraditional data along with their traditional enterprise data.

Difficulty: Moderate AACSB: Information technology Learning Objective: 6.3: Identify and describe the main technologies that support online marketing.

66) Discuss the revolution in Internet marketing technologies. What are four primary impacts the Internet has had on marketing?

Answer: The Internet has had four broad impacts on marketing. First, the Internet as a 16 Copyright © 2022 Pearson Education, Inc.

communications medium has broadened the scope of marketing. Marketing messages can now easily reach a greater number of people. Second, the Internet has increased the richness of marketing communications by combining text, video, and audio content into rich messages.

Some even think that the Web is a richer medium than television or video because of the complexity of messages and the huge amount of, and wide ranging, content that is available.

Third, the Internet has greatly expanded the information intensity of the marketplace by providing marketers with fine-grained, detailed, real-time information about consumers as they transact in the marketplace. Fourth, the always-on, always-attached, environment created by mobile devices results in consumers being much more available to receive marketing messages.

One result is an extraordinary expansion in marketing opportunities for firms.

Difficulty: Moderate AACSB: Analytical thinking; Information technology; Written and oral communication Learning Objective: 6.3: Identify and describe the main technologies that support online marketing.

67) Define and describe the functionality of customer relationship management (CRM) systems.

Answer: Customer relationship management systems are an important Internet marketing technology. They serve as repositories for customer information that records all of the contacts a customer has with a firm including its website. CRM systems can generate a profile of each customer that is available to everyone in the firm who requests the data, and they contain analytical software that will make this data valuable to the firm.

In the past, firms generally did not maintain a single storehouse of customer information, and any customer data was organized along product lines with each product line maintaining a separate customer list. CRMs are part of the evolution towards customer-centric and segmented market-based businesses, and away from this product-based model.

CRMs use database technology with capabilities for assessing the needs of individual customers and differentiating products to meet those needs. The customer profiles generated by a CRM can include a map of the customer's relationship with the firm, the products he or she has bought and the frequency of purchases, the demographic and psychographic profile for each customer, profitability measures, a complete contact history, and marketing and sales information containing marketing campaigns that the customer received and the customer's responses to them.

With these profiles, CRMs can be used to sell additional products and services, develop new products, increase product utilization, reduce marketing costs, identify and retain profitable customers, optimize service delivery costs, retain high lifetime value customers, enable personal communications, improve customer loyalty, and increase product profitability.

Difficulty: Moderate AACSB: Analytical thinking; Information technology; Written and oral communication Learning Objective: 6.3: Identify and describe the main technologies that support online marketing.

68) If you want to determine the size of your website's audience, the metric you will use for the most accurate measurement will be: A) page views.

B) unique visitors.

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C) hits.

D) reach.

Answer: B Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 6.4: Understand the costs and benefits of online marketing communications.

69) Cross-platform attribution refers to: A) how to assign credit to different marketing initiatives.

B) understanding why visitors to a website purchase a product.

C) understanding how impressions lead to visits.

D) understanding why people click on ads.

Answer: A Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 6.4: Understand the costs and benefits of online marketing communications.

70) VTR measures the ________ response rate to an ad.

A) 30-minute B) 24-hour C) 7-day D) 30-day Answer: D Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 6.4: Understand the costs and benefits of online marketing communications.

71) Uber has been criticized for using which of the following?

A) flash marketing B) bundling C) surge pricing D) malware Answer: C Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 6.4: Understand the costs and benefits of online marketing communications.

72) What kinds of ads have the lowest CTR? A) video ads B) e-mails to an in-house list C) social network display ads D) banner display ads Answer: D Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 6.4: Understand the costs and benefits of online marketing communications.

73) Purchasing an online ad on a CPA basis means that the advertiser: 18 Copyright © 2022 Pearson Education, Inc.

A) pays for impressions in 1,000 unit lots.

B) pays a pre-negotiated fee for each click an ad receives.

C) pays only for those users who perform a specific action, such as registering, purchasing, etc.

D) exchanges something of equal value for the ad space.

Answer: C Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 6.4: Understand the costs and benefits of online marketing communications.

74) eCPM measures the ROI of an ad by dividing the total earnings of the ad by which of the following?

A) the total number of impressions B) the total number of impressions in hundreds C) the total number of impressions in thousands D) the total number of impressions in millions Answer: C Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 6.4: Understand the costs and benefits of online marketing communications.

75) Which of the following measures the average length of stay at a website?

A) loyalty B) stickiness C) page views D) retention rate Answer: B Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 6.4: Understand the costs and benefits of online marketing communications.

76) Acquisition rate is a measure of the: A) percentage of visitors who indicate an interest in a site's products by registering or visiting a product's pages.

B) percentage of visitors who become customers.

C) percentage of existing customers who continue to buy on a regular basis.

D) percentage of shoppers who do not return within a year after their initial purchase.

Answer: A Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 6.4: Understand the costs and benefits of online marketing communications.

77) Recency refers to the: A) percentage of customers who do not return during the next year after an initial purchase.

B) time elapsed since the last visit made by a customer.

C) percentage of existing customers who continue to buy on a regular basis.

D) percentage of customers who return to the site within a year to make additional purchases.

Answer: B Difficulty: Moderate 19 Copyright © 2022 Pearson Education, Inc.

AACSB: Application of knowledge Learning Objective: 6.4: Understand the costs and benefits of online marketing communications.

78) View-to-cart ratio is a measure of the: A) percentage of visitors who indicate an interest in a site's products by registering or visiting a product's pages.

B) percentage of views that lead to an add-to-cart action.

C) percentage of existing customers who continue to buy on a regular basis.

D) percentage of shoppers who do not return within a year after their initial purchase.

Answer: B Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 6.4: Understand the costs and benefits of online marketing communications.

79) Which of the following measures the ratio of items purchased to product views?

A) conversion rate B) cart conversion rate C) browse-to-buy ratio D) view-to-cart ratio Answer: C Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 6.4: Understand the costs and benefits of online marketing communications.

80) Which of the following measures the percentage of e-mails that could not be delivered?

A) abandonment rate B) unsubscribe rate C) bounce-back rate D) attrition rate Answer: C Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 6.4: Understand the costs and benefits of online marketing communications.

81) Which of the following is the most meaningful metric for video ads?

A) view time B) CTR C) completion rate D) skip rate Answer: C Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 6.4: Understand the costs and benefits of online marketing communications.

82) Which of the following measures the percentage of times an ad is clicked?

A) retention rate B) CTR C) loyalty rate 20 Copyright © 2022 Pearson Education, Inc.

D) conversion rate Answer: B Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 6.4: Understand the costs and benefits of online marketing communications.

83) The average abandonment rate is highest for shopping carts accessed via smartphones.

Answer: FALSE Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 6.4: Understand the costs and benefits of online marketing communications.

84) What is cross-platform attribution and why is it difficult?

Answer: Cross-platform attribution involves understanding how to assign appropriate credit to different marketing initiatives on a variety of platforms that may have influenced a consumer along the way to an ultimate purchase. There is increasing recognition that first-click and lastclick models that focus on either the first or last marketing channel or advertising format that a consumer engages with prior to a purchase, are not sufficient. Cross-platform attribution is difficult because there is a lengthy path from simple online ad impressions, website visits, and page views to the purchase of a product.

Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 6.4: Understand the costs and benefits of online marketing communications.

85) What is marketing analytics software and what is it used for?

Answer: Marketing analytics software is a software package that collects, stores, analyzes, and graphically presents data on each of the stages in the conversion of shopper to customer process on e-commerce sites. Marketing analytics packages help business managers optimize the return on investment on their websites and social marketing efforts, by building a detailed understanding of how consumers behave when visiting their websites. They help analyze where customers come from, what they do on the site, and which content is most appealing, as well as how users shop and add to their shopping cart, and whether they abandon their shopping cart.

Marketing analytics also allows managers to measure the impact of specific marketing campaigns.

Difficulty: Moderate AACSB: Analytical thinking; Information technology; Written and oral communication Learning Objective: 6.4: Understand the costs and benefits of online marketing communications.

21 Copyright © 2022 Pearson Education, Inc.

E-commerce 2021: business. technology. society., 16e (Laudon/Traver) Chapter 7 Social, Mobile, and Local Marketing 1) All of the following were popular types of online marketing before 2007 except: A) e-mail.

B) corporate websites.

C) mobile marketing.

D) display ads.

Answer: C Difficulty: Easy AACSB: Application of knowledge Learning Objective: 7.1: Understand the difference between traditional online marketing and the new social-mobile-local marketing platforms and the relationships between social, mobile, and local marketing.

2) Which of the following is not true about social marketing?

A) More than 50% of Twitter's ad revenues are generated by desktop users.

B) Spending on social network advertising grew by a cumulative annual average growth rate of over 35% between 2015 and 2019.

C) Social marketing differs markedly from traditional online marketing.

D) In social marketing, businesses cannot tightly control their brand messaging.

Answer: A Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 7.1: Understand the difference between traditional online marketing and the new social-mobile-local marketing platforms and the relationships between social, mobile, and local marketing.

3) By 2022, it is estimated that advertisers will be spending which of the following amounts on mobile marketing?

A) $13 million B) $130 million C) $13 billion D) $130 billion Answer: D Difficulty: Moderate AACSB: Analytical thinking Learning Objective: 7.

4) In which year did spending on mobile marketing first exceed the amount spent on desktop/laptop marketing?

A) 2014 B) 2015 C) 2016 D) 2017 Answer: C Difficulty: Difficult AACSB: Application of knowledge 1 Copyright © 2022 Pearson Education, Inc.

Learning Objective: 71: Understand the difference between traditional online marketing and the new social-mobile-local marketing platforms and the relationships between social, mobile, and local marketing.

5) Both mobile and social advertising spending are expected to double from 2017 to 2021.

Answer: TRUE Difficulty: Easy AACSB: Application of knowledge Learning Objective: 7.1: Understand the difference between traditional online marketing and the new social-mobile-local marketing platforms and the relationships between social, mobile, and local marketing.

6) In 2020, the amount spent on local (digital) marketing is expected to exceed the amount spent on mobile marketing.

Answer: FALSE Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 7.1: Understand the difference between traditional online marketing and the new social-mobile-local marketing platforms and the relationships between social, mobile, and local marketing.

7) What has changed in online marketing since 2007?

Answer: Since 2007, Facebook and other social network sites have grown rapidly, smartphones have taken the market by storm, and local marketing has taken off. Prior to 2007, online marketing consisted of creating a corporate website, buying display ads on Yahoo and purchasing AdWords on Google, and sending e-mail. The display ad was the most prevalent form of online advertising. "Eyeballs" were the primary measure of a site's success, and "impressions" were the measure of an advertising campaign's success. What’s different about the world of social-mobile-local marketing and advertising are the related concepts of “conversations” and “engagement. The emphasis in online marketing has shifted from a focus on eyeballs to a focus on participating in customer-oriented conversations. Today, marketing is based on businesses marketing themselves as partners in multiple online conversations with customers and critics. Marketing requires firms to locate and participate in conversations happening on social media. Businesses can no longer tightly control their brand messaging. In addition, in 2007, mobile marketing was in its infancy, but now the amount spent on mobile marketing has overtaken the amount spent on desktop/laptop marketing.

Difficulty: Moderate AACSB: Analytical thinking; Written and oral communication Learning Objective: 7.1: Understand the difference between traditional online marketing and the new social-mobile-local marketing platforms and the relationships between social, mobile, and local marketing.

8) How much time a month does the average U.S. adult spend on Facebook?

A) about 7 hours B) about 10 hours C) about 17 hours D) about 27 hours Answer: C 2 Copyright © 2022 Pearson Education, Inc.

Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 7.1: Understand the difference between traditional online marketing and the new social-mobile-local marketing platforms and the relationships between social, mobile, and local marketing.

9) Which of the following attracts a highly educated, professional and managerial audience?

A) Snapchat B) TikTok C) LinkedIn D) Instagram Answer: C Difficulty: Easy AACSB: Application of knowledge Learning Objective: 7.2: Understand the social marketing process from fan acquisition to sales and the marketing capabilities of social marketing platforms such as Facebook, Twitter, and Pinterest.

10) Which of the following is the first step in the social marketing process?

A) community B) amplification C) fan acquisition D) engagement Answer: C Difficulty: Easy AACSB: Application of knowledge Learning Objective: 7.2: Understand the social marketing process from fan acquisition to sales and the marketing capabilities of social marketing platforms such as Facebook, Twitter, and Pinterest.

11) Encouraging users to click a Like button is an example of which step in the social marketing process?

A) fan acquisition B) brand strength C) community D) amplification Answer: D Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 7.2: Understand the social marketing process from fan acquisition to sales and the marketing capabilities of social marketing platforms such as Facebook, Twitter, and Pinterest.

12) Your Facebook News Feed includes all of the following except: A) status updates.

B) app activity.

C) Likes.

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D) tweets.

Answer: D Difficulty: Easy AACSB: Application of knowledge Learning Objective: 7.2: Understand the social marketing process from fan acquisition to sales and the marketing capabilities of social marketing platforms such as Facebook, Twitter, and Pinterest.

13) Which of the following companies used information from the Facebook pixel (tracking beacon) on its website and mobile app to create a dynamic ad campaign with ads delivered in Facebook News Feeds?

A) Lays B) Sephora C) Lifewtr D) Yankee Candle Answer: B Difficulty: Difficult AACSB: Information technology Learning Objective: 7.2: Understand the social marketing process from fan acquisition to sales and the marketing capabilities of social marketing platforms such as Facebook, Twitter, and Pinterest.

14) Ads that appear in a Facebook user's News Feed are called: A) Marketplace Ads. B) Promoted Ads. C) Page Post Ads. D) Brand Ads. Answer: C Difficulty: Easy AACSB: Application of knowledge Learning Objective: 7.2: Understand the social marketing process from fan acquisition to sales and the marketing capabilities of social marketing platforms such as Facebook, Twitter, and Pinterest.

15) In 2020, about how many hours a month are online social network users in the United States expected to spend, on average, on all social networks combined?

A) 15 B) 20 C) 25 D) 40 Answer: D Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 7.2: Understand the social marketing process from fan acquisition to sales and the marketing capabilities of social marketing platforms such as Facebook, Twitter, and Pinterest.

16) Which of the following is a history of your actions on Facebook?

4 Copyright © 2022 Pearson Education, Inc.

A) News Feed B) Timeline C) Ticker D) Open Graph Answer: B Difficulty: Moderate AACSB: Information technology Learning Objective: 7.2: Understand the social marketing process from fan acquisition to sales and the marketing capabilities of social marketing platforms such as Facebook, Twitter, and Pinterest.

17) Sprout Social helped the Chicago Bulls basketball team to improve its social media presence on all of the following except: A) Facebook.

B) Instagram.

C) Twitter.

D) Pinterest.

Answer: D Difficulty: Easy AACSB: Application of knowledge Learning Objective: 7.2: Understand the social marketing process from fan acquisition to sales and the marketing capabilities of social marketing platforms such as Facebook, Twitter, and Pinterest.

18) All of the following marketing tools on Facebook require payment except: A) Brand Pages.

B) Facebook Watch.

C) News Feed Page Post Ads. D) Mobile Ads. Answer: A Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 7.2: Understand the social marketing process from fan acquisition to sales and the marketing capabilities of social marketing platforms such as Facebook, Twitter, and Pinterest.

19) The ratio of impressions to fans is a measure of: A) engagement.

B) amplification.

C) community.

D) fan acquisition.

Answer: D Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 7.2: Understand the social marketing process from fan acquisition to sales and the marketing capabilities of social marketing platforms such as Facebook, Twitter, and Pinterest.

5 Copyright © 2022 Pearson Education, Inc.

20) Which of the following Twitter marketing tools provides marketers with a real-time digital dashboard so they can see tweet activity about a TV show, commercial, or brand?

A) Promoted Trends B) Amplify C) Twitter Cards D) Promoted Accounts Answer: B Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 7.2: Understand the social marketing process from fan acquisition to sales and the marketing capabilities of social marketing platforms such as Facebook, Twitter, and Pinterest.

21) Which of the following Twitter marketing tools involves a coupon or other promotional offer that appears in users' Twitter timeline?

A) Promoted Tweet B) Promoted Trend C) Promoted Account D) Twitter Card Answer: D Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 7.2: Understand the social marketing process from fan acquisition to sales and the marketing capabilities of social marketing platforms such as Facebook, Twitter, and Pinterest.

22) Which of the following statements about Pinterest is not true?

A) Pinned photos and photo boards are available to all Pinterest users.

B) Men are Pinterest's fastest growing demographic.

C) Pinterest enables users to integrate their pins into their Facebook News Feeds and Twitter streams.

D) Pinterest is the only one of the major social networks that does not accept paid advertising.

Answer: D Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 7.2: Understand the social marketing process from fan acquisition to sales and the marketing capabilities of social marketing platforms such as Facebook, Twitter, and Pinterest.

23) Which of the following are features of both Pinterest and Twitter?

A) tweets B) hashtags C) pins D) Image Hover widget Answer: B Difficulty: Moderate AACSB: Information technology Learning Objective: 7.2: Understand the social marketing process from fan acquisition to sales 6 Copyright © 2022 Pearson Education, Inc.

and the marketing capabilities of social marketing platforms such as Facebook, Twitter, and Pinterest.

24) All of the following are Pinterest marketing tools except: A) Brand pages.

B) Rich Pins.

C) Promoted Pins.

D) Promoted Accounts.

Answer: D Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 7.2: Understand the social marketing process from fan acquisition to sales and the marketing capabilities of social marketing platforms such as Facebook, Twitter, and Pinterest.

25) The number of people exposed to pins on Pinterest is a measure of which of the following?

A) engagement B) community C) brand strength D) fan acquisition Answer: D Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 7.2: Understand the social marketing process from fan acquisition to sales and the marketing capabilities of social marketing platforms such as Facebook, Twitter, and Pinterest.

26) Which of the following is an online service specifically aimed at measuring the impact of Pinterest and other visual social media?

A) TweetDeck B) Curalate C) Amplify D) Webtrends Answer: B Difficulty: Moderate AACSB: Information technology Learning Objective: 7.2: Understand the social marketing process from fan acquisition to sales and the marketing capabilities of social marketing platforms such as Facebook, Twitter, and Pinterest.

27) Which of the following is another term for amplification?

A) impressions B) reach C) conversation rate D) conversion ratio Answer: B Difficulty: Moderate AACSB: Application of knowledge 7 Copyright © 2022 Pearson Education, Inc.

Learning Objective: 7.2: Understand the social marketing process from fan acquisition to sales and the marketing capabilities of social marketing platforms such as Facebook, Twitter, and Pinterest.

28) All of the following are examples of dark social except: A) e-mail.

B) tweets.

C) SMS texts.

D) instant messages.

Answer: B Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 7.2: Understand the social marketing process from fan acquisition to sales and the marketing capabilities of social marketing platforms such as Facebook, Twitter, and Pinterest.

29) As discussed in the chapter-opening case, Hubble used all of the following Facebook marketing tools except: A) Facebook brand page.

B) Facebook News Feed ads C) Facebook Live.

D) Facebook’s Lookalike Audience lead generation tool.

Answer: C Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 7.2: Understand the social marketing process from fan acquisition to sales and the marketing capabilities of social marketing platforms such as Facebook, Twitter, and Pinterest.

30) Which of the following allows Facebook to track user behavior on other sites?

A) Open Graph B) Like button C) hashtags D) Facebook Watch Answer: B Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 7.2: Understand the social marketing process from fan acquisition to sales and the marketing capabilities of social marketing platforms such as Facebook, Twitter, and Pinterest.

31) Which of the following is not true about Page Post Ads displayed in the Facebook News Feed?

A) They have a tiny tag indicating that they are sponsored.

B) They can be liked, shared, and commented on, just like any news feed post.

C) They cannot contain links.

D) They have social context.

Answer: C 8 Copyright © 2022 Pearson Education, Inc.

Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 7.2: Understand the social marketing process from fan acquisition to sales and the marketing capabilities of social marketing platforms such as Facebook, Twitter, and Pinterest.

32) Which of the following is a micro-blogging social network site that allows users to send and receive 280-character messages, as well as news articles, photos, and videos?

A) Facebook B) Twitter C) Pinterest D) Instagram Answer: B Difficulty: Easy AACSB: Application of knowledge Learning Objective: 7.2: Understand the social marketing process from fan acquisition to sales and the marketing capabilities of social marketing platforms such as Facebook, Twitter, and Pinterest.

33) Companies are not permitted to collect personal information from children under the age of ________ without parental consent.

A) 8 B) 13 C) 15 D) 18 Answer: B Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 7.2: Understand the social marketing process from fan acquisition to sales and the marketing capabilities of social marketing platforms such as Facebook, Twitter, and Pinterest.

34) Which of the following statements about COPPA is not true?

A) COPPA is not applicable to Internet of Thing (IoT) devices.

B) COPPA can only be enforced by the Federal Trade Commission.

C) COPPA provides that companies are not permitted to use personal information collected from children under 13 years of age without the verifiable prior consent of their parents.

D) The largest fine levied by the FTC under COPPA as of 2020 was against Google and YouTube.

Answer: A Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 7.2: Understand the social marketing process from fan acquisition to sales and the marketing capabilities of social marketing platforms such as Facebook, Twitter, and Pinterest.

35) Which of the following is most similar to Pinterest?

A) LinkedIn 9 Copyright © 2022 Pearson Education, Inc.

B) Instagram C) YouTube D) Tumblr Answer: B Difficulty: Difficult AACSB: Analytical thinking Learning Objective: 7.2: Understand the social marketing process from fan acquisition to sales and the marketing capabilities of social marketing platforms such as Facebook, Twitter, and Pinterest.

36) Which social network has been the most effective marketing platform for ExchangeHunterJumper.com?

A) Facebook B) YouTube C) Pinterest D) Instagram Answer: A Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 7.2: Understand the social marketing process from fan acquisition to sales and the marketing capabilities of social marketing platforms such as Facebook, Twitter, and Pinterest.

37) Which of the following refers to the number of interactions among members of a group and reflects the "connectedness" of the group, even if these connections are forced on users?

A) engagement B) information density C) social density D) amplification Answer: C Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 7.2: Understand the social marketing process from fan acquisition to sales and the marketing capabilities of social marketing platforms such as Facebook, Twitter, and Pinterest.

38) Which of the following refers to those forms of social sharing that occur off the major social networks, through alternative communication tools?

A) social density B) dark social C) amplification D) engagement Answer: B Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 7.2: Understand the social marketing process from fan acquisition to sales and the marketing capabilities of social marketing platforms such as Facebook, Twitter, and Pinterest.

10 Copyright © 2022 Pearson Education, Inc.

39) Which of the following is a not a type of Rich Pin? A) Product Pin B) Instant Pin C) Article Pin D) Recipe Pin Answer: B Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 7.2: Understand the social marketing process from fan acquisition to sales and the marketing capabilities of social marketing platforms such as Facebook, Twitter, and Pinterest.

40) Which of the following statements about Instagram is not true?

A) Instagram is owned by Facebook.

B) Instagram’s most rapidly growing demographic group is comprised of people under the age of 35.

C) Instagram is expected to generate around $16 billion in ad revenues in 2020.

D) Instagram has over 1 billion users worldwide.

Answer: B Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 7.2: Understand the social marketing process from fan acquisition to sales and the marketing capabilities of social marketing platforms such as Facebook, Twitter, and Pinterest.

41) Which of the following involves using a variety of tools to encourage users to interact with content and brand?

A) social density B) engagement C) amplification D) dark social Answer: B Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 7.2: Understand the social marketing process from fan acquisition to sales and the marketing capabilities of social marketing platforms such as Facebook, Twitter, and Pinterest.

42) Which of the following involves using the inherent strength of social networks to encourage visitors and fans to share their Likes and comments with friends?

A) social density B) engagement C) amplification D) dark social Answer: C Difficulty: Moderate AACSB: Application of knowledge 11 Copyright © 2022 Pearson Education, Inc.

Learning Objective: 7.2: Understand the social marketing process from fan acquisition to sales and the marketing capabilities of social marketing platforms such as Facebook, Twitter, and Pinterest.

43) Which of the following is a Facebook feature that allows app developers to integrate their apps into the Facebook pages of users who sign up for the app?

A) Graph Search B) Like button C) Messenger D) Open Graph Answer: D Difficulty: Moderate AACSB: Information technology Learning Objective: 7.2: Understand the social marketing process from fan acquisition to sales and the marketing capabilities of social marketing platforms such as Facebook, Twitter, and Pinterest.

44) Influencer marketing is a method of generating customer engagement.

Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 7.2: Understand the social marketing process from fan acquisition to sales and the marketing capabilities of social marketing platforms such as Facebook, Twitter, and Pinterest.

45) Pinterest’s Shopping Pins requires a merchant to have a product catalog uploaded to Pinterest.

Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 7.2: Understand the social marketing process from fan acquisition to sales and the marketing capabilities of social marketing platforms such as Facebook, Twitter, and Pinterest.

46) Facebook does not sell display ads.

Answer: FALSE Difficulty: Easy AACSB: Application of knowledge Learning Objective: 7.2: Understand the social marketing process from fan acquisition to sales and the marketing capabilities of social marketing platforms such as Facebook, Twitter, and Pinterest.

47) Brand pages on Facebook typically attract more visitors than a brand's website.

Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 7.2: Understand the social marketing process from fan acquisition to sales and the marketing capabilities of social marketing platforms such as Facebook, Twitter, and 12 Copyright © 2022 Pearson Education, Inc.

Pinterest.

48) Promoted Video is the source of over 60% of Twitter’s ad revenue.

Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 7.2: Understand the social marketing process from fan acquisition to sales and the marketing capabilities of social marketing platforms such as Facebook, Twitter, and Pinterest.

49) Pinterest's users are predominantly women.

Answer: TRUE Difficulty: Easy AACSB: Application of knowledge Learning Objective: 7.2: Understand the social marketing process from fan acquisition to sales and the marketing capabilities of social marketing platforms such as Facebook, Twitter, and Pinterest.

50) In 2020, Millennials and Gen-Zers together represent about 85% of Snapchat's monthly active U.S. users.

Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 7.2: Understand the social marketing process from fan acquisition to sales and the marketing capabilities of social marketing platforms such as Facebook, Twitter, and Pinterest.

51) TikTok is owned by Facebook Answer: FALSE Difficulty: Easy AACSB: Application of knowledge Learning Objective: 7.1: Understand the difference between traditional online marketing and the new social-mobile-local marketing platforms and the relationships between social, mobile, and local marketing.

52) What are some of the downsides of social marketing?

Answer: Social marketing is not without its disadvantages. One problem is that brands lose a substantial amount of control over where their ads appear in terms of other content and what people say about their brands on social sites. Ads placed on Facebook according to an algorithm can be placed near content that does not represent the values of the brand. This is not peculiar to social marketing, as advertising using Google's advertising platform faces the same problem.

This is very different, however, from TV ads where brands maintain near complete control. In 2020, social marketing faces a number of challenges in this regard. Many major brands such as Unilever, Starbucks, Coca-Cola, Ford, Lego, and others have stated that they will pause their social media advertising for a period of time due to concerns about hate speech and divisive content. Some brands, such as Honda America, Levi Strauss, Patagonia, Birchbox, Ben & Jerry’s, Clorox, HP, and more than 400 others announced that they would specifically boycott Facebook and Instagram, which they deemed to have been particularly unresponsive to those 13 Copyright © 2022 Pearson Education, Inc.

issues. Although the boycott does not appear to have had a significant financial impact on Facebook’s advertising revenue, the boycotting companies hope that it pushes Facebook to reconsider its policies.

Difficulty: Moderate AACSB: Application of knowledge; Written and oral communication Learning Objective: 7.2: Understand the social marketing process from fan acquisition to sales and the marketing capabilities of social marketing platforms such as Facebook, Twitter, and Pinterest.

53) Name and briefly describe the five steps in the social marketing process.

