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Laudon/Laudon/Brabston, Management Information Systems, Seventh Canadian Edition
Chapter 10 E-Commerce: Digital Markets and Digital Goods
1) E-commerce refers to the use of any networking technologies to transact business.
2) Consumer e-commerce