Answer: The five steps in the social marketing process are fan acquisition, engagement, amplification, community, and brand strength.

Social marketing campaigns begin with fan acquisition, which involves using any of a variety of means, from display ads to News Feed and page pop-ups, to attract people to your Facebook page, Twitter feed, or other platform like a Web page. The next step is to generate engagement, which involves using a variety of tools to encourage users to interact with your content and brand located on your Facebook or Web pages. You can think of this as "starting the conversation" around your brand. Once you have engaged visitors, you can begin to use social site features to amplify your messages by encouraging users to tell their friends by clicking a Like button, or by sending a message to their followers on Twitter. Amplification involves using the inherent strength of social networks to continue the spread of its message. Once you have gathered enough engaged fans, you will have created the foundation for a community — a more or less stable group of fans who are engaged and communicating with one another over a substantial period of time (say several months or more). The ultimate goal is to enlarge your firm's "share of the online conversation." The process ends with strengthening the brand and, hopefully, additional sales of products and services.

Difficulty: Moderate AACSB: Application of knowledge; Written and oral communication Learning Objective: 7.2: Understand the social marketing process from fan acquisition to sales and the marketing capabilities of social marketing platforms such as Facebook, Twitter, and Pinterest.

54) Name and describe five of the marketing tools available with Facebook.

Answer: Marketing tools available with Facebook include: Reactions buttons, Brand Pages, News Feed Page Post Ads, Right-hand Column Sidebar Ads, Facebook Live and Facebook Watch, video ads, and mobile ads, and Facebook Messenger.

Reactions buttons enable users to share their feelings with friends and friends of friends about content and other objects they are viewing and Web sites they are visiting. The Reactions buttons provide amplification for marketers.

Nearly all Fortune 1000 companies, and hundreds of thousands of smaller firms, have Facebook brand pages, similar to brand websites, on Facebook as an adjunct to their main website, or in some cases, instead of a website. The purpose of a brand page is to develop fans of the brand by providing users opportunities to interact with the brand through comments, contests, and offerings. Using social calls to action, such as "Like us on Facebook" and "Share," brand pages 14 Copyright © 2022 Pearson Education, Inc.

can escape their isolation and make it more easily into users' social networks, where friends can hear the message. Social brand pages have many more social opportunities for fans to like and comment than are typical of traditional web pages. However, corporate websites have, over time, adopted many social features and the two are now often indistinguishable. Brand pages on Facebook typically attract more visitors than a brand's website.

The News Feed is the most prominent place for advertisements. The News Feed is the center of the action for Facebook users and where Facebook users spend most of their time because that is where posts from their friends appear. Page Post Ads appear in a user's News Feed along with all of the other posts and status updates that normally appear from friends. Page Post Ads have a tiny tag that indicates that they are sponsored (i.e., are advertisements) but otherwise look very similar to posts from friends. They have social context ("John Smith and Jane Doe like Pottery Barn") and can be liked, shared, and commented on, just like any other post. Page Post Ads can contain text, photos, video, and links. They can be used for many of marketing objectives, such as increasing brand engagement, obtaining Likes for the brand's Facebook page, and encouraging app installs and engagement. Companies pay to promote or boost Page Post Ads to extend their reach.

Right-hand Column Sidebar Ads are display ads shown in the right column on a user's profile and home Facebook pages. They are often used to direct users to off-Facebook content such as website landing pages and content offers.

Facebook Live is a free video streaming service that can be used to stream live content that followers can interact with by commenting, liking, and sharing. The video can be saved on a brand’s page and followers can continue to interact with it. Facebook Watch is a video on demand service that offers advertisers both pre-roll and mid-roll advertising options.

Facebook also offers video ads, mobile ads (its mobile ad platform is its fastest growing revenue stream), and ads on its Facebook Messenger instant messaging app.

Difficulty: Moderate AACSB: Application of knowledge; Written and oral communication Learning Objective: 7.2: Understand the social marketing process from fan acquisition to sales and the marketing capabilities of social marketing platforms such as Facebook, Twitter, and Pinterest.

55) What are the basic steps in creating a Pinterest marketing campaign?

Answer: The first step is to create a brand page and pin photos of your products, ensuring that you change your selections regularly and use high quality photos. Next, use URL links and keywords so that followers can easily find and buy the projects you have pinned. Use of hashtags helps organize your photos.

Using Pinterest Rich Pins, such as Product Pins help businesses in industries that are cost competitive like food, retail, or movie distribution. Adding Pin It buttons also encourages followers to pin your photos to their own boards and share them with friends. Developing themebased boards also enhances the entertainment and branding aspects of Pinterest.

Incorporating Facebook and Twitter into the campaign draws users from those networks onto Pinterest and integrating with those services allows users to navigate seamlessly from Facebook 15 Copyright © 2022 Pearson Education, Inc.

and Twitter to Pinterest. Being active on social media is also important to get the most out of it.

Difficulty: Moderate AACSB: Application of knowledge; Written and oral communication Learning Objective: 7.2: Understand the social marketing process from fan acquisition to sales and the marketing capabilities of social marketing platforms such as Facebook, Twitter, and Pinterest.

56) Which of the following is not true about mobile marketing?

A) There is significant overlap between local and mobile marketing.

B) By 2024, spending on mobile marketing is expected to be three times as much as spending on desktop marketing.

C) A substantial part of mobile marketing should be counted as social marketing.

D) People use most of their mobile minutes while they are on the go, outside of the home.

Answer: D Difficulty: Difficult AACSB: Application of knowledge Learning Objective: 7.3: Identify the key elements of a mobile marketing campaign.

57) Which of the following is the top app in terms of percentage reach?

A) YouTube B) Instagram C) Twitter D) Facebook Answer: A Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 7.3: Identify the key elements of a mobile marketing campaign.

58) On average, users use about ________ apps a month on their smartphone.

A) 10 B) 15 C) 20 D) 50 Answer: C Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 7.3: Identify the key elements of a mobile marketing campaign.

59) Which of the following statements about Google is not true?

A) Google has seven of the top 15 apps in terms of percentage of reach.

B) The prices Google can charge for mobile ads are higher than what it can charge for desktop computer ads.

C) Facebook surpassed Google in mobile advertising revenue for the first time in 2018.

D) About 65 % of all mobile search ad revenue is generated by Google.

Answer: B Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 7.3: Identify the key elements of a mobile marketing campaign.

16 Copyright © 2022 Pearson Education, Inc.

60) Which of the following is the most popular use for mobile devices?

A) shopping B) socializing C) entertainment D) performing tasks, such as finances Answer: C Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 7.3: Identify the key elements of a mobile marketing campaign.

61) Which of the following formats generates the second-highest amount of mobile ad spending revenue?

A) search engine advertising B) display advertising C) video advertising D) mobile messaging Answer: B Difficulty: Difficult AACSB: Application of knowledge Learning Objective: 7.3: Identify the key elements of a mobile marketing campaign.

62) People spend the most time doing which of the following when using a mobile device?

A) watching videos B) interacting on social networks C) listening to music D) reading news and magazines Answer: C Difficulty: Moderate AACSB: Information technology Learning Objective: 7.3: Identify the key elements of a mobile marketing campaign.

63) While using apps, users spend over 90% of the time on just ________ of them.

A) 2 B) 3 C) 4 D) 5 Answer: D Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 7.3: Identify the key elements of a mobile marketing campaign.

64) Which of the following generates the most mobile ad spending?

A) display ads B) search engine advertising C) video ads D) SMS text messages Answer: B 17 Copyright © 2022 Pearson Education, Inc.

Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 7.3: Identify the key elements of a mobile marketing campaign.

65) Which of the following is not a major provider of mobile display advertising?

A) MoPub B) Verizon Media C) AdMob D) Webtrends Answer: D Difficulty: Difficult AACSB: Application of knowledge Learning Objective: 7.3: Identify the key elements of a mobile marketing campaign.

66) Which of the following is the leading mobile retailer in the United States?

A) Walmart B) Amazon C) Google D) QVC Answer: B Difficulty: Easy AACSB: Application of knowledge Learning Objective: 7.3: Identify the key elements of a mobile marketing campaign.

67) Which of the following is not a technology for enabling proximity marketing?

A) Lens Studio B) NFC C) BLE D) QR codes Answer: A Difficulty: Moderate AACSB: Information technology Learning Objective: 7.3: Identify the key elements of a mobile marketing campaign.

68) Which of the following statements about BLE is not true?

A) Only Apple iPhones can use BLE. B) BLE uses less power than traditional Bluetooth or GPS. C) BLE has a two-way, push-pull communication capability.

D) BLE is more accurate than targeting through Wi-Fi triangulation.

Answer: A Difficulty: Moderate AACSB: Information technology Learning Objective: 7.3: Identify the key elements of a mobile marketing campaign.

69) Which of the following has been a leader in enabling augmented reality for mobile marketing?

A) Twitter B) Google 18 Copyright © 2022 Pearson Education, Inc.

C) Snapchat D) Apple Answer: C Difficulty: Difficult AACSB: Application of knowledge Learning Objective: 7.3: Identify the key elements of a mobile marketing campaign.

70) Traditional retail products and travel services are the source of much of the current growth in m-commerce.

Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 7.3: Identify the key elements of a mobile marketing campaign.

71) Purchases made on tablet computers are the fastest growing and largest source of mcommerce revenues.

Answer: FALSE Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 7.3: Identify the key elements of a mobile marketing campaign.

72) SMS text messaging generates most of mobile marketing spending.

Answer: FALSE Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 7.3: Identify the key elements of a mobile marketing campaign.

73) What are the implications for marketers given that users spend almost 90% of their total mobile time using apps and that on average, only use about 20 apps a month?

Answer: The implications for marketers are quite clear: if consumers are primarily using apps rather than browsing the Web on their mobile devices, marketers need to place ads in apps where most of the action is for attracting consumers, and that means social, entertainment, and game sites. Second, if mobile consumers only use, on average, 20 apps, then marketers need to concentrate their marketing in these popular apps, let's say, the top 100. Niche marketers, on the other hand, can concentrate their ads in apps that support that niche. A distributor of diving equipment, for instance, could place ads in apps devoted to the diving community. There may not be many users of the app, but those who do use it are highly motivated on the topic. Another implication for marketers is that rather than focus on mobile display ads that are difficult to read, the best ad may be an entertaining video ad that captures the viewer's attention or an ad in an app that is precisely targeted to the consumer's current activities and interests.

Difficulty: Moderate AACSB: Application of knowledge; Written and oral communication Learning Objective: 7.3: Identify the key elements of a mobile marketing campaign.

74) How does the multi-screen environment change the marketing funnel?

Answer: Consumer purchasing behavior changes in a multi-screen world. Consumers will often use two or more screens at once, tweeting when watching a TV show, or moving seamlessly from a TV ad, to a mobile search for more information, and finally making an online purchase.

19 Copyright © 2022 Pearson Education, Inc.

Also, the more screens people use, the more shopping and purchasing they do. One conclusion is that the more screens consumers have, the more consumer touchpoints or marketing opportunities exist. The implications of the multi-device platform, or screen diversity environment, are that marketing needs to be designed for whatever device the consumer is using, and consistent branding across platforms will be important.

Screen diversity means that one ad size, for instance, will not fit all situations, and that branding images will need to be adjusted automatically based on the device the consumer is using. From a design perspective, graphics and creative elements will appear differently depending on the screen. The requirement to find customers on multiple screens can add considerably to the cost of marketing online. Companies may find that they need to develop a presence and market not only on Web sites, but on mobile Web sites, and/or smartphone apps as well. Perhaps they may not be able to afford all three and may want to choose only one. In that case, which is the best?

Much depends on what the point of the marketing is. To drive sales, a Web site might be more effective, but to drive brand awareness, and engagement, social and entertainment apps might be better.

But even beyond screen adaptability, a multi-screen world means merchants need to be on all platforms, and to be integrated across platforms, to send a coherent message and to create a convenient consumer platform. The marketing environment today is much more complex than placing banner ads on pages or on search engine results pages on the Web. Difficulty: Difficult AACSB: Application of knowledge; Written and oral communication Learning Objective: 7.3: Identify the key elements of a mobile marketing campaign.

75) How do people use their mobile devices today?

Answer: Of the over four and a quarter hours a day that people spend using their mobile devices, one and a quarter hours is spent listening to music, over 50 minutes on social networks, over 45 minutes on watching video, and over 25 minutes playing mobile games Most people believe that people use their mobile devices on the go, but in fact, according to one of the very few studies of actual mobile behavior, almost 70% of all mobile minutes occur in the home. In 2020, in part due to the Covid-19 pandemic as well as existing trends, people are spending over seven and a half hours with digital media on average daily, and over four and a quarter of these hours are spent using mobile devices—smartphones and tablets. Recent data show that entertainment, not shopping or buying, is the primary focus (at least in terms of time) for mobile device users. Of the over four and a quarter hours a day that people spend using their mobile devices, one and a quarter hours is spent listening to music, over 50 minutes on social networks, over 45 minutes on watching video, and over 25 minutes playing mobile games.

Difficulty: Moderate AACSB: Application of knowledge; Written and oral communication Learning Objective: 7.3: Identify the key elements of a mobile marketing campaign.

76) In 2020, how much are advertisers expected to spend on local-based (local) mobile marketing?

A) $25 billion B) $59 billion C) $92 billion D) $135 billion 20 Copyright © 2022 Pearson Education, Inc.

Answer: A Difficulty: Difficult AACSB: Application of knowledge Learning Objective: 7.4: Understand the capabilities of location-based local marketing.

77) Which of the following proximity marketing technologies did Macy’s deploy in many of its retail stores in 2014?

A) QR codes B) iBeacon C) E9-1-1 D) Geo-search Answer: B Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 7.4: Understand the capabilities of location-based local marketing.

78) Which of the following dominates the local mobile search market?

A) Twitter B) Apple C) Facebook D) Google Answer: D Difficulty: Easy AACSB: Application of knowledge Learning Objective: 7.4: Understand the capabilities of location-based local marketing.

79) Apple's iBeacon uses which of the following technologies?

A) BLE B) NFC C) E9-1-1 D) QR codes Answer: A Difficulty: Moderate AACSB: Information technology Learning Objective: 7.4: Understand the capabilities of location-based local marketing.

80) Which of the following account for the vast majority of location-based mobile marketing?

A) Google and Twitter B) Google and Facebook C) Facebook and Twitter D) Facebook and Instagram Answer: B Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 7.4: Understand the capabilities of location-based local marketing.

81) Google uses which of the following to build a global database of wireless access points and their geographic locations?

21 Copyright © 2022 Pearson Education, Inc.

A) E9-1-1 B) Street View cars C) iBeacons D) BLE Answer: B Difficulty: Moderate AACSB: Information technology Learning Objective: 7.4: Understand the capabilities of location-based local marketing.

82) Eddystone is an open-source standard for beacon technology.

Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 7.4: Understand the capabilities of location-based local marketing.

83) A cell phone's GPS is accurate to within five feet of the actual location of the phone.

Answer: FALSE Difficulty: Moderate AACSB: Information technology Learning Objective: 7.4: Understand the capabilities of location-based local marketing.

84) What technologies and techniques are employed in location-based mobile marketing?

Answer: There are two general types of location-based marketing techniques: geo-aware and proximity marketing. Geo-aware techniques identify the location of a user's device and then target marketing to the device, recommending actions within. Proximity marketing techniques identify a perimeter around a physical location, and then target ads to users within that perimeter, recommending actions possible within the fenced-in area. The perimeter can be from hundreds of feet (in urban areas) to several miles (in suburban locations). For instance, if users walk into the geo-fenced perimeter of a store, restaurant, or retail shop, they will receive ads from these businesses. Both techniques utilize the same locating technologies. GPS is the most accurate positioning method in theory, but in practice, the signal can be weak in urban areas, nonexistent inside buildings, signals can be deflected, and it can take a long time (30-60 seconds) for the device to acquire the signal and calculate a position. Wi-Fi location is used in conjunction with GPS signals to more accurately locate a user based on the known location of Wi-Fi transmitters, which are fairly ubiquitous in urban and suburban locations. Apple's iBeacon technology uses Bluetooth low energy (BLE), which uses less battery power than traditional Bluetooth or GPS and is more accurate than targeting through Wi-Fi triangulation.

Difficulty: Moderate AACSB: Application of knowledge; Written and oral communication Learning Objective: 7.4: Understand the capabilities of location-based local marketing.

85) Why is location-based mobile marketing so attractive to marketers? What are some of the current challenges facing location-based marketing?

Answer: Consumers who seek information about local businesses using mobile devices are much more active and ready to purchase than desktop users. In part this is because desktop searchers for local information are not in as close proximity to merchants as are mobile searchers. A recent Google survey found over 80% of U.S. consumers use smartphones or tablet computers to conduct local searches on search engines for a variety of local information such as 22 Copyright © 2022 Pearson Education, Inc.

business hours, local store addresses and directions, and availability of local information through the purchase process, and 50% of smartphone users visited a store within a day of their local search, and 18% made a purchase within a day. As a result, a majority of marketers surveyed in 2019 indicated that they planned to increase their use of location data in order to be able to better target their ads and to enhance audience engagement, customer experience, and audience segmentation (eMarketer, Inc., 2019b).

Location-based marketing is facing some significant challenges entering into the new decade, due to privacy concerns and new laws and regulations such as the California Consumer Privacy Act (CCPA). Consumers have become more aware of location-based advertising, and while surveys indicate consumers appreciate the usefulness of such advertising, many find it “creepy.”

Operating system updates by Apple (iOS 13) and Google (Android 10) have added more user controls, potentially restricting the collection of location data by apps, and making data that is available more costly. Marketers are going to have to adjust to the new environment, reducing reliance on third-party data and being more transparent about collection methods and uses.

Difficulty: Moderate AACSB: Application of knowledge; Written and oral communication Learning Objective: 7.4: Understand the capabilities of location-based local marketing.

23 Copyright © 2022 Pearson Education, Inc.

E-commerce 2021: business. technology. society., 16e (Laudon/Traver) Chapter 8 Ethical, Social, and Political Issues in E-commerce 1) Which of the following e-commerce technology dimensions creates greater opportunities for cyberbullying?

A) information density B) interactivity C) social technology D) ubiquity Answer: C Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 8.1: Understand why e-commerce raises ethical, social, and political issues.

2) Which of the following e-commerce technology dimensions has the potential to reduce cultural diversity in products?

A) ubiquity B) interactivity C) information density D) global reach Answer: D Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 8.1: Understand why e-commerce raises ethical, social, and political issues.

3) Which of the following is not one of the four basic principles shared by ethical schools of thought in western culture?

A) accountability B) privacy C) responsibility D) liability Answer: B Difficulty: Moderate AACSB: Ethical understanding and reasoning Learning Objective: 8.1: Understand why e-commerce raises ethical, social, and political issues.

4) What is the first step in analyzing an ethical dilemma?

A) Define the conflict or dilemma and identify the higher-order values involved.

B) Identify the potential consequences of your opinions.

C) Identify the options you can reasonably take.

D) Identify and describe the facts.

Answer: D Difficulty: Moderate AACSB: Ethical understanding and reasoning Learning Objective: 8.1: Understand why e-commerce raises ethical, social, and political issues.

5) Which ethical principle states that, when confronted with an ethical dilemma, individuals should take the action that achieves the greater value for all of society?

1 Copyright © 2022, 2020, and 2019 Pearson Education, Inc.

A) The Golden Rule B) Risk Aversion Principle C) Collective Utilitarian Principle D) The Social Contract Rule Answer: C Difficulty: Moderate AACSB: Ethical understanding and reasoning Learning Objective: 8.1: Understand why e-commerce raises ethical, social, and political issues.

6) Which ethical principle emphasizes putting oneself into the place of others and thinking of oneself as the object of the decision?

A) The Golden Rule B) Universalism C) Collective Utilitarian principle D) The Social Contract Rule Answer: A Difficulty: Moderate AACSB: Ethical understanding and reasoning Learning Objective: 8.1: Understand why e-commerce raises ethical, social, and political issues.

7) Which ethical principle asks you to assume that virtually all tangible and intangible objects are owned by someone else unless there is a specific declaration otherwise?

A) The Golden Rule B) Slippery Slope C) The Social Contract Rule D) No Free Lunch Answer: D Difficulty: Moderate AACSB: Ethical understanding and reasoning Learning Objective: 8.1: Understand why e-commerce raises ethical, social, and political issues.

8) Which ethical principle states that if an action cannot be taken repeatedly, then it's not right to take at all?

A) Universalism B) Slippery Slope C) The Social Contract Rule D) The Golden Rule Answer: B Difficulty: Moderate AACSB: Ethical understanding and reasoning Learning Objective: 8.1: Understand why e-commerce raises ethical, social, and political issues.

9) Which ethical principle asks you to consider the impact of your decision if the principles underlying your decision became an organizing principle of the entire society?

A) The Golden Rule B) Risk Aversion C) Slippery Slope D) The Social Contract Rule 2 Copyright © 2022, 2020, and 2019 Pearson Education, Inc.

Answer: D Difficulty: Moderate AACSB: Ethical understanding and reasoning Learning Objective: 8.1: Understand why e-commerce raises ethical, social, and political issues.

10) Which ethical principle tells you that it is wise to assume perfect information markets?

A) The Golden Rule B) The New York Times Test C) The Social Contract Rule D) The Collective Utilitarian Principle Answer: B Difficulty: Moderate AACSB: Ethical understanding and reasoning Learning Objective: 8.1: Understand why e-commerce raises ethical, social, and political issues.

11) Which ethical principle states that when confronted with an ethical dilemma, an individual should take the action that produces the least harm, or the least potential cost?

A) Slippery Slope B) Risk Aversion C) No Free Lunch D) The Collective Utilitarian Principle Answer: B Difficulty: Moderate AACSB: Ethical understanding and reasoning Learning Objective: 8.1: Understand why e-commerce raises ethical, social, and political issues.

12) A social consequence of the richness of Internet information is: A) an increase in shallowness.

B) an increase in the ease of creating misleading information.

C) very persuasive messages might reduce the need for multiple independent sources of information.

D) an increase in vulnerability to hacking attacks.

Answer: C Difficulty: Difficult AACSB: Application of knowledge Learning Objective: 8.1: Understand why e-commerce raises ethical, social, and political issues.

13) Downloading a music track owned by a record company without paying for it is an example of a violation of: A) patent law.

B) copyright law.

C) trademark law.

D) privacy law.

Answer: B Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 8.1: Understand why e-commerce raises ethical, social, and political issues.

3 Copyright © 2022, 2020, and 2019 Pearson Education, Inc.

14) Which of the following features of e-commerce technology can result in work and shopping invading family life?

A) interactivity B) ubiquity C) information density D) global reach Answer: B Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 8.1: Understand why e-commerce raises ethical, social, and political issues.

15) Liability is a feature of political systems in which a body of law is in place that permits individuals to recover damages done to them by other actors, systems, or organizations.

Answer: TRUE Difficulty: Moderate AACSB: Ethical understanding and reasoning Learning Objective: 8.1: Understand why e-commerce raises ethical, social, and political issues.

16) The principle of responsibility means that individuals, organizations, and societies should be held accountable to others for the consequences of their actions.

Answer: FALSE Difficulty: Moderate AACSB: Ethical understanding and reasoning Learning Objective: 8.1: Understand why e-commerce raises ethical, social, and political issues.

17) The ethical principle of Universalism states that if an action is not right for all situations, then it is not right for any situation.

Answer: TRUE Difficulty: Moderate AACSB: Ethical understanding and reasoning Learning Objective: 8.1: Understand why e-commerce raises ethical, social, and political issues.

18) Describe in depth one ethical, social, or political issue that is presently in the news surrounding the Internet and e-commerce.

Answer: A student might answer this issue by focusing on any one of a number of ethical, social, or political issues currently surrounding the Internet and e-commerce. Possible topics include privacy issues, intellectual property rights issues (copyright, patents, or trademarks), taxation, Internet governance issues such as net neutrality and the impact of “big tech,” and Internet public safety and welfare issues such as the regulation of online pornography, gambling, or the sale of drugs.

Difficulty: Moderate AACSB: Analytical thinking; Information technology; Written and oral communication Learning Objective: 8.1: Understand why e-commerce raises ethical, social, and political issues.

19) Describe the five-step process that can be used to analyze an ethical dilemma. What other guidelines are there to help in understanding a complicated ethical or moral situation?

Answer: The five-step process is: 4 Copyright © 2022, 2020, and 2019 Pearson Education, Inc.

1. Identify and describe the facts. Find out who did what to whom, and where, when, and how.

It helps to get the opposing parties involved in an ethical dilemma to agree on the facts.

2. Define the conflict or dilemma and identify the higher-order values involved. Ethical, social, and political issues always reference higher values. Otherwise, there would be no debate.

The parties to a dispute all claim to be pursuing higher values (e.g., freedom, privacy, protection of property, and the free enterprise system).

3. Identify the stakeholders. Every ethical, social, and political issue has stakeholders: players in the game who have an interest in the outcome, who have invested in the situation, and usually who have vocal opinions. Find out the identity of these groups and what they want. This will be useful later when designing a solution.

4. Identify the options that you can reasonably take. You may find that none of the options satisfies all the interests involved, but that some options do a better job than others. Sometimes, arriving at a "good" or ethical solution may not always be a balancing of consequences to stakeholders.

5. Identify the potential consequences of your options. Some options may be ethically correct, but disastrous from other points of view. Other options may work in this one instance, but not in other similar instances. Always ask yourself, "What if I choose this option consistently over time?"

Other things to consider when appraising an ethical dilemma include basic ethical concepts such as responsibility, accountability, and liability and how these play into the situation. Additionally, you can judge the situation against candidate ethical principles, such as the Golden Rule, the Slippery Slope theory, Universalism, the Collective Utilitarian principle, Risk Aversion theory, the No Free Lunch theory, the New York Times test (Perfect Information rule), and the Social Contract rule. Actions that do not easily pass these guidelines deserve some very close attention and a great deal of caution because the appearance of unethical behavior may do as much harm to you and your company as the actual behavior.

Difficulty: Moderate AACSB: Analytical thinking; Written and oral communication; Ethical understanding and reasoning Learning Objective: 8.1: Understand why e-commerce raises ethical, social, and political issues.

20) Which of the following basic ethical concepts plays an important role in defining privacy?

A) responsibility B) accountability C) liability D) due process Answer: D Difficulty: Difficult AACSB: Ethical understanding and reasoning Learning Objective: 8.2: Understand basic concepts related to privacy and information rights, the practices of e-commerce companies that threaten privacy, and the different methods that can be used to protect online privacy.

21) Which of the following is not aimed at strengthening the ability of law enforcement agencies to monitor Internet users without their knowledge?

A) USA PATRIOT Act B) Homeland Security Act 5 Copyright © 2022, 2020, and 2019 Pearson Education, Inc.

C) Cyber Security Enhancement Act D) USA Freedom Act Answer: D Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 8.2: Understand basic concepts related to privacy and information rights, the practices of e-commerce companies that threaten privacy, and the different methods that can be used to protect online privacy.

22) Which of the following is used to track individuals as they move among thousands of websites?

A) first-party cookies B) digital wallets C) advertising networks D) shopping carts Answer: C Difficulty: Moderate AACSB: Information technology Learning Objective: 8.2: Understand basic concepts related to privacy and information rights, the practices of e-commerce companies that threaten privacy, and the different methods that can be used to protect online privacy.

23) Which of the following uses software installed at the ISP level to track user clickstream behavior?

A) shopping carts B) trusted computing environments C) deep packet inspection D) DRM Answer: C Difficulty: Easy AACSB: Application of knowledge Learning Objective: 8.2: Understand basic concepts related to privacy and information rights, the practices of e-commerce companies that threaten privacy, and the different methods that can be used to protect online privacy.

24) Which of the following statements about industry self-regulation regarding privacy is not true?

A) The AdChoices program is an industry-sponsored initiative to encourage websites to be more transparent about how they use personal information and to make it more likely that appropriate ads are shown to users.

B) The Network Advertising Initiative offers consumers a global opt-out feature to prevent network advertising agencies from placing cookies on a user's computer.

C) Industry efforts have not so far succeeded in reducing American fears of privacy invasion.

D) Online seal programs that attest to a company's privacy policies have had a significant impact on online privacy practices.

Answer: D Difficulty: Difficult AACSB: Application of knowledge 6 Copyright © 2022, 2020, and 2019 Pearson Education, Inc.

Learning Objective: 8.2: Understand basic concepts related to privacy and information rights, the practices of e-commerce companies that threaten privacy, and the different methods that can be used to protect online privacy.

25) The Spokeo case involved a claim for damages based on which of the following?

A) Fair Credit Reporting Act B) Digital Millennium Copyright Act C) Anticybersquatting Consumer Protection Act D) Defend Trade Secrets Act Answer: A Difficulty: Difficult AACSB: Application of knowledge Learning Objective: 8.2: Understand basic concepts related to privacy and information rights, the practices of e-commerce companies that threaten privacy, and the different methods that can be used to protect online privacy.

26) Which of the following requires financial institutions to inform consumers of their privacy policies and permits consumers some control over their records?

A) Freedom of Information Act B) Gramm-Leach-Bliley Act C) COPPA D) HIPAA Answer: B Difficulty: Difficult AACSB: Application of knowledge Learning Objective: 8.2: Understand basic concepts related to privacy and information rights, the practices of e-commerce companies that threaten privacy, and the different methods that can be used to protect online privacy.

27) Which of the following is a core Fair Information Practices (FIP) principle?

A) Choice/Consent B) Access/Participation C) Security D) Enforcement Answer: A Difficulty: Difficult AACSB: Application of knowledge Learning Objective: 8.2: Understand basic concepts related to privacy and information rights, the practices of e-commerce companies that threaten privacy, and the different methods that can be used to protect online privacy.

28) Which of the FTC's Fair Information Practices (FIP) principles requires identification of the collector of data?

A) Notice/Awareness B) Choice/Consent C) Access/Participation D) Security Answer: A 7 Copyright © 2022, 2020, and 2019 Pearson Education, Inc.

Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 8.2: Understand basic concepts related to privacy and information rights, the practices of e-commerce companies that threaten privacy, and the different methods that can be used to protect online privacy.

29) Which of the FTC's Fair Information Practices (FIP) principles requires opt-in or opt-out policies to be in place?

A) Notice/Awareness B) Choice/Consent C) Access/Participation D) Security Answer: B Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 8.2: Understand basic concepts related to privacy and information rights, the practices of e-commerce companies that threaten privacy, and the different methods that can be used to protect online privacy.

30) What is the FTC recommendation regarding choice as it relates to personally identifiable information (PII)?

A) Require firms to have consumers affirmatively opt-in before PII is collected.

B) Require firms to allow consumers to opt-out before PII is collected.

C) Make collection of PII illegal.

D) Require robust notice only before PII is collected.

Answer: A Difficulty: Difficult AACSB: Application of knowledge Learning Objective: 8.2: Understand basic concepts related to privacy and information rights, the practices of e-commerce companies that threaten privacy, and the different methods that can be used to protect online privacy.

31) "Do Not Track" falls under which of the following principles in the FTC's current privacy framework?

A) Privacy by Design B) Simplified Choice C) Greater Transparency D) Scope Answer: B Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 8.2: Understand basic concepts related to privacy and information rights, the practices of e-commerce companies that threaten privacy, and the different methods that can be used to protect online privacy.

32) Which of the following technologies reduces the ability to merge different files and deanonymize consumer data?

A) anonymous surfing 8 Copyright © 2022, 2020, and 2019 Pearson Education, Inc.

B) anonymous remailers C) differential privacy software D) public key encryption Answer: C Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 8.2: Understand basic concepts related to privacy and information rights, the practices of e-commerce companies that threaten privacy, and the different methods that can be used to protect online privacy.

33) Which of the following is an example of a pay-for-privacy (PFP) approach?

A) AT&T’s GigaPower service B) Meeco.me’s life management tool C) Digi.me’s app D) The Hub of All Thing’s open source project Answer: A Difficulty: Difficult AACSB: Application of knowledge Learning Objective: 8.2: Understand basic concepts related to privacy and information rights, the practices of e-commerce companies that threaten privacy, and the different methods that can be used to protect online privacy.

34) According to data from Pew Research Center, which of the following is the action which the highest percentage of Internet users has taken to preserve their privacy online?

A) used an anonymous web browsing service B) encrypted their communications C) cleared web browser history and cookies D) posted comments online anonymously Answer: C Difficulty: Difficult AACSB: Application of knowledge Learning Objective: 8.2: Understand basic concepts related to privacy and information rights, the practices of e-commerce companies that threaten privacy, and the different methods that can be used to protect online privacy.

35) Which of the following statements about the General Data Protection Regulation (GDPR) is not true?

A) The GDPR replaces the Data Protection Directive.

B) The GDPR applies to any firm operating in any E.U. country.

C) The GDPR eliminate the right to be forgotten.

D) The GDPR limits the ability of companies to use data for purposes other than those for which it was collected.

Answer: C Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 8.2: Understand basic concepts related to privacy and information rights, the practices of e-commerce companies that threaten privacy, and the different methods that can be used to protect online privacy.

9 Copyright © 2022, 2020, and 2019 Pearson Education, Inc.

36) As of 2020, the largest consumer privacy penalty issued by the Federal Trade Commission had been imposed on which of the following companies?

A) Google B) Facebook C) Uber D) Apple Answer: B Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 8.2: Understand basic concepts related to privacy and information rights, the practices of e-commerce companies that threaten privacy, and the different methods that can be used to protect online privacy.

37) The California Consumer Privacy Act (CCPA) does all of the following except: A) give residents the right to be informed about the kind of personal information that is collected about them.

B) gives residents the right to opt out of the sale of their information.

C) gives residents the right to access their information in a usable format so they can transfer it to another service.

D) gives residents the right to prevent government access to their personal information.

Answer: D Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 8.2: Understand basic concepts related to privacy and information rights, the practices of e-commerce companies that threaten privacy, and the different methods that can be used to protect online privacy.

38) In the United States, Google is not required to remove results from its search engine if requested.

Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 8.2: Understand basic concepts related to privacy and information rights, the practices of e-commerce companies that threaten privacy, and the different methods that can be used to protect online privacy.

39) The main objective of the European Union’s General Data Protection Regulation (GDPR) is to strengthen the rights of citizens to their own personal information and to strengthen oversight of firms to ensure that they implement these individual rights.

Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 8.2: Understand basic concepts related to privacy and information rights, the practices of e-commerce companies that threaten privacy, and the different methods that can be used to protect online privacy.

40) The opt-in model for informed consent requires an affirmative action by the consumer before 10 Copyright © 2022, 2020, and 2019 Pearson Education, Inc.

a company can collect and use information.

Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 8.2: Understand basic concepts related to privacy and information rights, the practices of e-commerce companies that threaten privacy, and the different methods that can be used to protect online privacy.

41) The Federal Communications Commission's privacy rules, applicable to broadband ISPs, were repealed by Congress in 2017.

Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 8.2: Understand basic concepts related to privacy and information rights, the practices of e-commerce companies that threaten privacy, and the different methods that can be used to protect online privacy.

42) The Illinois Biometric Information Privacy Act requires firms to have user consent to collect facial information.

Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 8.2: Understand basic concepts related to privacy and information rights, the practices of e-commerce companies that threaten privacy, and the different methods that can be used to protect online privacy.

43) In what ways has the European environment turned against American firms such as Facebook and Google?

Answer: The EU General Data Protection Regulation (GDPR) is clearly aimed at Facebook, Google, Twitter, and other ad-based online businesses that build collections of personal data by tracking individuals across the Web, merging that data with data from firms and data brokers in order to build comprehensive digital images (profiles) and to target these persons with ads.

Google and Facebook are both extremely popular in Europe, and dominate their markets, but at the same time are widely criticized for invading privacy and not protecting PII. European regulators and politicians point to Facebook allowing Cambridge Analytica, a political consulting firm, to gain access to over 100 million user accounts in 2016 and a 2018 data breach of 50 million Facebook accounts as evidence that Facebook is unable to protect the privacy of Europeans.

Google is also in the crosshairs of EU regulators for its monopoly on search in the European Union, abuse of that monopoly by ranking Google services above others on its search pages, and abuse of its ownership of the Android operating system by requiring smartphone manufacturers to pre-install Google apps on Android phones, as well as evading taxes on revenues earned in EU countries. Both firms, along with Microsoft’s Windows 10 operating system, have been accused of “deceit by design” through the use of threats against users who choose strong privacy protections on their services, and screen designs that encourage users to give up as much personal information as possible.

Difficulty: Moderate 11 Copyright © 2022, 2020, and 2019 Pearson Education, Inc.

AACSB: Application of knowledge; Written and oral communication Learning Objective: 8.2: Understand basic concepts related to privacy and information rights, the practices of e-commerce companies that threaten privacy, and the different methods that can be used to protect online privacy.

44) How is it possible to measure the strength of privacy policies?

Answer: Very little attention has been paid to measuring the strength of privacy policies for individual companies, comparing them to other companies, and understanding how privacy policies have changed over time at a specific company. However, researchers have developed a measure of privacy policies by applying 10 privacy policy principles when reviewing policies.

These principles are as follows: • Can the privacy policy be easily found, reviewed, and understood by users?

• Does the privacy policy fully disclose how personal information will and will not be used by the organization? Is information about users ever shared or sold without users' explicit permission?

• Can users decide if they want to participate?

• Can users decide and actively indicate that they agree to be profiled, tracked, or targeted?

• Can users decide how and if their sensitive information is shared?

• Are users able to change any information that they input about themselves?

• Can users decide who can access their information?

• Are users notified promptly if their information is lost, stolen, or improperly accessed?

• Can users easily report concerns and get answers?

• Do users receive a copy of all disclosures of their information?

The dimensions are measured on a four-point scale from 0 to 4 (0 meaning the privacy policy fails to meet the criterion and 4 indicating the criterion was fully achieved).

Difficulty: Moderate AACSB: Application of knowledge; Written and oral communication Learning Objective: 8.2: Understand basic concepts related to privacy and information rights, the practices of e-commerce companies that threaten privacy, and the different methods that can be used to protect online privacy.

45) Briefly define privacy, information privacy, the right to be forgotten, and informed consent.

Answer: Privacy is the moral right of individuals to be left alone, free from surveillance or interference from other individuals including the state.

Information privacy includes both the right to prohibit certain information from being collected by either governments or businesses, and the right to control the use of whatever information is collected about you. The core concept is the control of your own personal information.

The right to be forgotten is the claim of individuals to be able to edit and delete personal information online.

Informed consent means that an individual has knowledge of all the material facts needed to make a rational decision and consent has been given to collect information. In the United States, business firms and government agencies can gather transaction data from the marketplace and use it for other marketing purposes without the informed consent of the individual. In Europe, on the other hand, this is illegal. European businesses can only use transaction data to support the current transaction if they have asked for and received the informed consent of the individual.

12 Copyright © 2022, 2020, and 2019 Pearson Education, Inc.

Difficulty: Moderate AACSB: Application of knowledge; Written and oral communication Learning Objective: 8.2: Understand basic concepts related to privacy and information rights, the practices of e-commerce companies that threaten privacy, and the different methods that can be used to protect online privacy.

46) How does Apple’s Intelligent Tracking Prevention (ITP) technology work?

Answer: Apple’s web browser, Safari, already blocked third-party cookies by default but ITP extended that functionality by ensuring that first-party cookies would generally only be available for a 24-hour window after a user visited a site. Thereafter, the cookie could not be used for most forms of tracking, and the cookie was deleted entirely if the user did not visit the site within 30 days. In 2018, Apple updated ITP, further limiting how advertisers can track browsing data using cookies by completely removing the 24-hour tracking window and since then, it has continued to release updated versions that further limit the ability of advertisers to track users.

Difficulty: Moderate AACSB: Analytical thinking; Information technology; Written and oral communication Learning Objective: 8.2: Understand basic concepts related to privacy and information rights, the practices of e-commerce companies that threaten privacy, and the different methods that can be used to protect online privacy.

47) All of the following are required for information to be considered a trade secret except: A) it must have commercial value to its owner.

B) the owner must have taken steps to protect it.

C) it must be unique.

D) it must be something that others do not know.

Answer: C Difficulty: Difficult AACSB: Application of knowledge Learning Objective: 8.3: Understand the various forms of intellectual property and the challenges involved in protecting it.

48) Which of the following cases has chipped away at the Digital Millennium Copyright Act (DMCA) safe harbor protection?

A) Field v. Google, Inc. B) Alice Corporation Pty. Ltd. v. CLS Bank International C) BMG Rights Management v. Cox Communications D) Perfect 10, Inc. v. Amazon.com, Inc. et al.

Answer: C Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 8.3: Understand the various forms of intellectual property and the challenges involved in protecting it.

49) What is the major reason why the Internet has such potential for destroying traditional conceptions and implementations of intellectual property law?

A) the ability to make perfect copies of digital works at little cost B) the anonymous nature of the Internet C) the support for instant peer-to-peer communication 13 Copyright © 2022, 2020, and 2019 Pearson Education, Inc.

D) the use of standards for file formats Answer: A Difficulty: Easy AACSB: Application of knowledge Learning Objective: 8.3: Understand the various forms of intellectual property and the challenges involved in protecting it.

50) Which of the following protects original forms of expression in a tangible medium?

A) trade secret law B) copyright law C) patent law D) trademark law Answer: B Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 8.3: Understand the various forms of intellectual property and the challenges involved in protecting it.

51) How long does copyright protection extend for corporate-owned works?

A) 25 years B) 50 years C) 75 years D) 95 years Answer: D Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 8.3: Understand the various forms of intellectual property and the challenges involved in protecting it.

52) Which of the following situations would not qualify for the fair use exception to U.S. copyright law?

A) A professor clips a newspaper article just before class and distributes copies of it to his class.

B) A journalist quotes a paragraph from a book in a review of the book.

C) A student copies a photograph of his favorite band from a website created by the band's record label and places it on the student's personal website.

D) Google posts thumbnail images of books in the Google Book Search Project.

Answer: C Difficulty: Moderate AACSB: Analytical thinking Learning Objective: 8.3: Understand the various forms of intellectual property and the challenges involved in protecting it.

53) All of the following are factors that will be considered in determining whether use of copyrighted material is "fair use" except the: A) nature of the work used.

B) amount of the work used.

C) market effect of the use.

D) free availability of the work on the Web. 14 Copyright © 2022, 2020, and 2019 Pearson Education, Inc.

Answer: D Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 8.3: Understand the various forms of intellectual property and the challenges involved in protecting it.

54) All of the following are possible penalties for violating the Digital Millennium Copyright Act (DMCA) except: A) up to ten years imprisonment for a first offense.

B) fines up to $500,000 for a first offense.

C) fines up to $1 million for a repeat offense.

D) restitution to the injured parties for any losses due to infringement.

Answer: A Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 8.3: Understand the various forms of intellectual property and the challenges involved in protecting it.

55) All of the following statements about the Digital Millennium Copyright Act (DMCA) are true except: A) the DMCA makes it illegal to circumvent technological measures to protect works.

B) the DMCA makes Internet Service Providers (ISPs) responsible and accountable for hosting websites or providing services to infringers regardless of whether the ISP is aware of infringement.

C) the DMCA requires search engines to block access to infringing sites.

D) the DMCA allows libraries to make digital copies of works for internal use only.

Answer: B Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 8.3: Understand the various forms of intellectual property and the challenges involved in protecting it.

56) Which of the following allows someone to obtain an exclusive monopoly on the ideas behind an invention for 20 years?

A) copyright law B) trade secret law C) patent law D) trademark law Answer: C Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 8.3: Understand the various forms of intellectual property and the challenges involved in protecting it.

57) All of the following statements about patents are true except: A) it is more difficult to obtain a copyright than it is to obtain a patent.

B) the four types of inventions protected by patent law are machines, manmade products, compositions of matter, and processing methods.

15 Copyright © 2022, 2020, and 2019 Pearson Education, Inc.

C) computer programs can be patented.

D) in order to be patented, an invention must be nonobvious.

Answer: A Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 8.3: Understand the various forms of intellectual property and the challenges involved in protecting it.

58) Which case was instrumental in paving the way for Internet business methods patents?

A) Bilski et al. v. Kappos B) State Street Bank & Trust Co. v. Signature Financial Group, Inc. C) Alice Corporation Pty. Ltd. v. CLS Bank International D) Ticketmaster Corp. v. Tickets.com Answer: B Difficulty: Difficult AACSB: Application of knowledge Learning Objective: 8.3: Understand the various forms of intellectual property and the challenges involved in protecting it.

59) Which of the following is considered one of the most contentious e-commerce patents?

A) Acacia Technologies’ patent on streaming video media transmission B) Priceline’s patent on buyer-driven name your price tools C) Amazon’s patent on one-click purchasing D) Google's PageRank patent Answer: C Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 8.3: Understand the various forms of intellectual property and the challenges involved in protecting it.

60) Disputes over federal trademarks involve establishing: A) underlying ideas.

B) intent.

C) piracy.

D) infringement.

Answer: D Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 8.3: Understand the various forms of intellectual property and the challenges involved in protecting it.

61) Registering a domain name similar or identical to trademarks of others to extort profits from legitimate holders is an example of: A) cybersquatting.

B) cyberpiracy.

C) framing.

D) metatagging.

Answer: A 16 Copyright © 2022, 2020, and 2019 Pearson Education, Inc.

Difficulty: Easy AACSB: Application of knowledge Learning Objective: 8.3: Understand the various forms of intellectual property and the challenges involved in protecting it.

62) Which of the following handles cybersquatting cases under its Uniform Dispute Resolution procedures?

A) ICANN B) FTC C) WIPO D) USPTO Answer: C Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 8.3: Understand the various forms of intellectual property and the challenges involved in protecting it.

63) Registering a domain name similar or identical to a trademark of a legitimate site to divert web traffic to the infringing site is an example of: A) keywording.

B) cyberpiracy.

C) framing.

D) metatagging.

Answer: B Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 8.3: Understand the various forms of intellectual property and the challenges involved in protecting it.

64) Registering the domain name Faceboik.com with the intent to divert web traffic from people misspelling Facebook.com is an example of: A) keywording.

B) typosquatting.

C) metatagging.

D) deep linking.

Answer: B Difficulty: Easy AACSB: Application of knowledge Learning Objective: 8.3: Understand the various forms of intellectual property and the challenges involved in protecting it.

65) In which of the following cases did the U.S. Supreme Court rule that basic business methods cannot be patented?

A) State Street Bank & Trust v. Signature Financial Group, Inc. B) Bilski et al. v. Kappos C) Alice Corporation Pty. Ltd. v. CLS Bank International D) BMG Rights Management v. Cox Communications Answer: C 17 Copyright © 2022, 2020, and 2019 Pearson Education, Inc.

Difficulty: Difficult AACSB: Application of knowledge Learning Objective: 8.3: Understand the various forms of intellectual property and the challenges involved in protecting it.

66) The display of a third-party's website or page within your own website is called: A) cybersquatting.

B) metatagging.

C) framing.

D) deep linking.

Answer: C Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 8.3: Understand the various forms of intellectual property and the challenges involved in protecting it.

67) Safe harbor provisions of the Digital Millennium Copyright Act (DMCA) were at issue in all the following lawsuits except: A) a lawsuit filed by the Authors Guild and five major publishing companies against Google B) a lawsuit brought by Viacom against YouTube and Google C) BMG Rights Management v. Cox Communications.

D) Mavrix Photographs, LLC v. LiveJournal, Inc. Answer: A Difficulty: Difficult AACSB: Application of knowledge Learning Objective: 8.3: Understand the various forms of intellectual property and the challenges involved in protecting it.

68) Which of the following cases involved the issue of keywording?

A) Ticketmaster Corp. v. Tickets.com B) Bernina of America, Inc. v. Fashion Fabrics Int'l, Inc. C) Government Employees Insurance Company v. Google, Inc. D) E. & J. Gallo Winery v. Spider Webs Ltd. Answer: C Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 8.3: Understand the various forms of intellectual property and the challenges involved in protecting it.

69) Which of the following involves bypassing the target site's home page and going directly to a content page?

A) cybersquatting B) metatagging C) framing D) deep linking Answer: D Difficulty: Moderate AACSB: Application of knowledge 18 Copyright © 2022, 2020, and 2019 Pearson Education, Inc.

Learning Objective: 8.3: Understand the various forms of intellectual property and the challenges involved in protecting it.

70) All of the following cases involved the doctrine of fair use except: A) Spokeo v. Robins B) Perfect 10, Inc. v. Amazon.com, Inc. et al.

C) Field v. Google, Inc. D) Kelly v. Arriba Soft.

Answer: A Difficulty: Difficult AACSB: Application of knowledge Learning Objective: 8.3: Understand the various forms of intellectual property and the challenges involved in protecting it.

71) Copyright protection protects against others copying the underlying ideas in a work.

Answer: FALSE Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 8.3: Understand the various forms of intellectual property and the challenges involved in protecting it.

72) Owners of gTLDs have the right to create and sell new domains with the gTLD suffix.

Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 8.3: Understand the various forms of intellectual property and the challenges involved in protecting it.

73) Google defended its Library Project on the grounds of fair use.

Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 8.3: Understand the various forms of intellectual property and the challenges involved in protecting it.

74) Discuss the Authors Guild's lawsuit against Google with respect to Google's Library Project and explain why the courts ultimately ruled in Google's favor.

Answer: Google's Library Project involved an effort by Google to scan all the books in several university and public libraries, and then make snippets and parts of the book available online without receiving permission from the publishers or paying royalties. Google said it would never show a full page, just relevant portions of a page in response to searches. In 2005, the Authors Guild and the large book publishers filed a lawsuit seeking to prevent Google from implementing the Library Project. Google argued that the Library Project constituted fair use of publishers' copyrighted works because it only published snippets. Moreover, Google claimed that it was simply helping libraries do what they are intended to do, namely, lend books. Library lending is considered a fair use following an agreement in the late 1930s with publishers, and such lending was codified into the Copyright Act of 1976. Google claimed that helping libraries make books more available to the public was in the broader public interest and extended existing rights of 19 Copyright © 2022, 2020, and 2019 Pearson Education, Inc.

libraries to encourage book availability. In 2013, a federal court finally found in favor of Google without reservation by ruling that Google's scanning and making snippets of text available to the public was "fair use" under U.S. copyright law. The judge believed the project had a broad public purpose of making it easier for students, researchers, teachers, and the general public to find books, while also preserving consideration for author and publisher rights. The Google project was "transformative" in the court's view, giving books a new character and purpose, making it easier to discover old books, and leading to increased sales. The Supreme Court ruled in 2016 that Google's Library Project was fair use, and the matter is settled from a legal perspective. In the meantime, the project itself has stalled, and efforts to scan so-called orphan books in libraries where the copyright holder could not be identified have ended. Google now appears less than enthusiastic about pursuing the project, in part, analysts believe, because the project offered no hope of ever making a return on the investment and created a rift with the author and publishing community upon which it depends for content against which to show ads.

Difficulty: Moderate AACSB: Analytical thinking; Information technology; Written and oral communication Learning Objective: 8.3: Understand the various forms of intellectual property and the challenges involved in protecting it.

75) Describe the purpose of intellectual property law and outline the main types of intellectual property protection.

Answer: The purpose of intellectual property law is to balance two competing interests: the public and the private. The public interest is served by the creation of inventions, works of art, music, literature, and other types of intellectual expression. The private interest is served by rewarding creators of intellectual property by a time-limited monopoly that grants exclusive use to the creator.

There are three main types of intellectual property protection: copyright, patent, and trademark law. Copyright law protects original forms of expression such as books, periodicals, and other forms of written expression, art, drawings, photographs, music, movies, performances, and computer programs. Patents grant the owner a 20-year exclusive monopoly on the ideas behind an invention. There are four types of inventions for which patents are granted under patent law: machines, manmade products, compositions of matter, and processing methods. Trademark law is used to protect trademarks — marks used to identify and distinguish goods and indicate their source.

Difficulty: Moderate AACSB: Analytical thinking; Written and oral communication Learning Objective: 8.3: Understand the various forms of intellectual property and the challenges involved in protecting it.

76) Which of the following involves the issue of social control?

A) information rights B) governance C) public safety and welfare D) property rights Answer: B Difficulty: Easy AACSB: Application of knowledge 20 Copyright © 2022, 2020, and 2019 Pearson Education, Inc.

Learning Objective: Learning Objective: 8.4: Understand how the Internet is governed and why taxation of e-commerce raises governance and jurisdiction issues.

77) Which of the following Supreme Court cases established that states can compel online retailers to collect and remit sales taxes even if they do not have a physical presence within the state?

A) South Dakota v. Wayfair B) Bilski et al. v. Kappos C) Quill v. North Dakota D) Alice Corporation v. CLS Bank International Answer: A Difficulty: Difficult AACSB: Application of knowledge Learning Objective: 8.4: Understand how the Internet is governed and why taxation of ecommerce raises governance and jurisdiction issues.

78) Which of the following statements is not true?

A) Currently, the United States is in a mixed-mode policy environment with respect to the Internet where self-regulation co-exists with limited government regulation.

B) The Internet is technically very difficult to control, monitor, and regulate from a central location.

C) Early Internet advocates argued that the Internet was different from all previous technologies.

D) Controlling e-commerce also involves regulating the Internet.

Answer: B Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 8.4: Understand how the Internet is governed and why taxation of ecommerce raises governance and jurisdiction issues.

79) Net neutrality refers to the idea that Internet service providers (ISPs), including cable Internet and wireless carriers, should treat all data on the Internet in the same manner, and not discriminate or price differentially by content, protocol, platform, hardware, or application.

Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 8.4: Understand how the Internet is governed and why taxation of ecommerce raises governance and jurisdiction issues.

80) Explain why the taxation of e-commerce raises governance and jurisdiction issues.

Answer: The taxation of e-commerce illustrates the complexity of the governance and jurisdictional issues in the global economy. Most of the issues surround the sales tax imposed by various states or countries on products sold to residents of their state or country. Governments the world over rely on sales taxes to fund various types of government initiatives and programs including the building of roads, schools, and sewers or other utilities to support business development.

In the United States, between the fifty states and the multiple counties and municipalities, there are thousands of different tax rates and policies. For example, food is not taxed at all in some 21 Copyright © 2022, 2020, and 2019 Pearson Education, Inc.

states, and there are a myriad of different exceptions and inclusions depending on the locality.

The development of MOTO (mail order/telephone) retail in the 1970s began the discussion on the taxing of remote sales. State and local tax authorities wanted MOTO retailers to collect taxes based upon the address of the recipients, but the Supreme Court originally ruled that states could not force MOTO retailers to collect taxes unless the business had a physical presence in the state.

Legislation to the contrary was never able to garner sufficient support in Congress due to pressure from the catalog merchants, leaving intact an effective tax subsidy for MOTO merchants.

The explosive growth of e-commerce raised the issue of how — and if — to tax online sales. For many years, e-commerce benefited from a tax subsidy of up to 13% for goods shipped to high sales tax areas. Local retail merchants complained bitterly about the e-commerce tax subsidy. Ecommerce merchants argued that e-commerce needed to be nurtured and encouraged, and that in any event, the crazy quilt of sales and use tax regimes would be difficult to administer for Internet merchants. Online giants like Amazon originally argued they should not have to pay taxes in states where they had no operations because they did not benefit from local schools, police, fire, and other governmental services. State and local governments meanwhile saw billions of tax dollars slipping from their reach. As Amazon's business model changed with its building of large distribution centers close to urban areas to enable next-day delivery, its opposition to paying sales taxes softened. In 2015, the Supreme Court upheld a challenge to a Colorado law that would have required firms to report online sales to state residents as one step to ensure the residents paid taxes on such sales in Colorado, which is required by state law. In 2018, in the landmark South Dakota v. Wayfair case, the Supreme Court reversed its earlier position and ruled that states can levy sales taxes on online sales. The businesses that may be most drastically affected by the Wayfair ruling are smaller sellers, such as third-party Amazon merchants, sellers on smaller marketplaces such as Etsy, and other independent e-commerce retailers who now have to comply with thousands of tax jurisdiction requirements across the country. These sellers have been forced to invest in tax reporting software and other compliance technology, which may prove prohibitive for some businesses without the profit margins to sustain the additional costs.

Difficulty: Difficult AACSB: Analytical thinking; Written and oral communication Learning Objective: 8.4: Understand how the Internet is governed and why taxation of ecommerce raises governance and jurisdiction issues.

81) Which of the following is not an e-commerce public safety and welfare issue?

A) regulation of gambling B) regulation of cigarette sales C) regulation of pornography D) regulation of taxation Answer: D Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 8.5: Identify major public safety and welfare issues raised by e-commerce.

82) The Children's Internet Protection Act (CIPA) has been struck down by the U.S. Supreme Court as unconstitutional.

22 Copyright © 2022, 2020, and 2019 Pearson Education, Inc.

Answer: FALSE Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 8.5: Identify major public safety and welfare issues raised by e-commerce.

83) Section 230 of the Communications Decency Act (CDA) provides immunity for providers and users of interactive computer services (such as ISPs and websites) from being considered a publisher that might be liable for harmful content posted by others.

Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 8.5: Identify major public safety and welfare issues raised by e-commerce.

84) Online gambling is now legal throughout the United States.

Answer: FALSE Difficulty: Easy AACSB: Application of knowledge Learning Objective: 8.5: Identify major public safety and welfare issues raised by e-commerce.

85) Describe the fantasy sport business and the issues it raises.

Answer: In fantasy sports, players assemble their ideal fantasy teams, drafting real-life athletes to their team, and then, based on the performance of those players in real games, they can win significant prizes. The most popular sports are college football and basketball, and professional football and baseball. Players are given a budget that they can use to draft players, and some of the combined fees for each game make up the pool for which players compete. Entry fees range widely from less than a dollar, to over $1,000. Fantasy sports were exempted from the Unlawful Internet Gambling Enforcement Act of 2006 (UIGEA). The industry argued that participating in fantasy sports was not gambling, but instead a game of skill like chess or Scrabble. Two firms dominate the online fantasy sports market: DraftKings and FanDuel. Both firms advertise heavily during college and professional sports games.

As the industry has grown to billion-dollar venture capital valuations, however, and with allegations of cheating customers, deceptive practices, lack of transparency, and insider irregularities, state and federal legislators are holding hearings and considering regulations. In 2015, the New York State attorney general told both DraftKings and FanDuel to stop taking entries from New York State residents because, in the state's opinion, their operations constituted illegal gambling and the sites engaged in false and misleading advertising. Citibank cut off credit card processing for both sites. After lengthy legislative hearings and strong support from sports fans, New York reversed its position, agreeing that when played fairly, fantasy sports is a game of skill, not gambling. The governor signed legislation legalizing fantasy sports as a state regulated industry, claiming it would add $4 billion to the state's education fund. The sites also agreed to pay $12 million in fines. In February 2020, however, a New York State appeals court ruled that the law legalizing fantasy sports violated the New York State Constitution's ban on gambling, throwing its future in New York into doubt (Campbell, 2020) However, fantasy sports remains legal in over 40 states and DraftKings is now a public company with a valuation of over $3 billion.

Difficulty: Moderate AACSB: Application of knowledge; Written and oral communication 23 Copyright © 2022, 2020, and 2019 Pearson Education, Inc.

Learning Objective: 8.5: Identify major public safety and welfare issues raised by e-commerce.

24 Copyright © 2022, 2020, and 2019 Pearson Education, Inc.

E-commerce 2021: business. technology. society., 16e (Laudon/Traver) Chapter 9 Online Retailing and Services 1) Which of the following is not a major trend in online retail for 2020-2021?

A) Buying online has become a normal, mainstream, everyday experience.

B) The average annual purchase of online buyers continues to increase.

C) The number of online buyers continues to increase.

D) The Covid-19 pandemic is expected to create a decrease in e-commerce retail purchases.

Answer: D Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 9.1: Understand the environment in which the online retail sector operates today.

2) The online retail sector of the retail industry is most similar to the ________ sector.

A) specialty stores B) general merchandise C) mail order/telephone order (MOTO) D) consumer durables Answer: C Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 9.1: Understand the environment in which the online retail sector operates today.

3) Which of the following is not one of the seven major segments of the retail industry?

A) electronics and computers B) specialty stores C) gasoline and fuel D) food and beverage Answer: A Difficulty: Easy AACSB: Application of knowledge Learning Objective: 9.1: Understand the environment in which the online retail sector operates today.

4) All of the following statements about the MOTO sector are true except: A) compared to general merchandisers, the transition to e-commerce was easier for MOTO firms.

B) the MOTO sector is also referred to as the specialty store sector.

C) MOTO was the last technological retailing revolution that preceded e-commerce.

D) improvements in telephone systems and the expansion of the credit card industry and associated technologies fueled the development of the MOTO sector.

Answer: B Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 9.1: Understand the environment in which the online retail sector operates 1 Copyright © 2022, 2020, and 2019 Pearson Education, Inc.

today.

5) Which of the following enabled MOTO firms to make an easier transition to e-commerce?

A) the national toll-free call system B) the fact that they already had efficient customer order fulfillment processes C) falling long distance telecommunications prices D) the growth of the credit card industry Answer: B Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 9.1: Understand the environment in which the online retail sector operates today.

6) All of the following were parts of the vision during the early days of e-commerce except the belief that: A) new, "first-mover" middlemen, with expertise in e-commerce, would force traditional intermediaries out of business.

B) online consumers were rational and cost-driven.

C) entry costs to the online retail market would be much less than those needed to establish a physical storefront.

D) the cost of acquiring customers would be much lower.

Answer: A Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 9.1: Understand the environment in which the online retail sector operates today.

7) All of the following have introduced social commerce functionality, such as buy buttons, shoppable ads, and marketplaces, except: A) Facebook.

B) Pinterest.

C) Instagram.

D) Tumblr.

Answer: D Difficulty: Easy AACSB: Application of knowledge Learning Objective: 9.1: Understand the environment in which the online retail sector operates today.

8) In 2020, it was estimated that about what percentage of Internet users over the age of 14 would make a purchase at an online retail store?

A) 40% B) 60% C) 70% D) 80% Answer: D Difficulty: Moderate AACSB: Application of knowledge 2 Copyright © 2022, 2020, and 2019 Pearson Education, Inc.

Learning Objective: 9.1: Understand the environment in which the online retail sector operates today.

9) Which of the following categories generated the highest percentage of online retail revenue in 2019?

A) computers and electronics B) apparel and accessories C) books/music/video D) automobile and automobile parts and accessories Answer: A Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 9.1: Understand the environment in which the online retail sector operates today.

10) All of the following are advantages of online retail except: A) lower supply chain costs.

B) lower cost of distribution.

C) ability to change prices.

D) faster delivery of goods.

Answer: D Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 9.1: Understand the environment in which the online retail sector operates today.

11) Which of the following is not one of the central challenges facing the online retail industry?

A) lack of physical store presence B) consumer concerns about the privacy of personal information C) inconvenience in returning goods D) delivery delays Answer: A Difficulty: Difficult AACSB: Application of knowledge Learning Objective: 9.1: Understand the environment in which the online retail sector operates today.

12) Which of the following is not one of the methods used by traditional retailers to develop omni-channel integration?

A) online catalog B) online order, in-store pickup C) online supply-push D) online promotions for offline purchases Answer: C Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 9.1: Understand the environment in which the online retail sector operates today.

3 Copyright © 2022, 2020, and 2019 Pearson Education, Inc.

13) Which of the following statements is not true about the automobile, and automobile parts and accessories, online retail category?

A) Most of the revenue in this category is generated from the sales of automobiles.

B) Automobile manufacturers use the Internet to deliver branding advertising.

C) U.S. franchising law prohibits automobile manufacturers from selling cars directly to consumers.

D) Automobile retailing is dominated by dealership networks.

Answer: A Difficulty: Easy AACSB: Application of knowledge Learning Objective: 9.1: Understand the environment in which the online retail sector operates today.

14) Apart from Amazon, the top online retail firms in terms of online sales are all primarily ______ firms.

A) manufacturer-direct B) omni-channel C) web-only D) catalog merchant Answer: B Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 9.1: Understand the environment in which the online retail sector operates today.

15) Which of the following is not a digitally native vertical brand (D2C)?

A) Warby Parker B) Wayfair C) Everlane D) Caspar Answer: B Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 9.1: Understand the environment in which the online retail sector operates today.

16) Online retail constitutes about 20% of the total retail market today.

Answer: FALSE Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 9.1: Understand the environment in which the online retail sector operates today.

17) In 2020, the number of online buyers in the United States was around 205 million.

Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge 4 Copyright © 2022, 2020, and 2019 Pearson Education, Inc.

Learning Objective: 9.1: Understand the environment in which the online retail sector operates today.

18) Personal consumption of retail goods and services accounts for over 80% of total gross domestic product (GDP).

Answer: FALSE Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 9.1: Understand the environment in which the online retail sector operates today.

19) Contrary to predictions of analysts made during the early days of e-commerce, the Internet has led to both disintermediation and hypermediation on a widespread basis.

Answer: FALSE Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 9.1: Understand the environment in which the online retail sector operates today.

20) Consumers are primarily price-driven when shopping on the Internet.

Answer: FALSE Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 9.1: Understand the environment in which the online retail sector operates today.

21) Online retailing provides an example of the powerful role that intermediaries continue to play in retail trade.

Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 9.1: Understand the environment in which the online retail sector operates today.

22) Describe the vision of online retailing during the early days of e-commerce. Did these predictions and assumptions turn out to be true?

Answer: In the early days of e-commerce, entrepreneurial online retailers saw the Web as one of the largest market opportunities in the United States economy. They believed that entering the online retail market would be an easy proposition because the new marketing channel would revolutionize the retail industry. The belief was that the Internet would greatly reduce both search costs and transaction costs, causing consumers to use the Internet to find the lowest prices for products. This would result in consumers being increasingly drawn to the new channel, and only the low-cost, high-service quality e-tailers would survive. Economists assumed that online consumers would be rational and cost-driven rather than brand-name and perceived-value driven.

Entrepreneurs also believed that entry costs to the online retail market would be much lower than the costs to establish a physical store, and that they could be more efficient at marketing and order fulfillment than their offline counterparts. They believed they could inexpensively create 5 Copyright © 2022, 2020, and 2019 Pearson Education, Inc.

compelling websites that would attract customers and that these costs would no doubt be far less than the costs of warehouses, fulfillment centers, and physical stores. They severely underestimated the costs to build sophisticated order entry, shopping cart, and fulfillment systems because they believed the technology had already been developed and furthermore believed with technology prices falling every year, updating and building any other necessary systems would be economical.

With search engines almost instantaneously connecting consumers to relevant online vendors, customer acquisition costs would also be negligible. As prices fell, the unwieldy and outdated offline merchants would be driven out of business and the new entrepreneurs of the efficient online marketplace would take over. Smart entrepreneurs would exploit first mover advantages to take their place at the head of the online merchant class and the old general merchandisers would be locked out of the market.

In some industries, such as apparel, electronics, and digital content, the market would be disintermediated, eliminating the traditional "middlemen" as manufacturers and distributors built a direct relationship with the consumer. The Web would become the dominant channel replacing the physical stores, sales clerks, and sales forces. In other industries, retailers would outsource the warehousing and order-fulfillment functions and a kind of hypermediation would occur in which many intermediaries would perform the functions for the virtual firm.

Unfortunately for many failed businesses and investors, these assumptions did not turn out to be correct. The structure of the retail marketplace remained intact, and consumers have proven to be less price sensitive than the economists expected. In online merchandising, the importance of brand names to consumers' perceptions of quality and service has been extended rather than decreased or eliminated. The retail marketplace was neither disintermediated nor revolutionized.

Although an entirely new channel emerged, it today belongs not just to the pure-play, onlineonly, first movers, but also to omni-channel firms with established brand names.

Difficulty: Moderate AACSB: Analytical thinking; Written and oral communication Learning Objective: 9.1: Understand the environment in which the online retail sector operates today.

23) Describe the state of the online retail sector today.

Answer: Although the online retail sector is one of the smallest segments of the total retail market, constituting only about 11% of the total retail market in 2019, it is growing faster than its offline counterparts, with new functionality and product lines being added every day. During the recession of 2008-2009, online retail revenues were basically flat, but have since resumed their upward trajectory. Although the Covid-19 pandemic is expected to create a 10% decline in overall retail sales, e-commerce retail revenues are expected to increase by almost 20% in 2020, in part due to a shift by consumers to purchasing essential goods online. More people than ever are shopping online, and for most consumers, the advantages of online shopping overcome the disadvantages. In 2020, it is estimated that over 80% of Internet users over the age of 14 (around 205 million people) will buy at an online retail store, generating over $710 billion in online retail sales. While the number of new Internet users in the United States is not growing as rapidly as it was, with 85% of the U.S. population already on the Internet, this slowdown will not necessarily reduce the growth in online retail e-commerce because the average shopper is spending more on the Internet each year and finding many new categories of items to buy. For instance, in 2003, 6 Copyright © 2022, 2020, and 2019 Pearson Education, Inc.

the average annual amount spent online by users was $675, but by 2020, it had jumped an estimated $3,476. Millions of additional consumers more look for information online about purchases they make at offline stores.

Offline retailers who have the brand-name recognition, supportive infrastructure, and financial resources have entered the online marketplace successfully and continue to integrate their online operations with their physical store operations to provide an integrated shopping customer experience and leverage the value of their physical stores. Some of the most significant changes in retail e-commerce in 2020 are the continuing growth in social e-commerce, the growing ability of firms to market local services and products using location-based marketing, and, not least, the rapidly growing mobile platform composed of smartphones and tablet computers. In retail circles, smartphones have become a leading shopping tool, while tablets are increasingly both shopping and purchase platforms. Social networks like Facebook, Pinterest, Facebook, Pinterest, and Instagram have all introduced functionality, such as buy buttons, shoppable ads, and marketplaces, that allows consumers to more easily purchase goods on a large scale. In addition, location-based mobile marketing and advertising solutions such as Groupon have enabled local merchants to inexpensively enter local mobile marketing. Social and local ecommerce are enabled by the tremendous growth in mobile Internet devices, both smartphones and tablet computers. In 2020, U.S. retail m-commerce is expected to generate about $315 billion overall and over 80% of online buyers are expected to make a purchase using a mobile device. It is estimated that this percentage will grow to about 85% by 2024.

Difficulty: Moderate AACSB: Analytical thinking; Written and oral communication Learning Objective: 9.1: Understand the environment in which the online retail sector operates today.

24) Which of the following is not a key industry strategic factor?

A) synergies B) barriers to entry C) industry value chain D) existence of substitute products Answer: A Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 9.2: Explain how to analyze the economic viability of an online firm.

25) All of the following are strategic factors that pertain specifically to a firm and its related businesses except: A) core competencies.

B) synergies.

C) technology.

D) power of customers.

Answer: D Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 9.2: Explain how to analyze the economic viability of an online firm.

26) The lower the ________ compared to revenue, the higher the gross profit.

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A) assets B) cost of sales C) gross margin D) operating expenses Answer: B Difficulty: Difficult AACSB: Application of knowledge Learning Objective: 9.2: Explain how to analyze the economic viability of an online firm.

27) Gross margin is defined as gross profit: A) minus total operating expenses.

B) divided by net sales revenues.

C) divided by cost of sales.

D) minus net income.

Answer: B Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 9.2: Explain how to analyze the economic viability of an online firm.

28) Which of the following is not categorized as an operating expense?

A) the cost of products being sold B) marketing costs C) administrative overhead D) amortization of goodwill Answer: A Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 9.2: Explain how to analyze the economic viability of an online firm.

29) Operating margin is defined as: A) operating income or loss divided by net sales revenues.

B) operating income or loss divided by total operating expenses.

C) net sales revenues divided by net income or loss.

D) net assets divided by net liabilities.

Answer: A Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 9.2: Explain how to analyze the economic viability of an online firm.

30) What is another name for pro forma earnings?

A) net margin B) operating income C) earnings before income taxes, depreciation, and amortization (EBITDA) D) generally accepted accounting principles (GAAP) earnings Answer: C Difficulty: Difficult AACSB: Application of knowledge Learning Objective: 9.2: Explain how to analyze the economic viability of an online firm.

8 Copyright © 2022, 2020, and 2019 Pearson Education, Inc.

31) Which of the following is not considered a current asset?

A) long-term investments B) cash C) accounts receivable D) marketable securities Answer: A Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 9.2: Explain how to analyze the economic viability of an online firm.

32) Current liabilities are debts of the firm that will be due within: A) three months.

B) six months.

C) one year.

D) two years.

Answer: C Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 9.2: Explain how to analyze the economic viability of an online firm.

33) For a quick check of a firm's short-term financial health, examine its: A) working capital.

B) gross margin.

C) long-term debt.

D) cost of sales.

Answer: A Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 9.2: Explain how to analyze the economic viability of an online firm.

34) Which of the following measures the percentage of sales revenue a firm can retain after all expenses are deducted from gross revenues?

A) gross profit B) net margin C) operating margin D) working capital Answer: B Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 9.2: Explain how to analyze the economic viability of an online firm.

35) Which of the following provides a financial snapshot of a company's assets and liabilities (debts) on a given date?

A) working capital B) operating margin C) balance sheet D) gross margin 9 Copyright © 2022, 2020, and 2019 Pearson Education, Inc.

Answer: C Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 9.2: Explain how to analyze the economic viability of an online firm.

36) The existence of substitute products is a key industry strategic factor.

Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 9.2: Explain how to analyze the economic viability of an online firm.

37) Define the term economic viability and explain the factors involved in assessing a firm's economic viability.

Answer: Economic viability refers to the ability of a firm to survive during a specified time period as a profitable business firm. To analyze the economic viability of a firm, both strategic and financial assessments are conducted.

Strategic approaches to economic viability focus on both the industry in which a firm operates and the firm itself. Industry factors to examine include barriers to entry, which are expenses such as high capital costs, or intellectual property such as patents or copyrights held by other firms, and make it difficult for new entrants to join the industry.

The power of the suppliers and power of the customers in the industry must also be considered.

If suppliers are sufficiently powerful, they can charge higher prices, whereas if the manufacturers or retailers are more powerful, they can bargain effectively for lower prices from their suppliers.

The relative power of the customers determines whether they will be able to shop among the firm's competitors, thus keeping prices down. The existence of substitute products in an industry can also drive prices down if consumers have access to products with a similar function that they determine will fill their needs just as adequately. The industry value chain must be evaluated to determine if the chain of production and distribution for the industry is changing in ways that will benefit or harm the firm. Finally, the nature of the intra-industry competition must be evaluated to determine if the competition within the industry is based on differentiated products and services, price, the scope of the offerings or the focus of the offerings, and whether any imminent changes in the nature of the competition will benefit or harm the firm.

The strategic factors to analyze include the firm value chain, the core competencies of the firm, the synergies available to the firm, the technology used by the firm, and the social and legal challenges facing the firm. The firm value chain must be evaluated to determine if the firm has adopted business systems that will enable it to operate at peak efficiency and whether there are any looming technological changes that might force the firm to change its processes or methods.

The core competencies of a firm are its unique skills that cannot be easily duplicated. When analyzing the economic viability of a firm it is important to consider whether technological changes might invalidate these competencies. Synergies refer to the availability to the firm of the competencies and assets of related firms that it owns or with which it has formed strategic partnerships. The firm's current technology must be evaluated to determine if it has proprietary technologies that will allow it to scale with demand and if it has developed the customer relationship, fulfillment, supply chain management, and human resources systems that it will 10 Copyright © 2022, 2020, and 2019 Pearson Education, Inc.

need to be viable. Finally, the social and legal challenges facing the firm should be examined to determine if the firm has considered consumer trust issues such as the privacy and security of personal information and if the firm may be vulnerable to legal challenges.

The financial factors to analyze are the firm's revenues, cost of sales, gross margin, operating expenses, operating margin, and net margin. Revenues must be examined to determine if they are growing and at what rate. Cost of sales is the cost of the products sold including all related costs.

The lower the cost of sales compared to revenue, the higher the gross profit. Gross margin is calculated by dividing gross profit by net sales. If the gross margin is improving consistently, the economic outlook for the firm is enhanced. Operating expenses such as marketing, technology, and administrative costs should be evaluated to determine if the firm's needs in the near interim will necessitate increased outlays. Large increases in operating expenses may result in net losses for the firm. Operating margin tells us if the firm's current operations are covering its operating expenses, not including interest expenses and other non-operating expenses. Net margin is calculated by dividing net income or net loss by net sales. It evaluates the net profit or loss for each dollar in sales. For example, a net margin of 12% indicates that a firm is making 12 cents on each dollar in sales. These figures can be found on a firm's consolidated statement of operations and summary balance sheet. A thorough strategic and financial analysis will often reveal the true economic prospects for a firm in the near to medium term.

Difficulty: Difficult AACSB: Analytical thinking; Written and oral communication Learning Objective: 9.2: Explain how to analyze the economic viability of an online firm.

38) Which of the following is not an example of a virtual merchant?

A) Overstock B) Wayfair C) Newegg D) Dell Answer: D Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 9.3: Identify the challenges faced by the different types of online retailers.

39) Omni-channel merchants are also referred to as: A) virtual merchants.

B) bricks-and-clicks companies.

C) catalog merchants.

D) manufacturer-direct firms.

Answer: B Difficulty: Easy AACSB: Application of knowledge Learning Objective: 9.3: Identify the challenges faced by the different types of online retailers.

40) Which of the following is a subscription-based retailer using predictive marketing and big data?

A) Macy's B) Stitch Fix C) Dell 11 Copyright © 2022, 2020, and 2019 Pearson Education, Inc.

D) Lands' End Answer: B Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 9.3: Identify the challenges faced by the different types of online retailers.

41) Virtual merchants face potentially large costs for all of the following except: A) building and maintaining a website.

B) building and maintaining physical stores.

C) building an order fulfillment infrastructure.

D) developing a brand name.

Answer: B Difficulty: Easy AACSB: Application of knowledge Learning Objective: 9.3: Identify the challenges faced by the different types of online retailers.

42) All of the following statements about Amazon are true except: A) Amazon purchased Jet.com, one of its discount competitors, to give it a more robust network for delivering goods.

B) Amazon Web Services delivers more profits than Amazon’s entire retail business.

C) eBay can be considered a competitor of Amazon's.

D) Amazon generates the bulk of its overall revenue by selling products.

Answer: A Difficulty: Difficult AACSB: Application of knowledge Learning Objective: 9.3: Identify the challenges faced by the different types of online retailers.

43) All of the following are challenges faced by bricks-and-clicks firms except: A) coordinating prices across channels.

B) handling returns of online purchases at retail outlets.

C) building a credible website.

D) building a brand name.

Answer: D Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 9.3: Identify the challenges faced by the different types of online retailers.

44) All of the following are challenges for catalog merchants except: A) high costs of printing and mailing.

B) building a credible website.

C) the need to bring staff in or manage new technology.

D) building sophisticated order entry and fulfillment systems.

Answer: D Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 9.3: Identify the challenges faced by the different types of online retailers.

45) The term supply-push refers to: 12 Copyright © 2022, 2020, and 2019 Pearson Education, Inc.

A) making products prior to orders being received based on estimated demand.

B) waiting for orders to be received before building a product.

C) channel conflict.

D) multi-channel manufacturers who sell directly online to consumers.

Answer: A Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 9.3: Identify the challenges faced by the different types of online retailers.

46) All of the following are examples of the challenges that traditional manufacturers experience when using the Internet to sell directly to the consumer except: A) moving to a demand-pull model.

B) high-cost structures.

C) developing a fast-response online order and fulfillment system.

D) channel conflict.

Answer: B Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 9.3: Identify the challenges faced by the different types of online retailers.

47) Which of the following occurs when retailers of products must compete on price and currency of inventory directly against the manufacturer?

A) disintermediation B) localization C) channel conflict D) hypermediation Answer: C Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 9.3: Identify the challenges faced by the different types of online retailers.

48) Which of the following has the highest share of online retail sales?

A) omni-channel merchants B) virtual merchants C) catalog merchants D) manufacturer-direct Answer: B Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 9.3: Identify the challenges faced by the different types of online retailers.

49) Which of the following has the second-highest share of online retail sales?

A) omni-channel merchants B) virtual merchants C) catalog merchants D) manufacturer-direct Answer: A 13 Copyright © 2022, 2020, and 2019 Pearson Education, Inc.

Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 9.3: Identify the challenges faced by the different types of online retailers.

50) Big data plays an important role in predictive marketing.

Answer: TRUE Difficulty: Easy AACSB: Application of knowledge Learning Objective: 9.3: Identify the challenges faced by the different types of online retailers.

51) Why have so many online retailers had difficulty in achieving profits? How has this changed by 2020?

Answer: There are several reasons for the difficulties experienced by online retailers in achieving profits. The path to success in any form of retail involves having a central location to attract a larger number of shoppers, charging high enough prices to cover the costs of goods and marketing, and developing highly efficient inventory and fulfillment systems so that the company can offer goods at lower costs than competitors and still make a profit. Many online merchants failed to follow these fundamental ideas, lowering prices below the total costs of goods and operations, failing to develop efficient business processes, failing to attract a large enough audience to their websites, and spending far too much on customer acquisition and marketing. Now, however, the lessons of the past have been learned, and far fewer online merchants are selling below cost, especially if they are start-up companies. There's also been a change in consumer culture and attitudes. Whereas in the past consumers looked to the Web for cheap prices, today, they now look to online purchasing for convenience, time savings, and time shifting (buying retail goods at night from the sofa). Consumers have been willing to accept higher prices in return for the convenience of shopping online and avoiding the inconvenience of shopping at stores and malls. This allows online merchants more pricing freedom.

Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 9.3: Identify the challenges faced by the different types of online retailers.

52) Describe the virtual merchant business model and its unique challenges in becoming financially viable.

Answer: Virtual merchants are single-channel e-commerce firms that generate almost all their revenue from online sales. Unfortunately, they face a number of challenges. They must build a business and brand name from scratch quickly and face many virtual merchant competitors. They also face large costs in building and maintaining an e-commerce presence, building an order fulfillment infrastructure, and developing a brand name. Customer acquisition costs are high, and the learning curve is steep. Like all retail firms, their gross margins are low. Therefore, virtual merchants must achieve highly efficient operations to preserve a profit, while building a brand name as quickly as possible in order to attract a sufficient number of customers to cover their costs of operations. Most merchants in this category adopt low-cost and convenience strategies, coupled with extremely effective and efficient fulfillment processes to ensure customers receive what they ordered as fast as possible.

Difficulty: Moderate AACSB: Analytical thinking; Written and oral communication Learning Objective: 9.3: Identify the challenges faced by the different types of online retailers.

14 Copyright © 2022, 2020, and 2019 Pearson Education, Inc.

53) In the United States, the service sector accounts for approximately ________ % of the United States GDP. A) 70 B) 75 C) 80 D) 85 Answer: C Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 9.4: Describe the major features of the online service sector.

54) Within the major service industry groups, companies can be categorized generally into those that provide transaction brokering and those that involve which of the following?

A) retailing goods B) personalization C) information brokering D) providing hands-on services Answer: D Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 9.4: Describe the major features of the online service sector.

55) Approximately ________ % of the United States labor force is involved in providing services.

A) 50 B) 60 C) 70 D) 80 Answer: D Difficulty: Difficult AACSB: Application of knowledge Learning Objective: 9.4: Describe the major features of the online service sector.

56) Which of the following is not an example of a transaction broker?

A) a stockbroker B) a real estate agent C) an accountant D) an employment agency Answer: C Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 9.4: Describe the major features of the online service sector.

57) All of the following services require extensive personalization except: A) financial services.

B) legal services.

C) medical services.

D) accounting services.

15 Copyright © 2022, 2020, and 2019 Pearson Education, Inc.

Answer: A Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 9.4: Describe the major features of the online service sector.

58) Which of the following best explains why the service sector is a natural avenue for ecommerce?

A) The service sector is less geographically reliant and more globally oriented.

B) The service sector requires “rich” marketing messages to reach new customers.

C) Much of the value in services is based on the collection, storage, and exchange of information.

D) It is not; services are difficult to translate to e-commerce because they all rely on face-to-face communication and barter.

Answer: C Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 9.4: Describe the major features of the online service sector.

59) Service industries (i.e., finance & travel) typically are very knowledge- and informationintense.

Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 9.4: Describe the major features of the online service sector.

60) What aspects of Internet and e-commerce technology are undergirding the rapid growth of ecommerce services and how will it impact the growth of such services in the future?

Answer: The ability of Internet and e-commerce technology to personalize and customize service, or components of service, is a major factor undergirding the extremely rapid growth of e-commerce services. Future expansion of e-services will depend in part on the ability of ecommerce firms to transform their customized services—choosing from a list—into truly personalized services, such as providing unique advice and consultation based on a digital yet intimate understanding of the client (at least as intimate as professional service providers).

Difficulty: Moderate AACSB: Application of knowledge; Written and oral communication Learning Objective: 9.4: Describe the major features of the online service sector.

61) Which of the following statements about online banking is not true?

A) Top mobile banking activities include checking balances and bank statements.

B) Online and mobile banking transactions provide significant costs savings for banks.

C) Millennials are adopting mobile banking at a much higher rate than those who are older.

D) More people use a tablet for mobile banking than a mobile phone.

Answer: D Difficulty: Difficult AACSB: Application of knowledge Learning Objective: 9.5: Discuss the trends taking place in the online financial services industry.

62) In ________, all of a customer's financial (and even nonfinancial) data are pulled together 16 Copyright © 2022, 2020, and 2019 Pearson Education, Inc.

into a single, personalized website.

A) account aggregation B) a financial portal C) integrated financial services D) EBPP systems Answer: A Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 9.5: Discuss the trends taking place in the online financial services industry.

63) The Internet has resulted in lower search costs, increased price comparison, and lower prices to consumers for which insurance product line?

A) term life insurance B) automobile insurance C) health insurance D) property and casualty insurance Answer: A Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 9.5: Discuss the trends taking place in the online financial services industry.

64) All of the following statements about the online insurance industry are true except: A) the Internet has lowered search costs, increased price comparison, and decreased prices to consumers for all forms of insurance.

B) websites of almost all the major firms provide the ability to obtain an online quote.

C) the wave of interest in fintech companies is starting to filter into the insurance industry.

D) the industry has been very successful in attracting visitors searching for information about prices and terms of insurance policies.

Answer: A Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 9.5: Discuss the trends taking place in the online financial services industry.

65) All of the following statements about the online real estate services market are true except: A) the first step in the home buying process for nearly all ages of home buyers is to look online.

B) the major impact of Internet real estate sites has been in influencing offline decisions.

C) the primary service offered by real estate sites is a listing of houses available.

D) the Internet and e-commerce have created a revolution in the real estate value chain.

Answer: D Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 9.5: Discuss the trends taking place in the online financial services industry.

66) Craigslist is most involved in which of the following online services market(s)?

A) real estate services and career services B) insurance services and brokerage services C) travel services D) online accounting services 17 Copyright © 2022, 2020, and 2019 Pearson Education, Inc.

Answer: A Difficulty: Easy AACSB: Application of knowledge Learning Objective: 9.5: Discuss the trends taking place in the online financial services industry.

67) In 2020, almost 75% of the adult U.S. population was expected to use online banking.

Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 9.5: Discuss the trends taking place in the online financial services industry.

68) The online mortgage industry has transformed the process of obtaining a mortgage.

Answer: FALSE Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 9.5: Discuss the trends taking place in the online financial services industry.

69) The term fintech applies only to tech companies that are seeking use technology to unbundle traditional institutional financial services industries and instead deliver targeted solutions.

Answer: FALSE Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 9.5: Discuss the trends taking place in the online financial services industry.

70) Define the term insurtech and give an example of an insurtech company.

Answer: The wave of interest in fintech companies previously discussed is also starting to filter into the insurance industry, with a subset labeled “insurtech” companies, who are seeking to use technologies such as big data, machine learning, and artificial intelligence to disrupt the traditional insurance industry. For example, a company named Lemonade, Inc., founded in 2015, is attempting to reinvent the homeowners and renters’ insurance market by cutting out agents, offering competitive rates, and using a mobile app featuring a chatbot and powered by artificial intelligence. Lemonade initially focused on the Millennial market, with 70% of its users under the age of 35. Lemonade went public in July 2020 and as of August 2020 had a market capitalization of $3,7 billion. Hippo, which has raised over $200 million and is valued at $1 billion, analyzes public data sets to develop a more accurate profile of a customer’s property, resulting in qualified customers receiving a comprehensive quote in under 60 seconds. Hippo claims its data-driven pricing algorithms reduced premium costs of up to 25% Difficulty: Difficult AACSB: Analytical thinking; Written and oral communication Learning Objective: 9.5: Discuss the trends taking place in the online financial services industry.

71) ________ provides notices called Consumer Alerts to inform readers when a review is likely to be fraudulent.

A) Yelp B) TripAdvisor C) Angie's List D) TripExpert Answer: A 18 Copyright © 2022, 2020, and 2019 Pearson Education, Inc.

Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 9.6: Describe the major trends in the online travel services industry today.

72) What is the largest sector of the online travel services market in terms of revenue?

A) hotel reservations B) car reservations C) cruise/tour reservations D) airline reservations Answer: D Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 9.6: Describe the major trends in the online travel services industry today.

73) Which of the following statements is not true?

A) Price competition among online travel services is difficult as comparison shopping for better prices is easy.

B) The online travel services sector is one of the few in which extensive disintermediation has occurred.

C) The ability of travel products and services to be commoditized is a significant factor in the explosive growth of the online travel services industry.

D) The online travel services industry has gone through a period of consolidation.

Answer: B Difficulty: Difficult AACSB: Application of knowledge Learning Objective: 9.6: Describe the major trends in the online travel services industry today.

74) Booking Holdings owns all of the following except: A) Priceline.

B) Expedia.

C) Booking.com D) Kayak Answer: B Difficulty: Easy AACSB: Application of knowledge Learning Objective: 9.6: Describe the major trends in the online travel services industry today.

75) The Covid-19 pandemic has severely impacted the online travel industry.

Answer: TRUE Difficulty: Easy AACSB: Application of knowledge Learning Objective: 9.6: Describe the major trends in the online travel services industry today.

76) Discuss the issue of consolidation in the online travel services industry.

Answer: The online travel services industry has gone through a period of intense consolidation.

Expedia now owns Travelocity, Orbitz, CheapTickets, Hotels.com, Hotwire, HomeAway, and meta-search engine Trivago. Its primary competition consists of Booking Holdings, which owns Priceline, Booking.com, and Kayak. Together, Expedia and Booking Holdings control a 19 Copyright © 2022, 2020, and 2019 Pearson Education, Inc.

whopping 95% of the online travel agency booking market. However, Google is also poised to become a player in the market, with its Google Flights that also provides booking functionality.

The U.S. Department of Justice also cited the TripAdvisor's Instant Booking service as a factor in its approval of Expedia's acquisition of Orbitz.

Difficulty: Moderate AACSB: Application of knowledge; Written and oral communication Learning Objective: 9.6: Describe the major trends in the online travel services industry today.

77) Which of the following job recruitment companies is not a job listing aggregator?

A) Indeed B) SimplyHired C) Glassdoor D) CareerBuilder Answer: D Difficulty: Easy AACSB: Application of knowledge Learning Objective: 9.7: Identify current trends in the online career services industry.

78) Which of the following is not a major trend in the online recruitment services industry?

A) disintermediation B) video and remote recruiting C) social recruiting D) use of artificial intelligence technologies in the hiring process Answer: A Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 9.7: Identify current trends in the online career services industry.

79) The social network LinkedIn has become major player in the online recruitment market.

Answer: TRUE Difficulty: Easy AACSB: Application of knowledge Learning Objective: 9.7: Identify current trends in the online career services industry.

80) Explain why online career services are so well suited to the Web. Answer: Next to travel services, job-hunting services have been one of the Internet's most successful online services because they save money for both job hunters and employers. Job resumes can be posted for free, many other career-related services can be easily accessed, and for a fee, job hunters can access lists of job openings that have been posted by companies.

Online recruiting provides an efficient and cost-effective means of linking employers and job hunters and reduces the total time-to-hire. Job hunters can easily build, update, and distribute their resumes, conduct job searches, and gather information on employers at their convenience and leisure. They can also take skills assessment tests, fill out personality assessment questionnaires, and access such services as personalized account management for job hunters, job search tools, employer blocking tools, organizational culture assessments, and e-mail notifications when an appropriate job is newly listed on the site.

20 Copyright © 2022, 2020, and 2019 Pearson Education, Inc.

Career recruitment is an information-intense business process that the Internet can automate, thus reducing search time and costs for all parties. In addition to matching job applicants with available positions, online sites also serve the larger function of automating this informationintense business process.

Difficulty: Moderate AACSB: Analytical thinking; Written and oral communication Learning Objective: 9.7: Identify current trends in the online career services industry.

81) Which of the following is not true about on-demand service firms?

A) The growth of on-demand service firms is supported using online reputation systems based on peer review.

B) It is not likely that on-demand service firms will totally escape government regulation.

C) On-demand service firms facilitate access to resources.

D) On-demand service firms are a totally new phenomenon without precedent in the history of ecommerce.

Answer: D Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 9.8: Understand the business models of on-demand service companies.

82) Which of the following is an on-demand service company focused on lodging?

A) Uber B) Lyft C) Airbnb D) Task Rabbit Answer: C Difficulty: Easy AACSB: Application of knowledge Learning Objective: 9.8: Understand the business models of on-demand service companies.

83) All of the following are terms used to describe on-demand service companies except: A) mesh economy.

B) collaborative commerce.

C) we-commerce.

D) omni-channel commerce.

Answer: D Difficulty: Easy AACSB: Application of knowledge Learning Objective: 9.8: Understand the business models of on-demand service companies.

84) On-demand service companies collect a fee from both sellers and buyers who use the platform.

Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 9.8: Understand the business models of on-demand service companies.

85) Describe Airbnb’s business model and discuss the challenges that it faces.

21 Copyright © 2022, 2020, and 2019 Pearson Education, Inc.

Answer: Airbnb was founded in 2008 as a way to find lodging for attendees at a business convention. People with spaces to rent, which can range from a single sofa to an entire apartment or house, create an account and a profile, and then list their properties on the site. The amount charged depends on the host and is usually based on the host’s assessment of similar listings nearby and market demand. Travelers seeking to rent spaces register and create an account, which includes a profile. They then consult the website listings, read reviews of the host, and contact the host to arrange for the rental. After the rental period, hosts rate their renters, and vice versa. Renters pay through their Airbnb account, which must be funded by a credit card. Airbnb charges guests a sliding fee of 6% to 12%, depending on the price of the booking, and charges the host 3%. The hosts are issued an IRS 1099 form at the end of the year to report taxes due on the income.

Airbnb faces significant legal challenges and has filed at least 11 lawsuits against various U.S. city or state governments. In 2017, it settled a federal lawsuit it had filed against the city of San Francisco, agreeing to register all of its hosts in the city in compliance with San Francisco’s short-term rental laws, using an automated system Airbnb developed and which it was already using in several other cities. However, Airbnb will not be held responsible for enforcing the law in any way. In New York, Airbnb continues to be hampered by a law that prohibits most apartments in New York City from being rented out for less than 30 days, unless the host is actually present during the guest’s stay. Another New York City law imposes fines on Airbnb hosts who advertise listings that violate this law. In Boston, new regulations that took effect in December 2019 require hosts to own their properties and live in them for at least nine months of the year. Airbnb is facing similar battles in other countries, such as Holland, Germany, and Spain. A report from UBS suggests that regulations such as these are having a negative impact on Airbnb’s business, with listings and bookings growing at a slower pace than in the previous year. The Covid-19 pandemic has also created a number of challenges for Airbnb. Prior to the pandemic, Airbnb had raised around $4.4 billion in equity and debt financing and was valued at $31 billion. In April 2020, during the wake of the Covid-19 pandemic, Airbnb raised an additional $2 billion to provide it with cash for operations, at a valuation of only $18 billion, a drop of 45%. Airbnb initially predicted that its 2020 revenue would be less than half of what it was in 2019. However, in mid-May, Airbnb reported that business was beginning to return, particularly for local travel. Although many assumed that its plans to go public in 2020 would have to be shelved, in August 2020, Airbnb filed IPO paperwork with the Securities and Exchange Commission, paving the way for a potential public offering later in the year Difficulty: Moderate AACSB: Application of knowledge; Written and oral communication Learning Objective: 9.8: Understand the business models of on-demand service companies.

22 Copyright © 2022, 2020, and 2019 Pearson Education, Inc.

E-commerce 2021: business. technology. society., 16e (Laudon/Traver) Chapter 10 Online Content and Media 1) Which of the following is not a current trend in online content?

A) Americans continue to spend more on streaming music than downloaded music.

B) Readership of newspapers in print form continues to exceed online readership.

C) E-book sales growth slows.

D) Explosive growth of the mobile platform accelerates the transition to digital content.

Answer: B Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 10.1: Understand the major trends in the consumption of media and online content, the major revenue models for digital content delivery, digital rights management, and the concept of media convergence.

2) Cord cutters and cord shavers are shrinking the number of pay TV subscribers yearly by approximately: A) 1%.

B) 4%.

C) 10%.

D) 14%.

Answer: B Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 10.1: Understand the major trends in the consumption of media and online content, the major revenue models for digital content delivery, digital rights management, and the concept of media convergence.

3) Which of the following U.S. media channels generates the most revenue?

A) broadcast television/pay TV B) video games C) newspapers D) box office movies Answer: A Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 10.1: Understand the major trends in the consumption of media and online content, the major revenue models for digital content delivery, digital rights management, and the concept of media convergence.

4) In 2019, the various entertainment industries together accounted for about __% of total media industry revenues, while the print media industries collectively accounted for about ___%.

A) 23, 77 B) 77, 23 C) 89, 11 D) 11, 89 Answer: B 1 Copyright © 2022 Pearson Education, Inc.

Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 10.1: Understand the major trends in the consumption of media and online content, the major revenue models for digital content delivery, digital rights management, and the concept of media convergence.

5) Which of the following statements about Millennials is not true?

A) Millennials are more likely to have read a book in the past 12 months than older adults.

B) Millennials overwhelmingly prefer e-books to printed books.

C) Almost two-thirds of Millennials view digital videos daily.

D) Millennials are much more to use streaming services such as Netflix, Hulu, and Amazon than older adults.

Answer: B Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 10.1: Understand the major trends in the consumption of media and online content, the major revenue models for digital content delivery, digital rights management, and the concept of media convergence.

6) In 2020, time spent with digital media in the United States accounted for ___ of total media time spent.

A) 23% B) 33% C) 55% D) 75% Answer: C Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 10.1: Understand the major trends in the consumption of media and online content, the major revenue models for digital content delivery, digital rights management, and the concept of media convergence.

7) Which of the following types of online content is consumed by the highest percentage of U.S. Internet users?

A) digital audio B) video C) digital games D) e-books Answer: B Difficulty: Easy AACSB: Application of knowledge Learning Objective: 10.1: Understand the major trends in the consumption of media and online content, the major revenue models for digital content delivery, digital rights management, and the concept of media convergence.

8) All of the following are examples of technology convergence except: A) the iPad. 2 Copyright © 2022 Pearson Education, Inc.

B) Amazon Books Publishing.

C) Apple TV. D) smartphones.

Answer: B Difficulty: Easy AACSB: Application of knowledge Learning Objective: 10.1: Understand the major trends in the consumption of media and online content, the major revenue models for digital content delivery, digital rights management, and the concept of media convergence.

9) All of the following are aspects of content convergence except: A) language.

B) design.

C) production.

D) distribution.

Answer: A Difficulty: Easy AACSB: Application of knowledge Learning Objective: 10.1: Understand the major trends in the consumption of media and online content, the major revenue models for digital content delivery, digital rights management, and the concept of media convergence.

10) Which of the following occurs first in the process of content convergence related to books?

A) media integration B) media migration C) media transformation D) media maturity Answer: B Difficulty: Difficult AACSB: Application of knowledge Learning Objective: 10.1: Understand the major trends in the consumption of media and online content, the major revenue models for digital content delivery, digital rights management, and the concept of media convergence.

11) Which of the following is not an example of industry structure convergence?

A) Amazon’s creation of Amazon Books Publishing B) Verizon’s acquisition of Yahoo C) AT&T’s acquisition of Time Warner D) Apple’s development of the iPad Answer: D Difficulty: Difficult AACSB: Application of knowledge Learning Objective: 10.1: Understand the major trends in the consumption of media and online content, the major revenue models for digital content delivery, digital rights management, and the concept of media convergence.

12) Which of the following types of online content is consumed by the lowest percentage of U.S. Internet users?

3 Copyright © 2022 Pearson Education, Inc.

A) e-books B) magazines C) video D) digital audio Answer: B Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 10.1: Understand the major trends in the consumption of media and online content, the major revenue models for digital content delivery, digital rights management, and the concept of media convergence.

13) The merger of media enterprises into powerful, synergistic combinations that can crossmarket content on many different platforms is referred to as: A) aggregation.

B) repackaging.

C) media transformation.

D) industry convergence.

Answer: D Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 10.1: Understand the major trends in the consumption of media and online content, the major revenue models for digital content delivery, digital rights management, and the concept of media convergence.

14) DRM refers to a combination of ________ for protecting digital content.

A) hardware and software methods B) technical and legal means C) user and publisher agreements D) local and remote policies Answer: B Difficulty: Easy AACSB: Application of knowledge Learning Objective: 10.1: Understand the major trends in the consumption of media and online content, the major revenue models for digital content delivery, digital rights management, and the concept of media convergence.

15) ________ convergence describes the development of hybrid devices that can combine the functionality of two or more existing media platforms into a single device.

A) Technological B) Content C) Media D) Industry Answer: A Difficulty: Easy AACSB: Application of knowledge Learning Objective: 10.1: Understand the major trends in the consumption of media and online content, the major revenue models for digital content delivery, digital rights management, and the concept of media convergence.

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16) Content convergence describes convergence in the design, production, and ________ of content.

A) sales B) distribution C) marketing D) consumption Answer: B Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 10.1: Understand the major trends in the consumption of media and online content, the major revenue models for digital content delivery, digital rights management, and the concept of media convergence.

17) A business model that uses advertising revenue to provide some content for free, combined with an option to obtain additional content for a price is called a(n) ________ model.

A) sales B) distribution C) a la carte D) freemium Answer: D Difficulty: Easy AACSB: Application of knowledge Learning Objective: 10.1: Understand the major trends in the consumption of media and online content, the major revenue models for digital content delivery, digital rights management, and the concept of media convergence.

18) The Covid-19 pandemic has resulted in an increase in advertising revenue for online content providers.

Answer: FALSE Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 10.1: Understand the major trends in the consumption of media and online content, the major revenue models for digital content delivery, digital rights management, and the concept of media convergence.

19) The amount of time the average American adult spends consuming media is about two-and-a half times the amount of time spent at work.

Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 10.1: Understand the major trends in the consumption of media and online content, the major revenue models for digital content delivery, digital rights management, and the concept of media convergence.

20) The proliferation of mobile devices has led to a decrease in the total amount of time spent with media.

Answer: FALSE 5 Copyright © 2022 Pearson Education, Inc.

Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 10.1: Understand the major trends in the consumption of media and online content, the major revenue models for digital content delivery, digital rights management, and the concept of media convergence.

21) The video game industry accounts for the second highest percentage of U.S. media revenues.

Answer: TRUE Difficulty: Difficult AACSB: Application of knowledge Learning Objective: 10.1: Understand the major trends in the consumption of media and online content, the major revenue models for digital content delivery, digital rights management, and the concept of media convergence.

22) The time spent on desktop computers and mobile devices now exceeds time spent in front of the television.

Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 10.1: Understand the major trends in the consumption of media and online content, the major revenue models for digital content delivery, digital rights management, and the concept of media convergence.

23) The a la carte revenue model allows users to pay only for what they use.

Answer: TRUE Difficulty: Easy AACSB: Application of knowledge Learning Objective: 10.1: Understand the major trends in the consumption of media and online content, the major revenue models for digital content delivery, digital rights management, and the concept of media convergence.

24) Millennials are the first generation to be born into the digital revolution of the 20th century.

Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 10.1: Understand the major trends in the consumption of media and online content, the major revenue models for digital content delivery, digital rights management, and the concept of media convergence.

25) Revenue generated by online TV and movies is expected to grow by nearly 20% between 2020 and 2022.

Answer: TRUE Difficulty: Difficult AACSB: Application of knowledge Learning Objective: 10.1: Understand the major trends in the consumption of media and online content, the major revenue models for digital content delivery, digital rights management, and the concept of media convergence.

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26) Smartphones are an example of technological convergence.

Answer: TRUE Difficulty: Easy AACSB: Application of knowledge Learning Objective: 10.1: Understand the major trends in the consumption of media and online content, the major revenue models for digital content delivery, digital rights management, and the concept of media convergence.

27) Cannibalization is a major challenge facing book publishers.

Answer: FALSE Difficulty: Difficult AACSB: Application of knowledge Learning Objective: 10.1: Understand the major trends in the consumption of media and online content, the major revenue models for digital content delivery, digital rights management, and the concept of media convergence.

28) What is DRM and why is it used?

Answer: Digital rights management (DRM) refers to a combination of technical (both hardware and software), and legal means for protecting digital content from unlimited reproduction and distribution without permission. DRM hardware and software encrypt content so it cannot be used without some form of authorization, typically based on a payment. The objective is to control the uses of content after it has been sold or rented to consumers. Essentially, DRM can prevent users from purchasing and making copies for widespread distribution over the Internet without compensating the content owners.

Difficulty: Moderate AACSB: Application of knowledge; Written and oral communication Learning Objective: 10.1: Understand the major trends in the consumption of media and online content, the major revenue models for digital content delivery, digital rights management, and the concept of media convergence.

29) Explain the concept of media convergence.

Answer: The term media convergence refers to digitally based changes in technology platform, content, and industry structure. Technological convergence means the integration of previously separate platform functionality into hybrid devices that can combine the functionality of many different existing media platforms such as books, newspapers, television, radio, and stereo equipment.

Content convergence has three dimensions: design, production, and distribution. Content design convergence occurs as content created in an older media technology is transferred into a new technology. Historically the initial transference involves little artistic change, but as the artists and producers learn how to use the new tools and how to deliver content more efficiently in the new media, the new capabilities can be fully exploited, and the art becomes measurably different. Content production convergence occurs when content, which is the most significant cost of content, is developed only once using technology that can deliver it to multiple different platforms. Production convergence drives content convergence as new tools are developed for economically producing content for delivery to multiple platforms. For example, the text produced in a word processing program can be easily converted to an HTML or PDF file for online delivery. Distribution convergence occurs when the distributors and ultimate consumers 7 Copyright © 2022 Pearson Education, Inc.

have the devices needed to receive, store, and experience the product.

Industry convergence refers to the merger of media enterprises into powerful synergistic combinations that can cross-market content on many different platforms and create new works that use multiple platforms. Traditionally, each type of media — film, text, music, television — had its own separate industry, typically composed of very large players. However, the Internet has created forces that make the merger of traditionally separate firms in separate media industries a plausible — perhaps necessary — business proposition.

Difficulty: Moderate AACSB: Analytical thinking; Written and oral communication Learning Objective: 10.1: Understand the major trends in the consumption of media and online content, the major revenue models for digital content delivery, digital rights management, and the concept of media convergence.

30) Describe the three basic revenue models for digital content delivery.

Answer: There are three revenue models for delivering content on the Internet. The two "pay" models are subscription (usually "all you can eat," meaning the amount of content that you can consume is unlimited), and a la carte (pay only for what you use). The third model uses advertising revenue to provide content for free, often with a "freemium" option, which makes additional content available for a cost. In many cases, all three of the models work in tandem and cooperatively: free content can drive customers to paid content, as streaming services like Pandora and Spotify have discovered.

Difficulty: Moderate AACSB: Analytical thinking; Written and oral communication Learning Objective: 10.1: Understand the major trends in the consumption of media and online content, the major revenue models for digital content delivery, digital rights management, and the concept of media convergence.

31) Discuss the structure of the U.S. media content industry.

Answer: The U.S. media content industry prior to 1990 was composed of many smaller independent corporations specializing in content creation and distribution in the separate industries of film, television, book and magazine publishing, and newspaper publishing. During the 1990s and into this century, after an extensive period of consolidation, huge entertainment and publishing media conglomerates emerged. The U.S. media industry is still organized largely into three separate vertical stovepipes: print, movies, and music. Each segment is dominated by a few key players. Generally, there is very little crossover from one segment to another. Typically, newspapers do not also produce Hollywood films, and publishing firms do not own newspapers or film production studios. The purchase of the Washington Post in 2013 by Jeff Bezos, the founder of Amazon, and an Internet mogul in his own right, was an anomaly. Even within media conglomerates that span several different media segments, separate divisions control each media segment.

In the past, delivery content firms, such as Comcast, Altice, AT&T, Verizon, Sprint, and Dish Network were not involved in content creation, but instead just moved content produced by others across cable, satellite, and telephone networks. However, within the last several years, this has begun to change. Comcast led the way with the acquisition of a majority interest in NBC Universal. AT&T's merger with Time Warner and Verizon's purchase of Yahoo, along with its previous acquisition of AOL, are signs that the telecommunications companies are moving into 8 Copyright © 2022 Pearson Education, Inc.

the content and distribution market, as well as the Internet advertising industry, in a major way as revenues from traditional cable Internet and wireless business slow.

Difficulty: Moderate AACSB: Analytical thinking; Written and oral communication Learning Objective: 10.1: Understand the major trends in the consumption of media and online content, the major revenue models for digital content delivery, digital rights management, and the concept of media convergence.

32) Which of the following has not been purchased or invested in by a wealthy individual with ties to the technology industry?

A) Washington Post B) Time Magazine C) The Atlantic Magazine D) The New Yorker Answer: D Difficulty: Difficult AACSB: Application of knowledge Learning Objective: 10.2: Understand the key factors affecting the online publishing industry.

33) Which of the following has the highest share of the e-book market?

A) Amazon B) Apple C) Google D) Barnes & Noble Answer: A Difficulty: Easy AACSB: Application of knowledge Learning Objective: 10.2: Understand the key factors affecting the online publishing industry.

34) Which of the following happened during the time period when newspapers used a printcentric business model?

A) Google launched its search engine.

B) Apple introduced the iPhone.

C) Facebook opened to the public.

D) The adoption of smartphones and tablets has grown rapidly.

Answer: A Difficulty: Difficult AACSB: Application of knowledge Learning Objective: 10.2: Understand the key factors affecting the online publishing industry.

35) ________ were the most troubled segment of the print publishing industry in 2020.

A) Books B) Magazines C) Newspapers D) Periodicals Answer: C Difficulty: Moderate AACSB: Application of knowledge 9 Copyright © 2022 Pearson Education, Inc.

Learning Objective: 10.2: Understand the key factors affecting the online publishing industry.

36) Which of the following statements about the newspaper industry is not true?

A) U.S. newspaper revenues totaled about $26 billion in 2019.

B) The newspaper labor force has dropped precipitously since 2006.

C) Social media sites have become a major source of unique visitors to online newspapers.

D) Newspaper circulation revenues have declined dramatically since 2000.

Answer: D Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 10.2: Understand the key factors affecting the online publishing industry.

37) Which of the following statements about online magazine publishing is not true?

A) The total magazine audience size increased by almost 25% from 2014 to 2019, due entirely to the growth of digital magazines, especially mobile web editions and video content.

B) The majority of magazine revenues derive from subscriptions.

C) Apple+ News is an example of a magazine aggregator.

D) An estimated 225 million people engage with magazine content via print/digital replica editions.

Answer: B Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 10.2: Understand the key factors affecting the online publishing industry.

38) Magazine digital advertising revenues are expected to _______ for the next few years.

A) remain relatively flat B) more than double C) grow over 20% D) significantly decrease Answer: A Difficulty: Difficult AACSB: Application of knowledge Learning Objective: 10.2: Understand the key factors affecting the online publishing industry.

39) Which of the following statements about independent bookstores is not true?

A) The growth of national bookstore chains such as Barnes & Noble had a negative impact on independent bookstores.

B) Many independent bookstores have successfully transformed their legacy business models and technology.

C) The fate of independent bookstores remains a major question in the wake of the Covid-19 pandemic.

D) The number of independent bookstores declined by almost 50% between 2009 and 2018.

Answer: D Difficulty: Difficult AACSB: Application of knowledge Learning Objective: 10.2: Understand the key factors affecting the online publishing industry.

40) Which of the following is not an example of a native digital news site?

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A) Huffington Post B) Buzzfeed C) Vice D) USA Today Answer: D Difficulty: Easy AACSB: Application of knowledge Learning Objective: 10.2: Understand the key factors affecting the online publishing industry.

41) Which of the following magazines underwent a digital remaking following the introduction of a metered paywall in 2014?

A) Sports Illustrated B) The New Yorker C) Newsweek D) Time Answer: B Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 10.2: Understand the key factors affecting the online publishing industry.

42) Which of the following is the most common model for online newspaper access for U.S. newspapers?

A) totally free B) most content free, but subscription fee to access premium content C) paywall D) metered subscription model Answer: D Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 10.2: Understand the key factors affecting the online publishing industry.

43) Which of the following statements about the online newspaper audience is not true?

A) The online newspaper is one of the most successful of all online media in terms of audience size.

B) Online readership of newspapers is growing at more than 30% a year C) People in the age 18 to 34 age group are more likely to read the news online than older people.

D) Online newspapers reach over 75% of individuals in households earning more than $100,000 a year.

Answer: B Difficulty: Difficult AACSB: Application of knowledge Learning Objective: 10.2: Understand the key factors affecting the online publishing industry.

44) Who was the first major fiction writer to create an e-book-only volume of a new work?

A) Hugh Howey B) Stephen King C) Dan Brown 11 Copyright © 2022 Pearson Education, Inc.

D) Amanda Hocking Answer: B Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 10.2: Understand the key factors affecting the online publishing industry.

45) Which of the following statements about e-books is not true?

A) Most self-published e-books are not counted by the publishing industry reports on e-book sales.

B) Apple is a distant second in the e-book market.

C) E-book sales revenue in 2019 decreased significantly from the previous year.

D) The vast majority of indie authors are unable to make a living solely from e-book sales.

Answer: C Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 10.2: Understand the key factors affecting the online publishing industry.

46) Around what percentage do e-book revenues constitute of overall book publishing revenues?

A) About 13% B) About 23% C) About 33% D) About 43% Answer: D Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 10.2: Understand the key factors affecting the online publishing industry.

47) According to Amazon, around how many indie authors have earned more than $100,000 in royalties from their books?

A) 10 B) 100 C) 1,000 D) 10,000 Answer: C Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 10.2: Understand the key factors affecting the online publishing industry.

48) ________ was sued by the Justice Department for violating antitrust laws in connection with e-books.

A) Amazon B) Google C) Apple D) Barnes & Noble Answer: C Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 10.2: Understand the key factors affecting the online publishing industry.

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49) In 2019, book publishing revenues: A) were flat.

B) increased significantly.

C) experienced a sizeable decrease.

D) increased slightly.

Answer: A Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 10.2: Understand the key factors affecting the online publishing industry.

50) When was the future of e-books firmly established?

A) in 2000, with the release on Amazon of Stephen King's novella, Riding the Bullet B) in 2007, with the introduction of Amazon's Kindle C) in 2009, when Barnes & Noble introduced its Nook e-reader D) in 2010, when Apple introduced the first iPad Answer: B Difficulty: Easy AACSB: Application of knowledge Learning Objective: 10.2: Understand the key factors affecting the online publishing industry.

51) Which of the following statements about the wholesale and agency models for selling books is not true?

A) In the wholesale model, the retailer decides at what price to sell a book to the consumer.

B) Amazon surprised traditional publishers by selling e-books for below their wholesale cost.

C) Today, each publisher makes an agreement with Amazon about the price of their books.

D) A result of the agency model was that Amazon's prices on e-books declined.

Answer: D Difficulty: Difficult AACSB: Application of knowledge Learning Objective: 10.2: Understand the key factors affecting the online publishing industry.

52) Zinio is an example of which of the following?

A) interactive book developer B) magazine aggregator C) e-reader platform D) vanity press Answer: B Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 10.2: Understand the key factors affecting the online publishing industry.

53) Which of the following is not an advantage that pure digital news sites have over print newspapers?

A) They have a lower cost structure.

B) They can create new workflows and business processes that are timelier and more efficient.

C) They offer higher quality journalism.

D) They can take advantage of newer technologies for producing the news.

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Answer: C Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 10.2: Understand the key factors affecting the online publishing industry.

54) Which of the following native digital news sites was purchased by AOL? A) Vox B) Vice C) Reddit D) Huffington Post Answer: D Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 10.2: Understand the key factors affecting the online publishing industry.

55) The ________ model is not one of the three business models employed by newspapers between 1995 and 2018.

A) Print-centric B) Integrated Print/Web C) Digital First D) Convergence Answer: D Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 10.2: Understand the key factors affecting the online publishing industry.

56) Which of the following native digital news sites has the most unique monthly visitors?

A) HuffingtonPost.com B) Vox Media C) Vice Media D) Buzzfeed Answer: B Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 10.2: Understand the key factors affecting the online publishing industry.

57) Which of the following refers to itself as the front page of the Internet?

A) Reddit B) Huffington Post C) Vox D) Buzzfeed Answer: A Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 10.2: Understand the key factors affecting the online publishing industry.

58) According to Pew Research Center, what percentage of newspaper readers often use a desktop or laptop, as opposed to a mobile device, to read the news?

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A) 20% B) 30% C) 40% D) 50% Answer: B Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 10.2: Understand the key factors affecting the online publishing industry.

59) Major newspapers withdrew from Facebook’s Instant Articles program because it resulted in Facebook draining newspaper sites of visitors.

Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 10.2: Understand the key factors affecting the online publishing industry.

60) In the wholesale model of e-book distribution, pricing power is with the publisher.

Answer: FALSE Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 10.2: Understand the key factors affecting the online publishing industry.

61) Vox is an example of the Digital First business model.

Answer: FALSE Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 10.2: Understand the key factors affecting the online publishing industry.

62) Discuss the difference between a wholesale and agency model of e-book distribution and pricing. Why didn't the wholesale model work for e-books, and what happened when publishers tried to implement an agency model?

Answer: The wholesale model of distribution and pricing is the same model publishers used with hard cover books. In this model, the retail store pays a wholesale price for the book and then decides at what price to sell it to the consumer. The retailer sets the price with the publisher, and that the book will not be given away for free. In the past, the wholesale price was 50% of the retail price.

With e-books, publishers discovered that some online retailers like Amazon and Apple began to sell books below cost to encourage customers to purchase their e-book reader devices, or to sell them other goods. The real value in e-books for Amazon and Apple is selling digital devices.

Amazon not only sold millions of Kindles but also sold 90% of all e-book titles on the Web in 2011. Amazon had a de facto monopoly on e-books. In response, the top five publishers, along with Apple, introduced an agency model of distribution in which the distributor is an agent of the publisher, and can be directed to sell e-books at a price determined by the publisher, around $14.99 and higher for certain titles. In return for a 30% commission, Apple agreed to support this model, as did Google, neither of whom were comfortable watching as Amazon dominated one of the hottest areas of web content sales. Amazon's prices rose to this level, and its market share fell to 60%. However, as a result, the Justice Department sued the five publishers and Apple for price 15 Copyright © 2022 Pearson Education, Inc.

fixing in violation of antitrust laws. The case was settled, and Apple paid a fine of $450 million.

Today, each publisher (and not an industry consortium) makes an agreement with Amazon about the price of their books (agency model). E-book prices from major publishers are variable, but generally sell for around $15.

Difficulty: Moderate AACSB: Application of knowledge; Written and oral communication Learning Objective: 10.2: Understand the key factors affecting the online publishing industry.

63) Why have newspaper revenues significantly declined from what they were in 2000?

Answer: The decline in newspaper revenues since 2000 has resulted from four factors: • The growth of the Web and mobile devices as an alternative medium for news and advertising.

The movement of consumers to an online lifestyle has drained billions of ad dollars (including classified ads) from the printed newspaper.

• The rise of alternative digital sources for news, commentary, feature stories, and articles.

• The difficulty of traditional newspaper firms and their managers to develop suitable business and revenue models that could survive and even prosper on the Internet, and the mobile/social platform.

• The rise of social media, and its role in directing traffic to newspaper content, has challenged newspapers to change their business model to accommodate changes in consumer behavior and technology.

Difficulty: Moderate AACSB: Application of knowledge; Written and oral communication Learning Objective: 10.2: Understand the key factors affecting the online publishing industry.

64) What are the three different online business models that newspapers have employed since 1995?

Answer: Newspapers have developed three distinct business models to adapt to the Internet and the mobile and social platform. The three models are Print-centric, Integrated Print/Web and the most current model, Digital First.

In the Print-centric business model (1995-2000), newspapers created digital copies of their print editions and posted them online. Readers discovered stories as they did before, by reading the front page online, following links to stories, and clicking on topic areas or sections. Stories were promoted by a business department that sought to enlarge the print audience and to attract advertisers based on readership and online visitors. Digital advertising was very limited, in part because advertisers did not believe it was effective. Readers were not engaged with journalists except insofar as they read the stories and could identify with the subjects of stories. The business process of creating journalism did not change. There was little difference, if any, between the print and online versions. The technology platform for the digital edition was the desktop or laptop, and news was consumed at home and work.

In the Integrated Print/Web business model (2000-2010), newspapers adopted multimedia elements such as video, added more interactive elements like crossword puzzles and contests, and provided more reader feedback opportunities, especially on opinion and editorial pages.

There were opportunities to personalize the news using RSS feeds and push news to the reader.

Nevertheless, news was discovered by the reader visiting the website; promoting content online was limited, primarily to RSS feeds. Readers were somewhat more engaged. The technology platform remained the desktop or laptop platform.

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In the Digital First business model (2010 to present), startup news sites specifically focused on using new technology and platforms to radically transform their business — or go out of business. The new platform is not based on personal computers using a browser, but on mobile devices and apps, with desktops and laptops now just one pillar of the delivery platform. In this new environment, the news does not stop at 5 PM, but goes on 24×7. Stories start with an initial short article that is updated through the day, followed by thousands of tweets, then millions of shares on multiple social sites and on Google. Often amateurs on scene know more about the news in the first hours of a story than any collection of journalists in their offices. Amateurs provide video feeds, commentary, and opinion.

The Digital First business model inverts previous models: the top priority is producing the most engaging, continually updated digital edition, and then producing a print product based on the news developed in the digital edition. In the case of pure digital start-ups, there is no print edition, and the news is just a continuous stream of updates, blogs, tweets, and posts, rather than a fixed article. News articles are timestamped, indicating an update is on the way and the reader should return to follow the story. Instead of waiting for readers to discover the news, or search for the news on a search engine, the news is pushed to readers on any of a variety of venues where they happen to be — social media sites, mobile news feeds, Twitter, or Yahoo or Google News. Journalists remain professionals, but they follow Twitter feeds and social media sites, and promote their stories and personas on social media sites. Their job is no longer simply reporting and writing, but promoting and engaging readers on a personal level through their own efforts.

Superior reporting and writing are no longer the sole criterion for hiring and advancement. More emphasis is put on reporters' abilities to attract audiences on their own social media pages and Twitter feeds.

The Digital First business model is not yet a total reality for traditional newspapers, although the largest print newspaper organizations, such as the Wall Street Journal, New York Times, Washington Post, and others, have begun the journey towards becoming Digital First news organizations.

Difficulty: Difficult AACSB: Analytical thinking; Written and oral communication Learning Objective: 10.2: Understand the key factors affecting the online publishing industry.

65) What advantages do pure digital news sites have over print newspapers? What advantages do print newspapers have compared to online news sites?

Answer: Pure digital news sites have many advantages over print newspapers. They don't have the cost of printing papers; they can create new workflows and business processes that are more efficient and timelier; they have a lower cost structure, often relying on user generated content and minimal payments to reporters and bloggers, with lower pension costs; and they can take advantage of newer technologies for producing the news. While the quality of journalism on these pure digital sites is not as good as traditional print newspapers, this situation is changing rapidly as the pure digital sites hire talented journalists and editors from print newspapers that are experiencing financial difficulties. What online news sites often do not have is credibility and trust. For instance, Buzzfeed has been the subject of many lawsuits accusing it of copying content from competing newspapers and sites without attribution, claiming the content as its own. Without trust and quality, online news sites are simply distractions filled with celebrity 17 Copyright © 2022 Pearson Education, Inc.

photos, and there is significant competition for this kind of content.

Difficulty: Moderate AACSB: Analytical thinking; Written and oral communication Learning Objective: 10.2: Understand the key factors affecting the online publishing industry.

66) Which streaming gaming channel was purchased by Amazon in 2015?

A) Dailymotion B) YouTube Gaming C) Twitch D) Mixer Answer: C Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 10.3: Understand the key factors affecting the online entertainment industry.

67) Which of the following statements about e-sports is not true?

A) Many colleges now to offer scholarships for players on their video game teams.

B) YouTube Gaming accounts for over 80% of the online e-sports viewing in the United States.

C) E-sports tournaments routinely draw an online audience equal to professional football games.

D) The e-sport audience is predominantly composed of males between the ages of 21 and 34.

Answer: B Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 10.3: Understand the key factors affecting the online entertainment industry.

68) ________ is the leading online television and movie distributor.

A) Netflix B) Hulu C) iTunes D) Google Play Answer: A Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 10.3: Understand the key factors affecting the online entertainment industry.

69) Which of the following statements is not true?

A) iVOD revenues have grown faster than subscription streaming (SVOD) revenues.

B) Surveys indicated that a majority of people are unwilling to pay more than $20 per month for SVOD services.

C) Of all the content industries, thus far, the home entertainment and movie industry has been able to maintain its revenue stream and not be digitally destroyed by new technologies.

D) The movie industry's control of the release window of a movie is a form of price discrimination.

Answer: A Difficulty: Moderate 18 Copyright © 2022 Pearson Education, Inc.

AACSB: Application of knowledge Learning Objective: 10.3: Understand the key factors affecting the online entertainment industry.

70) Which of the following statements about piracy in the movie and television industry is not true?

A) Piracy still remains a threat to the movie and television industry.

B) The most common method of piracy uses bit cyberlockers/file hosting sites.

C) The monetary amount the movie industry loses as a result of piracy is unknown.

D) There has been a significant uptick in traffic to pirate websites during the Covid-19 pandemic.

Answer: B Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 10.3: Understand the key factors affecting the online entertainment industry.

71) Which of the following statements about the home entertainment industry is not true?

A) Over 55% of the U.S. population uses an over-the-top (OTT) subscription service in addition to or instead of cable/satellite TV. B) Apple TV is the digital media device used by the most people in the United States.

C) Both the television and movie industry share in home entertainment revenues.

D) Neither the television nor film industries have built an industry-wide Internet delivery system.

Answer: B Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 10.3: Understand the key factors affecting the online entertainment industry.

72) Which of the following statements about the music industry is not true?

A) Music industry revenues in 2019 are still only 80% of what they were in 1999.

B) Digital revenues accounted almost 90% of all U.S. music revenues in 2019.

C) More revenue was generated by the sales of digital downloads than physical units in 2019.

D) Streaming music generated about 80% of all digital music sales in 2019.

Answer: C Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 10.3: Understand the key factors affecting the online entertainment industry.

73) In 2019, which of the following was the producer of the largest percentage of revenues in the U.S. entertainment industry?

A) radio B) television C) box office movies D) games Answer: B Difficulty: Moderate AACSB: Application of knowledge 19 Copyright © 2022 Pearson Education, Inc.

Learning Objective: 10.3: Understand the key factors affecting the online entertainment industry.

74) In 2019, which of the following forms of entertainment produced the smallest percentage of revenue?

A) home entertainment B) recorded music C) games D) television Answer: B Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 10.3: Understand the key factors affecting the online entertainment industry.

75) In 2020, which of the following comprised the largest segment of the online gaming audience?

A) tablet gamers B) smartphone gamers C) PC gamers D) console gamers Answer: B Difficulty: Difficult AACSB: Application of knowledge Learning Objective: 10.3: Understand the key factors affecting the online entertainment industry.

76) House of Cards is an online TV series developed by which of the following?

A) Amazon Studios B) HBO C) Netflix D) Hulu Answer: C Difficulty: Difficult AACSB: Application of knowledge Learning Objective: 10.3: Understand the key factors affecting the online entertainment industry.

77) All of the following are “live”/on-demand over-the-top (OTT) services except: A) Sling TV. B) AT&T TV Now. C) Netflix.

D) YouTube TV. Answer: C Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 10.3: Understand the key factors affecting the online entertainment industry.

20 Copyright © 2022 Pearson Education, Inc.

78) Which of the following is not a type of digital gamer?

A) PC gamers B) local gamers C) social gamers D) MMO gamers Answer: B Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 10.3: Understand the key factors affecting the online entertainment industry.

79) Which of the following platforms was used by the fewest gamers in 2020?

A) consoles B) PCs C) smartphones D) tablets Answer: D Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 10.3: Understand the key factors affecting the online entertainment industry.

80) Hollywood's practice of staggering the distribution of movies in different channels, such as box office and DVDs, is referred to as: A) dynamic pricing.

B) content convergence.

C) the release windows.

D) digital rights management.

Answer: C Difficulty: Easy AACSB: Application of knowledge Learning Objective: 10.3: Understand the key factors affecting the online entertainment industry.

81) Which of the following statements is not true about over-the-top (OTT) services?

A) To use OTT services, consumers must purchase a bundle of channels.

B) OTT entertainment services are a threat to cable/satellite television delivery systems.

C) OTT services include the ability to download content after purchase or rental, as well as subscription streaming and “live” TV services.

D) OTT entertainment services enable binge watching.

Answer: A Difficulty: Difficult AACSB: Information technology Learning Objective: 10.3: Understand the key factors affecting the online entertainment industry.

82) Streaming has replaced downloading as the preferred consumer viewing platform for home 21 Copyright © 2022 Pearson Education, Inc.

entertainment content.

Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 10.3: Understand the key factors affecting the online entertainment industry.

83) In 2019, digital games generated more than three times the amount of digital music revenues.

Answer: TRUE Difficulty: Difficult AACSB: Application of knowledge Learning Objective: 10.3: Understand the key factors affecting the online entertainment industry.

84) What are e-sports and why are advertisers attracted to them?

Answer: E-sports involve professional online gaming. Like other professional sports, e-sports are based on organized competitions of prominent video games and resemble major sporting events. The competition at the championship level takes place in auditoriums attended by thousands of fans and is watched by millions more on the Internet, on sites such as Twitch.tv, which is owned by Amazon. E-sports tournaments now routinely draw an online audience equal to professional football games. In 2019, 100 million viewers watched the League of Legends World championship, including 44 million concurrent viewers for the championship's final round/ The organization of the tournaments, and the prize money for the players, is provided by the games' publishers and advertisers. Advertisers are attracted to e-sports because the audience is predominantly composed of young males between the ages of 21 and 34, who are hard to reach using traditional media. Coca Cola, Nissan, Ford, and Google are among the largest sponsors of e-sports. College teams have sprung up around the country, and many colleges now offer scholarships for students who play on their video game teams. At current rates of growth, esports are in the process of transforming online gaming into a popular sport similar to fantasy football but with a much larger audience.

Difficulty: Moderate AACSB: Application of knowledge; Written and oral communication Learning Objective: 10.3: Understand the key factors affecting the online entertainment industry.

85) Why has the compensation of artists and music labels for content been an issue for streaming music services?

Answer: While music labels might receive 32 cents for every iTunes track they sell, they receive only .63 of a penny on a streamed version of the same song. This revenue is split with the artists, who receive .32 of a penny. Rolling Stone calculated that a very popular song selling 1 million streams would produce revenue of $3,166 for the artist and a similar amount for the music label.

For artists, ad-supported streaming pays considerably less than subscription streaming. For this reason, many artists and groups refuse to allow free ad-supported streaming of their music. In 2014, Taylor Swift, one of the world’s most popular singers, pulled her music from Spotify’s free service because it paid such a low royalty rate. In 2015, she similarly pulled her album 1989 from Apple’s newly announced Apple Music service because Apple was planning to not charge for the first three months of the service. Many other singers have withdrawn their performances from free streaming services, and there is a growing movement among musicians toward seeking 22 Copyright © 2022 Pearson Education, Inc.

higher compensation from streaming sites. Streaming services have responded by increasing their payouts to musicians for subscription-based streaming and in 2018, Congress passed the Music Modernization Act (MMA), aimed specifically at these issues. The MMA enables songwriters and artists to receive royalties on older songs recorded before 1972, create a legal process for music professionals to obtain unclaimed royalties due to them (previously these were held onto by the streaming services), and create a licensing database paid for by the streaming services but overseen by music publishers and songwriters that should streamline how songwriters are paid, all of which should help ensure that artists are paid more and have an easier time collecting royalties they are owed.

Difficulty: Difficult AACSB: Analytical thinking; Written and oral communication Learning Objective: 10.3: Understand the key factors affecting the online entertainment industry.

23 Copyright © 2022 Pearson Education, Inc.

E-commerce 2021: business. technology. society., 16e (Laudon/Traver) Chapter 11 Social Networks, Auctions, and Portals 1) One of the first online virtual communities, formed in 1985, was: A) The Well.

B) Myspace.

C) AOL. D) Salon.com.

Answer: A Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 11.1: Describe the different types of social networks and online communities and their business models.

2) The technology used by early online communities was limited to mostly: A) instant messaging.

B) FTP. C) e-mail.

D) bulletin boards.

Answer: D Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 11.1: Describe the different types of social networks and online communities and their business models.

3) Which of the following is a community of members who self-identify with a demographic or geographic category?

A) practice network B) sponsored community C) affinity community D) interest-based social network Answer: C Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 11.1: Describe the different types of social networks and online communities and their business models.

4) PredictWallStreet is an example of a(n): A) interest-based social network.

B) affinity community.

C) sponsored community.

D) practice network.

Answer: A Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 11.1: Describe the different types of social networks and online communities and their business models.

1 Copyright © 2022 Pearson Education, Inc.

5) A website designed around a community of members who self-identify with a demographic or geographic category is classified as a(n): A) interest-based social network.

B) affinity community.

C) practice network.

D) sponsored community.

Answer: B Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 11.1: Describe the different types of social networks and online communities and their business models.

6) Instagram is an example of a(n) _______-based social network/community.

A) interest B) affinity C) general D) practice Answer: C Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 11.1: Describe the different types of social networks and online communities and their business models.

7) Which social network functionality allows users to view a list of updates from friends as well as advertisements and notifications in chronological order?

A) message board B) timeline C) friends' network D) newsfeed Answer: D Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 11.1: Describe the different types of social networks and online communities and their business models.

8) In 2020, around what percentage of the total U.S. population uses social networks?

A) 53% B) 63% C) 73% D) 83% Answer: B Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 11.1: Describe the different types of social networks and online communities and their business models.

9) Which of the following is the second leading social network in the United States in terms of monthly unique visitors?

2 Copyright © 2022 Pearson Education, Inc.

A) Twitter B) LinkedIn C) Instagram D) Pinterest Answer: C Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 11.1: Describe the different types of social networks and online communities and their business models.

10) Which of the following is a leading social network in Germany?

A) Xing B) Tuenti C) Orkut D) Mixi Answer: A Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 11.1: Describe the different types of social networks and online communities and their business models.

11) Each of the following is one of the top seven social network sites in the United States, in terms of monthly unique visitors, except: A) Tumblr.

B) MeWe. C) Instagram.

D) Pinterest.

Answer: B Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 11.1: Describe the different types of social networks and online communities and their business models.

12) Facebook owns which of the following?

A) Pinterest B) Snapchat C) WhatsApp D) Tumblr Answer: C Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 11.1: Describe the different types of social networks and online communities and their business models.

13) A survey of Fortune 500 companies found that 98% of those companies used: A) Twitter.

B) Facebook.

C) LinkedIn. 3 Copyright © 2022 Pearson Education, Inc.

D) Instagram.

Answer: C Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 11.1: Describe the different types of social networks and online communities and their business models.

14) On which of the following do users spent the least amount of time per month?

A) Snapchat B) Tumblr C) LinkedIn D) Pinterest Answer: C Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 11.1: Describe the different types of social networks and online communities and their business models.

15) When did the first online communities form?

A) the 1970s B) the 1980s C) the 1990s D) the 2000s Answer: B Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 11.1: Describe the different types of social networks and online communities and their business models.

16) BlackPlanet is an example of a(n) ________ social network.

A) practice-based B) interest-based C) affinity-based D) general Answer: C Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 11.1: Describe the different types of social networks and online communities and their business models.

17) Which of the following is an example of a practice network?

A) PredictWallstreet B) Instagram C) DebatePolitics D) Doximity Answer: D Difficulty: Moderate AACSB: Application of knowledge 4 Copyright © 2022 Pearson Education, Inc.

Learning Objective: 11.1: Describe the different types of social networks and online communities and their business models.

18) Which of the following has the highest penetration of social network usage among Internet users?

A) North America B) Latin America C) Europe D) Asia-Pacific Answer: B Difficulty: Easy AACSB: Application of knowledge Learning Objective: 11.1: Describe the different types of social networks and online communities and their business models.

19) Which age group has the fastest growing rate of Facebook usage?

A) 12-34 B) 35-45 C) 46-65 D) adults over 65 Answer: D Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 11.1: Describe the different types of social networks and online communities and their business models.

20) Which of the following social networks provides an open-source alternative to Twitter?

A) MeWe B) Mastadon C) Tagged D) Nextdoor Answer: B Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 11.1: Describe the different types of social networks and online communities and their business models.

21) Which of the following owns LinkedIn? A) Facebook B) Google C) Microsoft D) Verizon Answer: C Difficulty: Easy AACSB: Application of knowledge Learning Objective: 11.1: Describe the different types of social networks and online communities and their business models.

5 Copyright © 2022 Pearson Education, Inc.

22) Which of the following companies purchased Instagram?

A) Google B) Apple C) Facebook D) Microsoft Answer: C Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 11.1: Describe the different types of social networks and online communities and their business models.

23) Which of the following statements about Instagram is not true?

A) Instagram trails only Facebook in U.S. ad revenue.

B) Instagram is a social network that focuses on video and photo sharing.

C) Instagram is growing more quickly than Facebook.

D) Instagram users spend more time on Instagram than Facebook users spend on Facebook.

Answer: D Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 11.1: Describe the different types of social networks and online communities and their business models.

24) Howard Rheingold, one of The Well's early participants, coined the term ________ to refer to "cultural aggregations that emerge when enough people bump into each other often enough in cyberspace."

A) social networks B) virtual communities C) community portals D) social forums Answer: B Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 11.1: Describe the different types of social networks and online communities and their business models.

25) A(n) ________ offers members focused discussion groups, help, information, and knowledge related to an area of shared interest.

A) practice network B) general community C) affinity community D) interest-based social network Answer: A Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 11.1: Describe the different types of social networks and online communities and their business models.

26) The amount of time visitors spend on a site is a measure of: 6 Copyright © 2022 Pearson Education, Inc.

A) reach.

B) loyalty.

C) conversation.

D) engagement.

Answer: D Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 11.1: Describe the different types of social networks and online communities and their business models.

27) Facebook was the leader in U.S. ad spending revenues on social networks in 2019. What company earned the second most amount of ad spending revenue?

A) Snapchat B) Instagram C) Pinterest D) Twitter Answer: B Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 11.1: Describe the different types of social networks and online communities and their business models 28) More than three-quarters of Internet users worldwide participate in social networks.

Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 11.1: Describe the different types of social networks and online communities and their business models.

29) Facebook’s current user growth is being driven by growth in the number of users in the United States.

Answer: FALSE Difficulty: Easy AACSB: Application of knowledge Learning Objective: 11.1: Describe the different types of social networks and online communities and their business models.

30) A community site created by a corporation is called a sponsored community site.

Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 11.1: Describe the different types of social networks and online communities and their business models.

31) Briefly describe the evolution of social networks from their earliest appearance.

Answer: The earliest social networks, in the mid-1980s and 1990s were community bulletin boards, or discussion groups, like The Well. In the early 2000s, technology changed, bringing in blogging and photo sharing features. As the Internet user population expanded, more and more 7 Copyright © 2022 Pearson Education, Inc.

socially oriented sites appeared, including Facebook, allowing users to share content directly with each other. More recently, in the late 2000s and early 2010s, as the Internet became available to browse (and post to) via mobile devices, more and more photo and video sharing social networks have emerged, such as Pinterest and Instagram. A newer crop of social networks launched since 2008 (i.e., Snapchat and WhatsApp) focus on messaging. TikTok, the newest significant social network, focuses on short-form video sharing.

Difficulty: Moderate AACSB: Analytical thinking; Written and oral communication Learning Objective: 11.1: Describe the different types of social networks and online communities and their business models.

32) Name four shared characteristics of social networks.

Answer: Social networks involve (1) a group of people, (2) shared social interactions, (3) common ties among members, and (4) people who share an area for some period of time.

Difficulty: Moderate AACSB: Analytical thinking; Written and oral communication Learning Objective: 11.1: Describe the different types of social networks and online communities and their business models.

33) What has been the impact of the Covid-19 pandemic on social networks?

Answer: During early 2020, the amount of time users spent on social networks significantly increased due to changes in social behavior due to the Covid-19 pandemic, and analysts anticipate that some of those behavioral changes may persist into the future, reversing previous trends that showed a relatively flat rate of growth in time spent.

Difficulty: Moderate AACSB: Analytical thinking; Written and oral communication Learning Objective: 11.1: Describe the different types of social networks and online communities and their business models.

34) What business models do social networks primarily use?

Answer: The most popular general social networks, such as Facebook, have adopted an advertising model, and make money from ads displayed to users. There are also for profit and non-profit networks that stay afloat from user donations, member dues, premium services, or through sponsorship financing.

Difficulty: Moderate AACSB: Analytical thinking; Written and oral communication Learning Objective: 11.1: Describe the different types of social networks and online communities and their business models.

35) Discuss the impact social networks have had on how businesses operate, communicate, and serve their customers.

Answer: Social networks have had an important impact on how businesses operate, communicate, and serve their customers. The most visible business firm use of social networks is as a marketing and branding tool. The most popular social network tool for large corporate businesses is LinkedIn, with 98% of the Fortune 500 using LinkedIn. Twitter is the second most popular, used by 91%, while 89% use Facebook and 63% use Instagram. A less visible marketing use of networks is as a powerful listening tool which has strengthened the role of customers and customer feedback systems. Social networks are where corporate brands and 8 Copyright © 2022 Pearson Education, Inc.

reputations are formed, and firms today take very seriously the topic of "online reputation," as evidenced by social network posts, commentary, chat sessions, and Likes. In this sense, social network sites have become an extension of corporate customer relationship management systems and extend existing market research programs. Beyond branding, social network sites are being used increasingly as advertising platforms to contact a somewhat younger audience than websites and e-mail, and as customers increasingly shift their eyeballs to social networks. Rosetta Stone, for instance, uses its Facebook page to display videos of its learning technology, encourage discussions and reviews, and post changes in its learning tools. Public social networks like Facebook have not been used extensively in firms as collaboration tools thus far. However, in 2016, Facebook launched its Workplace app, designed to spur collaboration and networking inside large firms. The app faces stiff competition from a wide array of collaboration tools provided by Slack, Cisco, Microsoft, and IBM, along with other technologies like instant messaging and teleconferencing.

Difficulty: Difficult AACSB: Analytical thinking; Written and oral communication Learning Objective: 11.1: Describe the different types of social networks and online communities and their business models.

36) Which of the following statements about auctions is not true?

A) Most of the listings on eBay today use auction pricing.

B) The popularity of online auctions has significantly declined.

C) Online auctions were among the most successful early business models in retail and B2B ecommerce.

D) The marketplace for online auctions is highly concentrated.

Answer: A Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 11.2: Describe the major types of auctions, their benefits and costs, how they operate, when to use them, and the potential for auction abuse and fraud.

37) All of the following are benefits of auctions except: A) more efficient price discovery.

B) lower transaction costs.

C) decreased price transparency.

D) increased market efficiency.

Answer: C Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 11.2: Describe the major types of auctions, their benefits and costs, how they operate, when to use them, and the potential for auction abuse and fraud.

38) ________ is the market leader in C2C auctions.

A) Amazon B) eBay C) Walmart D) eBid Answer: B Difficulty: Easy 9 Copyright © 2022 Pearson Education, Inc.

AACSB: Application of knowledge Learning Objective: 11.2: Describe the major types of auctions, their benefits and costs, how they operate, when to use them, and the potential for auction abuse and fraud.

39) Which of the following is not a risk or cost of Internet auctions?

A) delayed consumption costs B) equipment costs C) price transparency D) trust risks Answer: C Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 11.2: Describe the major types of auctions, their benefits and costs, how they operate, when to use them, and the potential for auction abuse and fraud.

40) The fact that participating in an Internet auction means that you will need to purchase a computer, learn to use it, and pay for Internet access, is an example of ________ costs.

A) equipment B) fulfillment C) delayed consumption D) monitoring Answer: A Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 11.2: Describe the major types of auctions, their benefits and costs, how they operate, when to use them, and the potential for auction abuse and fraud.

41) All of the following are solutions to the problem of high monitoring costs except: A) seller rating systems.

B) watch lists.

C) proxy bidding.

D) fixed pricing.

Answer: A Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 11.2: Describe the major types of auctions, their benefits and costs, how they operate, when to use them, and the potential for auction abuse and fraud.

42) Which of the following types of auctions "shields the brand" of the seller?

A) English auction B) Name Your Own Price auction C) Dutch Internet auction D) penny auction Answer: B Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 11.2: Describe the major types of auctions, their benefits and costs, how they operate, when to use them, and the potential for auction abuse and fraud.

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43) Which of the following allows the consumer to enter a maximum price and the auction software automatically places incremental bids, up to that maximum price, as their original bid is surpassed?

A) watch lists B) proxy bidding C) sealed bidding D) price matching Answer: B Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 11.2: Describe the major types of auctions, their benefits and costs, how they operate, when to use them, and the potential for auction abuse and fraud.

44) ________ occurs when sellers agree informally or formally to set floor prices below which they will not sell on auction items.

A) Discriminatory pricing B) Price matching C) Bid rigging D) Distress pricing Answer: B Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 11.2: Describe the major types of auctions, their benefits and costs, how they operate, when to use them, and the potential for auction abuse and fraud.

45) Which of the following types of auctions is perfect for sellers that have many identical items to sell?

A) English auctions B) Name Your Own Price auctions C) Dutch Internet auctions D) group buying auctions Answer: C Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 11.2: Describe the major types of auctions, their benefits and costs, how they operate, when to use them, and the potential for auction abuse and fraud.

46) All of the following types of auctions involve single units except: A) an English auction.

B) a Dutch Internet auction.

C) a Name Your Own Price auction.

D) a penny auction.

Answer: B Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 11.2: Describe the major types of auctions, their benefits and costs, how they operate, when to use them, and the potential for auction abuse and fraud.

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47) A(n) ________, in which the highest bidder wins, is the most common form of auction.

A) Dutch Internet auction B) Japanese auction C) English auction D) reverse auction Answer: C Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 11.2: Describe the major types of auctions, their benefits and costs, how they operate, when to use them, and the potential for auction abuse and fraud.

48) Priceline is an example of a(n): A) English auction.

B) Dutch Internet auction.

C) penny auction.

D) Name Your Own Price auction.

Answer: D Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 11.2: Describe the major types of auctions, their benefits and costs, how they operate, when to use them, and the potential for auction abuse and fraud.

49) Which of the following is not one of the top factors a business should consider when planning an Internet auction?

A) type of product B) type of auction C) location of auction D) bid increments Answer: C Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 11.2: Describe the major types of auctions, their benefits and costs, how they operate, when to use them, and the potential for auction abuse and fraud.

50) The profit a seller makes at auction is a function of all of the following except: A) initial pricing.

B) auction length.

C) the number of units for auction.

D) watch lists.

Answer: D Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 11.2: Describe the major types of auctions, their benefits and costs, how they operate, when to use them, and the potential for auction abuse and fraud.

51) ________ is the tendency to gravitate toward, and bid for, auction listings with one or more existing bids.

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A) Group buying B) Winner's regret C) Herd behavior D) Bid rigging Answer: C Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 11.2: Describe the major types of auctions, their benefits and costs, how they operate, when to use them, and the potential for auction abuse and fraud.

52) Which of the following involves the feeling after winning an auction that you paid too much for an item?

A) herd behavior B) winner's regret C) seller's lament D) loser's lament Answer: B Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 11.2: Describe the major types of auctions, their benefits and costs, how they operate, when to use them, and the potential for auction abuse and fraud.

53) Which of the following involves e-mailing another seller's bidders and offering the same product for less?

A) transaction interception B) bid siphoning C) shill bidding D) persistent bidding Answer: B Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 11.2: Describe the major types of auctions, their benefits and costs, how they operate, when to use them, and the potential for auction abuse and fraud.

54) Threatening negative feedback in return for a benefit is an example of: A) feedback extortion.

B) offensive shill feedback.

C) defensive shill feedback.

D) sending spam.

Answer: A Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 11.2: Describe the major types of auctions, their benefits and costs, how they operate, when to use them, and the potential for auction abuse and fraud.

55) One partial solution to high monitoring costs is ________ pricing.

A) fixed B) dynamic 13 Copyright © 2022 Pearson Education, Inc.

C) allocated D) distress Answer: A Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 11.2: Describe the major types of auctions, their benefits and costs, how they operate, when to use them, and the potential for auction abuse and fraud.

56) The term ________ refer(s) to the advantages conferred as an auction site becomes larger in terms of visitors and products for sale.

A) siphoning B) herd behavior C) network effects D) channel expansion Answer: C Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 11.2: Describe the major types of auctions, their benefits and costs, how they operate, when to use them, and the potential for auction abuse and fraud.

57) A ________ permits the consumer to monitor specific auctions of interest, requiring the consumer to pay close attention only in the last few minutes of bidding.

A) bidding fee auction B) channel manager C) watch list D) rating system Answer: C Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 11.2: Describe the major types of auctions, their benefits and costs, how they operate, when to use them, and the potential for auction abuse and fraud.

58) The time spent watching and reviewing auction bids is a part of ________ costs.

A) pricing B) monitoring C) delayed consumption D) fulfillment Answer: B Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 11.2: Describe the major types of auctions, their benefits and costs, how they operate, when to use them, and the potential for auction abuse and fraud.

59) E-mailing buyers to warn them away from a seller is a type of auction fraud known as: A) transaction interference.

B) bid siphoning.

C) bid rigging.

D) shill bidding.

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Answer: A Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 11.2: Describe the major types of auctions, their benefits and costs, how they operate, when to use them, and the potential for auction abuse and fraud.

60) ________ refers to the feeling of having been too cheap in bidding and failing to win an auction.

A) Winner's lament B) Winner's regret C) Loser's lament D) Loser’s regret Answer: C Difficulty: Easy AACSB: Application of knowledge Learning Objective: 11.2: Describe the major types of auctions, their benefits and costs, how they operate, when to use them, and the potential for auction abuse and fraud.

61) ________ refers to the use of secondary user IDs or bidders who have no actual intention to buy to artificially raise the price of an item.

A) Bid manipulation B) Shill feedback C) Shill bidding D) Bid rigging Answer: C Difficulty: Difficult AACSB: Application of knowledge Learning Objective: 11.2: Describe the major types of auctions, their benefits and costs, how they operate, when to use them, and the potential for auction abuse and fraud.

62) In B2C auctions, consumers control assets and use dynamic pricing to establish the price.

Answer: FALSE Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 11.2: Describe the major types of auctions, their benefits and costs, how they operate, when to use them, and the potential for auction abuse and fraud.

63) Penny auctions don't require money to bid.

Answer: FALSE Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 11.2: Describe the major types of auctions, their benefits and costs, how they operate, when to use them, and the potential for auction abuse and fraud.

64) Priceline's auctions utilize fixed pricing.

Answer: TRUE Difficulty: Difficult AACSB: Application of knowledge 15 Copyright © 2022 Pearson Education, Inc.

Learning Objective: 11.2: Describe the major types of auctions, their benefits and costs, how they operate, when to use them, and the potential for auction abuse and fraud.

65) In a Dutch Internet auction, a single seller puts up multiple items for bidding.

Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 11.2: Describe the major types of auctions, their benefits and costs, how they operate, when to use them, and the potential for auction abuse and fraud.

66) Keeping bid increments low decreases the number of bidders and lowers the frequency of their bids.

Answer: FALSE Difficulty: Easy AACSB: Application of knowledge Learning Objective: 11.2: Describe the major types of auctions, their benefits and costs, how they operate, when to use them, and the potential for auction abuse and fraud.

67) Closed bidding offers the advantage of herd effects.

Answer: FALSE Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 11.2: Describe the major types of auctions, their benefits and costs, how they operate, when to use them, and the potential for auction abuse and fraud.

68) Auction prices are often higher than prices in fixed priced markets.

Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 11.2: Describe the major types of auctions, their benefits and costs, how they operate, when to use them, and the potential for auction abuse and fraud.

69) Consumers in auctions are driven solely by value maximization.

Answer: FALSE Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 11.2: Describe the major types of auctions, their benefits and costs, how they operate, when to use them, and the potential for auction abuse and fraud.

70) Describe the four major Internet auction types discussed in the chapter and how they function.

Answer: The four major types of Internet auctions are English, Dutch Internet, Name Your Own Price, and penny (bidding fee) auctions.

In an English auction, a single item is up for sale from a single seller. Multiple buyers bid against one another within a specific time frame. The highest bidder wins the object, as long as the high bid has exceeded the reserve bid set by the seller, below which she refuses to sell.

16 Copyright © 2022 Pearson Education, Inc.

In Dutch Internet auctions, sellers with many identical items to sell list a minimum price or starting bid and buyers indicate both a bid price and a quantity desired. All winning bidders pay the lowest winning bid that clears the available quantity. Those with the highest bid are assured of receiving the quantity they desire, but only pay the amount of the lowest successful bid. This is referred to as a uniform pricing rule.

In Name Your Own Price or reverse auctions, buyers specify the price they are willing to pay for an item and multiple sellers bid for their business. This is one example of discriminatory pricing in which winners may pay different amounts for the same product or service depending upon how much they have bid.

In a penny (bidding fee auction), you typically must pay the penny auction site for bids ahead of time, typically 50 cents to $1 dollar, usually in packs costing $25-$50. Once you have purchased the bids, you can use them to bid on items listed by the penny auction site (unlike traditional auctions, items are owned by the site, not third parties). Items typically start at or near $0 and each bid raises the price by a fixed amount, usually just a penny. Auctions are timed, and when the time runs out, the last and highest bidder wins the item. Although the price of the item itself may not be that high, the successful bidder will typically have spent much more than that. Unlike a traditional auction, it costs money to bid and that money is gone even if the bidder does not win the auction. The bidder's cumulative cost of bidding must be added to the final price of a successful bid to determine the true cost of the item.

Difficulty: Easy AACSB: Analytical thinking; Written and oral communication Learning Objective: 11.2: Describe the major types of auctions, their benefits and costs, how they operate, when to use them, and the potential for auction abuse and fraud.

71) What are the benefits of Internet auctions to sellers and buyers?

Answer: The general benefits of auctions to sellers and buyers are liquidity, price discovery, price transparency, market efficiency, lowered transaction costs, consumer aggregation, and network effects.

Sellers and buyers are connected in a global marketplace where even difficult to price items can be competitively priced based on supply and demand. Everyone in the world can see the asking and bidding prices for items, although prices can vary from auction site to auction site. Buyers are offered access to a selection of goods that would be impossible to access physically. Buyers and sellers benefit by the reduced costs of selling and purchasing goods compared to the physical marketplace. A large number of consumers who are motivated to buy are amassed in one marketplace, which is a great convenience to the seller. Network effects are achieved because the larger an auction site becomes in both the numbers of users and products, and ultimately increasing the value of the marketplace.

Difficulty: Moderate AACSB: Analytical thinking; Written and oral communication Learning Objective: 11.2: Describe the major types of auctions, their benefits and costs, how they operate, when to use them, and the potential for auction abuse and fraud.

72) What are the costs and risks for buyers at an auction, and how have auction sites sought to reduce these risks?

Answer: The costs for buyers when they participate in an auction are delayed consumption, 17 Copyright © 2022 Pearson Education, Inc.

monitoring costs, equipment costs, trust risks, and fulfillment costs. Delayed consumption occurs because auctions can go on for days and the product must then be shipped to the buyer. Buyers will typically want to pay less for an item for which they cannot receive immediate gratification.

Buyers must also spend time monitoring the bidding, returning to the site frequently to see if they need to raise their bid. They must also purchase, or have already purchased, computer systems and Internet service, and learned how to operate these systems. Since buyers must pay for packing, shipping, and insurance, they will factor these fulfillment costs into their bid price.

Consumers also face an increased risk of experiencing a loss because online auctions are a major source of Internet fraud. Auction sites have sought to reduce these trust risks through various methods including rating systems, watch lists, and proxy bidding. Rating systems are designed so that previous customers can evaluate sellers based upon their experience with them. These evaluations are posted on the site for other buyers to see. Watch lists allow buyers to monitor specific auctions as they proceed over several days and only pay close attention in the last few minutes of bidding. In proxy bidding systems, buyers can enter the maximum price they are willing to pay, and the auction software will automatically place incremental bids as their original bid is surpassed. In addition, one partial solution to high monitoring costs is, ironically, fixed pricing. At eBay, consumers can reduce the cost of monitoring and waiting for auctions to end by simply clicking on the "Buy It Now!" button and paying a premium price.

Difficulty: Moderate AACSB: Analytical thinking; Written and oral communication Learning Objective: 11.2: Describe the major types of auctions, their benefits and costs, how they operate, when to use them, and the potential for auction abuse and fraud.

73) Which of the following owns Yahoo?

A) AT&T B) Microsoft C) AOL D) Verizon Media Answer: D Difficulty: Easy AACSB: Application of knowledge Learning Objective: 11.3: Describe the major types of Internet portals and their business models.

74) To address the falling price of display ads and declining user engagement, Yahoo acquired all of the following except: A) Tumblr.

B) Flickr.

C) Aviate.

D) Instagram.

Answer: D Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 11.3: Describe the major types of Internet portals and their business models.

75) Which of the following is not one of the defining functions of a portal?

A) commerce B) content 18 Copyright © 2022 Pearson Education, Inc.

C) auctions D) navigation of the Web Answer: C Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 11.3: Describe the major types of Internet portals and their business models.

76) Which of the following statements best describes the potential impact of network effects with respect to portals?

A) Specialized vertical market portals attract only a small percentage of the audience, while a few large megaportals garner most of the market.

B) The value of the portal to advertisers and consumers increases geometrically as reach increases.

C) The greater the amount of content provided by a portal, the greater its value to the community.

D) The greater number of portals available, the greater the potential audience for each.

Answer: B Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 11.3: Describe the major types of Internet portals and their business models.

77) After Google, the portal/search engine site with the most unique visitors is: A) Yahoo.

B) Microsoft.

C) Verizon Media.

D) Facebook.

Answer: B Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 11.3: Describe the major types of Internet portals and their business models.

78) WebMD.com is an example of a: A) general purpose portal.

B) vertical market portal based on affinity group.

C) vertical market portal based on focused content.

D) focused content portal.

Answer: D Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 11.3: Describe the major types of Internet portals and their business models.

79) Which of the following is not one of the typical portal revenue sources?

A) commissions on sales B) subscription fees C) tenancy deals D) referral fees Answer: D Difficulty: Moderate 19 Copyright © 2022 Pearson Education, Inc.

AACSB: Application of knowledge Learning Objective: 11.3: Describe the major types of Internet portals and their business models.

80) The original portals in the early days of e-commerce were search engines.

Answer: TRUE Difficulty: Easy AACSB: Application of knowledge Learning Objective: 11.3: Describe the major types of Internet portals and their business models.

81) The value of portals to advertisers and content owners is primarily a function of the size of the audience the portal reaches, and the length of time visitors stay on the site.

Answer: TRUE Difficulty: Easy AACSB: Application of knowledge Learning Objective: 11.3: Describe the major types of Internet portals and their business models.

82) Vertical content portals and affinity group portals tend to be more well-known brands than general-purpose portals.

Answer: FALSE Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 11.3: Describe the major types of Internet portals and their business models.

83) Portals are not immune to network effects.

Answer: FALSE Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 11.3: Describe the major types of Internet portals and their business models.

84) Identify and describe the main types of portals.

Answer: There are two primary types of portals: general purpose and vertical market. General purpose portals attempt to attract a very large general audience and then retain the audience onsite by providing in-depth vertical content channels. Vertical market portals (sometimes also referred to as destination sites or vortals) attempt to attract highly focused, loyal audiences with a deep interest either in community or specialized content — from sports to the weather. In addition to their focused content, vertical market portals have recently begun adding many of the features found in general purpose portals.

Difficulty: Moderate AACSB: Analytical thinking; Written and oral communication Learning Objective: 11.3: Describe the major types of Internet portals and their business models.

85) What business models do portals use?

Answer: Portals receive income from several different sources. The revenue base of portals is changing and dynamic, with some of the largest sources of revenue declining. Typical revenue sources include general advertising, tenancy deals, commissions on sales, subscription fees, and fees from applications and games. The business strategies of both general-purpose and vertical portals have changed greatly because of the rapid growth in search engine advertising and intelligent ad placement networks such as Google's AdSense. General portal sites such as AOL 20 Copyright © 2022 Pearson Education, Inc.

and Yahoo did not have well-developed search engines, and hence did not grow as fast as Google, which developed a powerful search engine. Portal sites invested billions of dollars in an attempt to catch up with Google. On the other hand, general portals have content, which Google did not originally have, although it has since added content by purchasing YouTube and adding Google sites devoted to news, financial information, images, and maps. General portals are attempting to provide more premium content focused on subcommunities of their portal audience.

Advertisers on portals are especially interested in focused, revenue-producing premium content available on portals because it attracts a more committed audience. There is a direct relationship between the revenue derived from a customer and the focus of the customer segment. The survival strategy for general purpose portals in the future is therefore to develop deep, rich, vertical content to reach customers at the site. The strategy for much smaller vertical market portals is to put together a collection of vertical portals to form a vertical portal network, a collection of deep, rich content sites. The strategy for search engine such as Google is to obtain more content to attract users for a long time and expose them to more ads.

Difficulty: Moderate AACSB: Analytical thinking; Written and oral communication Learning Objective: 11.3: Describe the major types of Internet portals and their business models.

21 Copyright © 2022 Pearson Education, Inc.

E-commerce 2021: business. technology. society., 16e (Laudon/Traver) Chapter 12 B2B E-commerce: Supply Chain Management and Collaborative Commerce 1) Analysts predict that B2B e-commerce in the United States will grow to approximately ________ by 2024.

A) $9.8 billion B) $98 billion C) $980 billion D) $9.8 trillion Answer: D Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 12.1: Discuss the evolution and growth of B2B e-commerce, as well as its potential benefits and challenges.

2) In 2019, B2B e-commerce accounted for approximately ___ of all B2B commerce.

A) 22% B) 49% C) 51% D) 78% Answer: C Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 12.1: Discuss the evolution and growth of B2B e-commerce, as well as its potential benefits and challenges.

3) Which of the following was the first step in the development of B2B e-commerce?

A) Electronic Data Interchange (EDI) B) automated order entry systems C) computerized inventory databases D) digital invoices Answer: B Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 12.1: Discuss the evolution and growth of B2B e-commerce, as well as its potential benefits and challenges.

4) Which of the following refers to the links that connect business firms with one another to coordinate production?

A) supply chain B) B2B e-commerce C) vertical market D) horizontal market Answer: A Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 12.1: Discuss the evolution and growth of B2B e-commerce, as well as its 1 Copyright © 2022 Pearson Education, Inc.

potential benefits and challenges.

5) Automated order entry systems: A) only show goods from a single seller.

B) increased the costs of inventory replenishment.

C) are typically owned by the purchasing firm.

D) no longer play an important role in B2B commerce.

Answer: A Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 12.1: Discuss the evolution and growth of B2B e-commerce, as well as its potential benefits and challenges.

6) Which of the following statements about EDI systems is true?

A) They typically serve vertical markets.

B) They are seller-side solutions.

C) They evolved from private trading exchanges.

D) They still play an important role in B2C commerce.

Answer: A Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 12.1: Discuss the evolution and growth of B2B e-commerce, as well as its potential benefits and challenges.

7) B2B e-commerce websites: A) are a predecessor of industry consortia.

B) tend to serve horizontal markets.

C) are buyer-side solutions.

D) are considered a type of EDI system.

Answer: B Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 12.1: Discuss the evolution and growth of B2B e-commerce, as well as its potential benefits and challenges.

8) Which of the following is another name for a private industrial network?

A) industry consortia B) EDI system C) PTX D) net marketplace Answer: C Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 12.1: Discuss the evolution and growth of B2B e-commerce, as well as its potential benefits and challenges.

9) In 2019, which of the following accounted for the smallest amount of B2B commerce?

A) EDI 2 Copyright © 2022 Pearson Education, Inc.

B) private industrial networks C) Net marketplaces D) traditional B2B Answer: C Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 12.1: Discuss the evolution and growth of B2B e-commerce, as well as its potential benefits and challenges.

10) All of the following are potential benefits of B2B e-commerce except: A) lower administrative costs.

B) lower search costs.

C) lower price transparency.

D) lower transaction costs.

Answer: C Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 12.1: Discuss the evolution and growth of B2B e-commerce, as well as its potential benefits and challenges.

11) EDI began as a(n) ________ system.

A) document automation B) document exchange C) invoice generation D) MRP Answer: A Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 12.1: Discuss the evolution and growth of B2B e-commerce, as well as its potential benefits and challenges.

12) All of the following are potential benefits of B2B e-commerce except: A) increased production flexibility.

B) increased product cycle time.

C) increased opportunities to collaborate with suppliers and distributors.

D) increased visibility and real-time information sharing among all participants in the supply chain network.

Answer: B Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 12.1: Discuss the evolution and growth of B2B e-commerce, as well as its potential benefits and challenges.

13) All of the following have led to the development of outsourcing of manufacturing around the world except: A) technology.

B) globalization of trade.

C) environmental concerns.

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D) high levels of wage disparity between the developed and undeveloped worlds.

Answer: C Difficulty: Easy AACSB: Application of knowledge Learning Objective: 12.1: Discuss the evolution and growth of B2B e-commerce, as well as its potential benefits and challenges.

14) Supply chain ________ refers to differentiating a firm's products or prices on the basis of superior supply chain management.

A) management B) simplification C) competition D) collaboration Answer: C Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 12.1: Discuss the evolution and growth of B2B e-commerce, as well as its potential benefits and challenges.

15) A(n) ________ market is one that provides expertise and products for a specific industry (i.e., automobiles).

A) vertical B) horizontal C) indirect D) buyer-biased Answer: A Difficulty: Easy AACSB: Application of knowledge Learning Objective: 12.1: Discuss the evolution and growth of B2B e-commerce, as well as its potential benefits and challenges.

16) The essential characteristic of ________ is that they bring hundreds to thousands of suppliers into a single Internet-based environment to conduct trade.

A) industry consortia B) exchanges C) Net marketplaces D) horizontal markets Answer: C Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 12.1: Discuss the evolution and growth of B2B e-commerce, as well as its potential benefits and challenges.

17) B2B e-commerce websites tend to serve horizontal markets.

Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 12.1: Discuss the evolution and growth of B2B e-commerce, as well as its 4 Copyright © 2022 Pearson Education, Inc.

potential benefits and challenges.

18) Few large firms today have Electronic Data Interchange (EDI) systems.

Answer: FALSE Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 12.1: Discuss the evolution and growth of B2B e-commerce, as well as its potential benefits and challenges.

19) Define and discuss the terms B2B commerce, B2B e-commerce, and supply chains in the context of the history and significance of B2B e-commerce.

Answer: Before the Internet, business-to-business transactions were referred to simply as trade or the procurement process. The term B2B commerce refers to all types of inter-firm trade to exchange value across organizational boundaries. B2B commerce includes the following business processes: customer relationship management, demand management, order fulfillment, manufacturing management, procurement, product development, returns, logistics/transportation, and inventory management.

The term B2B e-commerce (or B2B digital commerce) refers to that portion of B2B commerce that is enabled by the Internet (including mobile apps) to assist firms in buying and selling a variety of goods to each other.

The links that connect business firms in the production of goods and services are referred to as the supply chain. Supply chains are a complex system of organizations, people, business processes, technology, and information, all of which need to work together to produce products efficiently. The process of conducting trade among businesses consumes many business resources. Across the economy this amounts to trillions of dollars spent annually on procurement processes. If a significant portion of this inter-firm trade could be automated and parts of the procurement process assisted by the Internet, millions or even trillions of dollars could be freed up for other uses resulting in increased productivity and increased national economic wealth.

Difficulty: Moderate AACSB: Analytical thinking; Written and oral communication Learning Objective: 12.1: Discuss the evolution and growth of B2B e-commerce, as well as its potential benefits and challenges.

20) Identify and describe the major stages in the development of B2B commerce.

Answer: B2B commerce has evolved over a 45-year period through several technology-driven stages. The major stages in this evolution were the development of automated order entry systems, electronic data interchange (EDI), digital storefronts, private industrial networks, and Net marketplaces.

Automated order entry systems began in the mid-1970s with the use of telephone modems to send digital orders to health care products companies. Modems were eventually replaced by personal computers using private networks in the late 1980s, and by Internet workstations accessing electronic online catalogs in the late 1990s.

By the late 1970s, a new form of computer-to-computer communication called electronic data 5 Copyright © 2022 Pearson Education, Inc.

interchange (EDI) emerged. EDI is a communications standard for sharing business documents such as invoices, purchase orders, shipping bills, product stocking numbers (SKUs), and settlement information among a small number of firms. Virtually all large firms have EDI systems, and most industry groups have industry standards for defining documents in that industry.

B2B e-commerce websites emerged in the mid-1990s along with the commercialization of the Internet. B2B e-commerce websites are online catalogs of products made available to the public marketplace by a single supplier.

Net marketplaces emerged in the late 1990s as a natural extension and scaling up of B2B ecommerce websites. These marketplaces bring hundreds to thousands of suppliers and potentially thousands of purchasing firms into a single Internet-based environment to conduct trade with business customers.

Private industrial networks also emerged in the late 1990s as natural extensions of EDI systems and the existing close relationships that developed between large industrial firms and their trusted suppliers. Private industrial networks (also referred to as private trading exchanges, or PTXs) are Internet-based communication environments that extend far beyond procurement to encompass supply chain efficiency enhancements and truly collaborative commerce.

Difficulty: Moderate AACSB: Analytical thinking; Written and oral communication Learning Objective: 12.1: Discuss the evolution and growth of B2B e-commerce, as well as its potential benefits and challenges.

21) What is the first step in the procurement process?

A) negotiate price B) qualify the seller and its products C) issue a purchase order D) search for suppliers Answer: D Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 12.2: Understand how procurement and supply chains relate to B2B ecommerce.

22) The last step in the procurement process is: A) sending a remittance payment.

B) sending the invoice.

C) shipping the goods.

D) delivering the goods.

Answer: A Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 12.2: Understand how procurement and supply chains relate to B2B ecommerce.

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23) Office supplies are an example of: A) direct goods.

B) indirect goods.

C) MRO goods.

D) distributed goods.

Answer: B Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 12.2: Understand how procurement and supply chains relate to B2B ecommerce.

24) The majority of inter-firm trade involves: A) spot purchasing of direct goods.

B) contract purchasing of indirect goods.

C) contract purchasing of direct goods.

D) spot purchasing of indirect goods.

Answer: C Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 12.2: Understand how procurement and supply chains relate to B2B ecommerce.

25) All of the following are examples of direct goods in the auto industry except: A) sheet steel.

B) shatter-resistant glass.

C) rubber molding.

D) desktop computers.

Answer: D Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 12.2: Understand how procurement and supply chains relate to B2B ecommerce.

26) An example of an indirect good in the fast-food industry is: A) mustard.

B) paper napkins.

C) beef.

D) sugar.

Answer: B Difficulty: Easy AACSB: Application of knowledge Learning Objective: 12.2: Understand how procurement and supply chains relate to B2B ecommerce.

27) An ________ is an independently owned, online marketplace that connects hundreds to potentially thousands of suppliers and buyers in a dynamic, real-time environment.

A) exchange B) e-distributor 7 Copyright © 2022 Pearson Education, Inc.

C) e-procurement company D) industry consortium Answer: A Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 12.2: Understand how procurement and supply chains relate to B2B ecommerce.

28) An ________ primarily serves businesses that primarily buy direct goods on a spot purchasing basis.

A) e-distributor B) e-procurement company C) exchange D) industry consortium Answer: C Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 12.2: Understand how procurement and supply chains relate to B2B ecommerce.

29) The liquidity of a market is measured by all of the following except: A) price transparency.

B) number of buyers and sellers in market.

C) volume of transactions.

D) size of transactions.

Answer: A Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 12.2: Understand how procurement and supply chains relate to B2B ecommerce.

30) ________ purchasing involves the purchase of goods based on immediate needs in larger marketplaces that involve many suppliers.

A) Spot B) Indirect C) Vertical D) Bulk Answer: A Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 12.2: Understand how procurement and supply chains relate to B2B ecommerce.

31) MRO goods are also known as direct goods.

Answer: FALSE Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 12.2: Understand how procurement and supply chains relate to B2B e8 Copyright © 2022 Pearson Education, Inc.

commerce.

32) Purchasing managers are key players in the procurement process.

Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 12.2: Understand how procurement and supply chains relate to B2B ecommerce.

33) What does the term supply chain visibility refer to and what benefits does it bring?

Answer: The term supply chain visibility refers to the ability of a firm to monitor the output of its first and second tier suppliers, track and manage supplier orders, and manage transportation and logistics suppliers who are moving the products. When a supply chain is visible, you know when suppliers' products will arrive, and you have accurate tracking of your goods. The benefit of a visible supply chain is that the firm can produce accurate production schedules and develop more accurate financial forecasts. Supply chain visibility will likely become even more of a priority in the wake of the Covid-19 pandemic, where many firms suffered severe supply chain disruptions, in part due to lack of real-time data about the functioning of their supply chains. The pandemic has highlighted the fact that supply chain practices such as just-in-time and lean manufacturing present heightened risk unless coupled with full supply chain visibility into demand, supply, and logistics.

Difficulty: Moderate AACSB: Application of knowledge; Written and oral communication Learning Objective: 12.2: Understand how procurement and supply chains relate to B2B ecommerce.

34) Define the procurement process. What are the seven basic steps in the procurement process?

Answer: The procurement process refers to the way business firms purchase the goods they need to produce the goods they will ultimately sell to consumers. Firms purchase goods from a set of suppliers that in turn purchase their inputs from another set of suppliers. These firms are linked in a series of connected transactions. The supply chain refers to this series of transactions, which links sets of firms that do business with each other. It includes not only the firms themselves but also the relationships between them and the processes that connect them. There are seven steps in the procurement process: searching for suppliers for specific products; qualifying the sellers and the products they sell; negotiating prices; credit terms, escrow requirements, quality, and scheduling delivery; issuing purchase orders; sending invoices; goods are shipped; and the buyer sends a payment. Each step is composed of separate substeps that must be recorded in the information systems of the buyer, seller, and shipper.

Difficulty: Difficult AACSB: Analytical thinking; Written and oral communication Learning Objective: 12.2: Understand how procurement and supply chains relate to B2B ecommerce.

35) All of the following are major technology trends in B2B e-commerce in 2020-2021, except: A) a movement of B2B systems to cloud computing providers as a means of slowing rising technology costs.

B) a growing emphasis on the use of business analytics software (business intelligence) to understand very large data sets.

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C) a growing use of the mobile platform for B2B systems.

D) a decrease in the use of social network platforms.

Answer: D Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 12.3: Identify major trends in supply chain management and collaborative commerce.

36) All of the following are weaknesses of EDI except: A) EDI is not well suited for electronic marketplaces.

B) EDI lacks universal standards.

C) EDI does not provide a real-time communication environment.

D) EDI does not scale easily.

Answer: B Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 12.3: Identify major trends in supply chain management and collaborative commerce.

37) Which of the following is a method of inventory cost management that seeks to eliminate excess inventory?

A) lean production B) sustainable production C) just-in-time production D) supply chain simplification Answer: C Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 12.3: Identify major trends in supply chain management and collaborative commerce.

38) Which of the following statements about cloud-based B2B systems is not true?

A) Much of the expense of the system is shifted from the B2B network provider to the firm.

B) B2B network providers charge customers on a demand basis.

C) Network effects apply, enabling the spreading of costs.

D) Cloud-based B2B data networks can be implemented in short periods of time.

Answer: A Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 12.3: Identify major trends in supply chain management and collaborative commerce.

39) ________ is a method for ensuring that suppliers precisely deliver ordered parts at a specific time and to a particular location.

A) Having an adaptive supply chain B) Tight coupling C) Supply-chain management D) Materials requirement planning 10 Copyright © 2022 Pearson Education, Inc.

Answer: B Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 12.3: Identify major trends in supply chain management and collaborative commerce.

40) Which of the following is a transaction database that operates on a distributed P2P network that connects all participant members in a single database and is highly secure, reliable, resilient, and inexpensive?

A) SCM system B) blockchain C) EDI D) cloud-based B2B system Answer: B Difficulty: Moderate AACSB: Information technology Learning Objective: 12.3: Identify major trends in supply chain management and collaborative commerce.

41) A(n) ________ system continuously links the activities of buying, making, and moving products from suppliers to purchasing firms, as well as integrating order entry systems.

A) EDI B) ERP C) CPFR D) SCM Answer: D Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 12.3: Identify major trends in supply chain management and collaborative commerce.

42) Collaborative commerce systems: A) focus on structuring intra-firm communications.

B) bring customers into the product development phase.

C) provide open, competitive marketplaces.

D) foster sharing sensitive internal information with suppliers and purchasers.

Answer: D Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 12.3: Identify major trends in supply chain management and collaborative commerce.

43) Which of the following is not a characteristic of the use of social networks in B2B ecommerce?

A) It is typically unstructured.

B) It helps develop a more personal relationship between participants in the supply chain.

C) It enables participants to make decisions based on current conditions.

D) They are always private.

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Answer: D Difficulty: Difficult AACSB: Application of knowledge Learning Objective: 12.3: Identify major trends in supply chain management and collaborative commerce.

44) Walmart is using which of the following technologies in its Food Traceability Initiative?

A) EDI B) blockchain C) cloud-based B2B system D) collaborative commerce system Answer: B Difficulty: Moderate AACSB: Information technology Learning Objective: 12.3: Identify major trends in supply chain management and collaborative commerce.

45) EDI document structures are defined by: A) a single international standards body.

B) individual suppliers and buyers.

C) industry committees.

D) each purchaser.

Answer: C Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 12.3: Identify major trends in supply chain management and collaborative commerce.

46) A(n) ________ supply chain is one in which the labor conditions in low-wage, underdeveloped producer countries are visible and morally acceptable to ultimate consumers in more developed industrial societies.

A) sustainable B) ethical C) lean D) accountable Answer: D Difficulty: Easy AACSB: Application of knowledge Learning Objective: 12.3: Identify major trends in supply chain management and collaborative commerce.

47) ________ production is a set of production methods that focuses on the elimination of waste throughout the customer value chain.

A) Green B) Sustainable C) Lean D) Just-in-time 12 Copyright © 2022 Pearson Education, Inc.

Answer: C Difficulty: Difficult AACSB: Application of knowledge Learning Objective: 12.3: Identify major trends in supply chain management and collaborative commerce.

48) ________ is defined as the use of digital technologies to permit organizations to work together to design, develop, build, and manage products through their life cycles.

A) SCM B) Social e-commerce C) EDI D) Collaborative commerce Answer: D Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 12.3: Identify major trends in supply chain management and collaborative commerce.

49) The term BYOD refers to employees: A) working from home.

B) being allowed or encouraged to use their own mobile devices and laptops.

C) using mobile devices for work.

D) bringing work devices to the home.

Answer: B Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 12.3: Identify major trends in supply chain management and collaborative commerce.

50) Which of the following statements about B2B marketing is not true?

A) The majority of B2B ad spending is aimed at desktops.

B) Spending on B2B digital marketing and advertising accounts for about 30% of the total amount spend on digital marketing and advertising.

C) LinkedIn is the most common social network used for B2B marketing.

D) The disparity between the amount spent on B2B marketing compared to B2C e-commerce reflects the different nature of much of B2B e-commerce when compared to B2C e-commerce.

Answer: B Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 12.3: Identify major trends in supply chain management and collaborative commerce.

51) Highly centralized supply chains produce higher short-term costs and lower long-term risk protection.

Answer: FALSE Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 12.3: Identify major trends in supply chain management and collaborative 13 Copyright © 2022 Pearson Education, Inc.

commerce.

52) EDI systems generally serve vertical markets.

Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 12.3: Identify major trends in supply chain management and collaborative commerce.

53) The primary goal of tight coupling is to reduce excess inventory to a bare minimum.

Answer: FALSE Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 12.3: Identify major trends in supply chain management and collaborative commerce.

54) What is the difference between an accountable supply chain and a sustainable supply chain?

Answer: An accountable supply chain provides information to consumers about the labor conditions of employees of the firm's suppliers and ensures that these conditions are satisfactory to the firm’s consumers. A sustainable supply chain takes a somewhat wider focus, as it takes both social and ecological interests into account throughout the firm's decision making, including issues such as carbon footprint and impact on the environment and community.

Difficulty: Moderate AACSB: Application of knowledge; Written and oral communication Learning Objective: 12.3: Identify major trends in supply chain management and collaborative commerce.

55) Define and explain supply chain management systems, supply chain simplification, and collaborative commerce, and the relationship between these concepts.

Answer: Supply chain management systems coordinate and link the activities of suppliers, shippers, and order entry systems to automate the order entry process from start to finish including the purchase, production, and moving of a product from a supplier to a purchasing firm. Contemporary supply chain management systems increase transparency and responsiveness because all the activities in the supply chain are able to interact with one another in near realtime, enabling companies to establish interconnected networks of what had been discrete, siloed supply chain processes and to manage their supply chains more flexibly Supply chain simplification refers to the reduction of the size of a firm's supply chain. Firms today generally prefer to work closely with a strategic group of suppliers to reduce both product costs and administrative costs. Instead of open bidding for orders, large manufacturers have chosen to work with strategic partner supply firms under long-term contracts that guarantee the supplier business and establish quality, cost, and timing goals. These strategic partnership programs are essential for just-in-time production models. They often involve joint product development and design, integration of computer systems, and tight coupling of the production processes of two or more companies.

Collaborative commerce is a direct extension of supply chain management systems and supply chain simplification. The goal is for organizations to collaboratively design, develop, build, and 14 Copyright © 2022 Pearson Education, Inc.

manage products throughout their life cycles. The focus has changed from the simplification of transactions to the relationships between the supply chain participants. Collaborative commerce fosters the sharing of sensitive internal information between suppliers and purchasers. A rich communications environment is cultivated so that inter-firm sharing of designs, production plans, inventory levels, and delivery schedules can take place. Strategic partners in a supply chain are connected for much broader purposes, including potentially the development of shared products.

Difficulty: Moderate AACSB: Analytical thinking; Written and oral communication Learning Objective: 12.3: Identify major trends in supply chain management and collaborative commerce.

56) How are social networks being used in B2B e-commerce?

Answer: In B2B e-commerce, social networks are beginning to be common tools for procurement offers, managers of supply chains, logistics managers and others engaged in B2B ecommerce. Social networks can provide personal connections among customers, suppliers, and logistics partners that are needed to keep the supply chain functioning, and to make decisions based on current conditions. Participants in the supply chain use social networks for purchasing, scheduling, exception handling, and making decisions with their B2B customers and suppliers.

In many cases, supply chain social networks are private and owned by the largest firm in the supply chain network. In other cases, firms develop Facebook groups to organize conversations among supply chain network members. Public social network sites like Facebook and Twitter can be excellent for coordinating the flow of information among business partners through the supply chain.

Difficulty: Difficult AACSB: Analytical thinking; Written and oral communication Learning Objective: 12.3: Identify major trends in supply chain management and collaborative commerce.

57) Which of the following is an example of an e-distributor?

A) Grainger B) Go2Paper C) The Seam D) Ariba Network Answer: A Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 12.4: Understand the different characteristics and types of Net marketplaces.

58) Which of the following primarily serve horizontal markets?

A) e-distributors and exchanges B) e-distributors and e-procurement Net marketplaces C) e-procurement Net marketplaces and industry consortia D) exchanges and industry consortia Answer: B Difficulty: Moderate AACSB: Application of knowledge 15 Copyright © 2022 Pearson Education, Inc.

Learning Objective: 12.4: Understand the different characteristics and types of Net marketplaces.

59) Which of the following primarily deal with indirect goods?

A) e-distributors and industry consortia B) e-distributors and e-procurement Net marketplaces C) exchanges and industry consortia D) exchanges and e-procurement Net marketplaces Answer: B Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 12.4: Understand the different characteristics and types of Net marketplaces.

60) Which of the following primarily deal with direct goods?

A) e-distributors and independent exchanges B) exchanges and e-procurement Net marketplaces C) exchanges and industry consortia D) e-procurement Net marketplaces and industry consortia Answer: C Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 12.4: Understand the different characteristics and types of Net marketplaces.

61) Which of the following primarily involve long-term sourcing?

A) e-distributors and exchanges B) e-distributors and industry consortia C) e-procurement Net marketplaces and exchanges D) e-procurement Net marketplaces and industry consortia Answer: D Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 12.4: Understand the different characteristics and types of Net marketplaces.

62) An ________ provides an online catalog that represents the products of thousands of direct manufacturers.

A) e-distributor B) e-procurement company C) exchange D) industry consortium Answer: A Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 12.4: Understand the different characteristics and types of Net marketplaces.

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63) An ________ primarily serves businesses that buy indirect goods on a spot purchasing basis.

A) e-distributor B) e-procurement company C) exchange D) industry consortium Answer: A Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 12.4: Understand the different characteristics and types of Net marketplaces.

64) E-distributors: A) make money by charging a mark-up on products they distribute.

B) usually operate "private" markets.

C) operate in vertical markets.

D) focus on selling direct products.

Answer: A Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 12.4: Understand the different characteristics and types of Net marketplaces.

65) An ________ primarily serves businesses that primarily buy indirect goods on a contract purchasing basis.

A) e-distributor B) e-procurement Net marketplace C) exchange D) industry consortium Answer: B Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 12.4: Understand the different characteristics and types of Net marketplaces.

66) ________ is an example of an e-procurement Net marketplace.

A) McMaster-Carr B) Ariba C) Amazon Business D) SupplyOn Answer: B Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 12.4: Understand the different characteristics and types of Net marketplaces.

67) An ________ serves businesses that primarily buy direct goods on a contract purchasing basis.

A) e-distributor 17 Copyright © 2022 Pearson Education, Inc.

B) e-procurement company C) exchange D) industry consortium Answer: D Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 12.4: Understand the different characteristics and types of Net marketplaces.

68) The Seam is an example of an: A) exchange.

B) industry consortium.

C) e-procurement Net marketplace.

D) e-distributor.

Answer: B Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 12.4: Understand the different characteristics and types of Net marketplaces.

69) NeweggBusiness is an example of a(n): A) e-distributor.

B) exchange.

C) private industrial network.

D) e-procurement Net marketplace.

Answer: A Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 12.4: Understand the different characteristics and types of Net marketplaces.

70) EDI was developed to reduce the cost, delays, and errors inherent in the manual exchanges of documents among firms.

Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 12.4: Understand the different characteristics and types of Net marketplaces.

71) E-distributors are sometimes referred to as many-to-one markets, with many sellers serving one firm.

Answer: FALSE Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 12.4: Understand the different characteristics and types of Net marketplaces.

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72) Exchanges are used for spot purchasing of MRO supplies.

Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 12.4: Understand the different characteristics and types of Net marketplaces.

73) Exchanges are not directly tied to ERP systems used by large firms.

Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 12.4: Understand the different characteristics and types of Net marketplaces.

74) What services do e-procurement Net marketplaces provide?

Answer: E-procurement Net marketplace services include providing a marketplace for long-term contractual purchasing as well as some spot-sourcing of indirect goods (MRO). They provide value chain management (VCM) services to both buyers and sellers. VCM services include automation of a firm's entire procurement process on the buyer side (e.g., purchase orders, sourcing, requisitions), and automation of the selling business processes on the seller side (e.g., catalog creation, order management, invoicing).

Difficulty: Moderate AACSB: Application of knowledge; Written and oral communication Learning Objective: 12.4: Understand the different characteristics and types of Net marketplaces.

75) Describe at least five characteristics of Net marketplaces.

Answer: Characteristics of Net marketplaces include (1) bias—whether the marketplace advantages sellers, buyers, or each group equally (neutral); (2) ownership—who owns the marketplace, a specific firm, group of firms, or an industry group; (3) pricing mechanism—how are prices determined for products sold: fixed prices, bidding, RFPs; (4) Scope/focus—does the marketplace serve horizontal or vertical markets; (5) value creation—what benefits are offered to customers or suppliers; and (6) access to market—is the marketplace open to everyone or limited to invitees only.

Difficulty: Moderate AACSB: Application of knowledge; Written and oral communication Learning Objective: 12.4: Understand the different characteristics and types of Net marketplaces.

76) Which of the following statements about Walmart's Global Replenishment System (GRS) is not true?

A) GRS is an online analytics package.

B) GRS is a just-in-time inventory management system.

C) GRS is predictive, not just reflective, of past sales.

D) To use GRS and make decisions about order sizes, vendors must first input data to the system in a spreadsheet format.

Answer: D Difficulty: Moderate 19 Copyright © 2022 Pearson Education, Inc.

AACSB: Application of knowledge Learning Objective: 12.5: Understand the objectives of private industrial networks, their role in supporting collaborative commerce, and the barriers to their implementation.

77) Trans-organizational business processes require _______ to perform.

A) one firm B) two independent firms C) three independent firms D) at least ten firms Answer: B Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 12.5: Understand the objectives of private industrial networks, their role in supporting collaborative commerce, and the barriers to their implementation.

78) Private industrial networks are direct descendants of: A) e-procurement Net marketplaces.

B) existing EDI networks.

C) independent exchanges.

D) industry consortia.

Answer: B Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 12.5: Understand the objectives of private industrial networks, their role in supporting collaborative commerce, and the barriers to their implementation.

79) All of the following are forms of collaboration among businesses except: A) RFQs. B) CPFR. C) demand chain visibility.

D) marketing coordination and product design.

Answer: A Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 12.5: Understand the objectives of private industrial networks, their role in supporting collaborative commerce, and the barriers to their implementation.

80) Which of the following is not a typical barrier to the implementation of a private industrial network?

A) It requires participating firms to share sensitive data.

B) It requires the large network owners to give up some of its independence.

C) It requires a significant investment of time and money.

D) It requires a change of mindset and behavior of employees.

Answer: B Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 12.5: Understand the objectives of private industrial networks, their role in supporting collaborative commerce, and the barriers to their implementation.

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81) Walmart is both the world’s largest retailer and has the world’s largest supply chain.

Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 12.5: Understand the objectives of private industrial networks, their role in supporting collaborative commerce, and the barriers to their implementation.

82) A private industrial network is an independently owned online marketplace that connects many suppliers and buyers.

Answer: FALSE Difficulty: Difficult AACSB: Application of knowledge Learning Objective: 12.5: Understand the objectives of private industrial networks, their role in supporting collaborative commerce, and the barriers to their implementation.

83) Private industrial networks are usually owned collectively by the major firms participating in the network, while exchanges usually are created by a single sponsoring company.

Answer: FALSE Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 12.5: Understand the objectives of private industrial networks, their role in supporting collaborative commerce, and the barriers to their implementation.

84) Operating on a global scale is one objective of private industrial networks.

Answer: TRUE Difficulty: Easy AACSB: Application of knowledge Learning Objective: 12.5: Understand the objectives of private industrial networks, their role in supporting collaborative commerce, and the barriers to their implementation.

85) Discuss the barriers to effective implementation of private industrial networks.

Answer: There are a number of barriers to effective implementation of private industrial networks. Participating firms are required to share sensitive data with their business partners, up and down the supply chain. What in the past was considered proprietary and secret, must now be shared. In a digital environment, it can be difficult to control the limits of information sharing.

Information a firm freely gives to its largest customer may end up being shared with its closest competitor.

Integrating private industrial networks into existing enterprise systems and EDI networks also poses a significant investment of time and money. Although the leading providers of enterprise systems to Fortune 500 companies (Oracle, IBM, and SAP) offer B2B modules, and supply chain management capabilities that can be added to their existing software suites, implementing these modules is a very expensive proposition in part because the procurement side of many Fortune 500 firms is so fragmented and out-of-date.

Adopting private industrial networks also requires a change in mindset and behavior for employees. Essentially, employees must shift their loyalties from the firm to the wider transorganizational enterprise and recognize that their fate is intertwined with the fate of their 21 Copyright © 2022 Pearson Education, Inc.

suppliers and distributors. Suppliers in turn are required to change the way they manage and allocate their resources because their own production is tightly coupled with the demands of their private industrial network partners. All participants in the supply and distribution chains, with the exception of the large network owner, lose some of their independence, and must initiate large behavioral change programs in order to participate.

Difficulty: Moderate AACSB: Analytical thinking; Information technology; Written and oral communication Learning Objective: 12.5: Understand the objectives of private industrial networks, their role in supporting collaborative commerce, and the barriers to their implementation.

22 Copyright © 2022 Pearson Education, Inc.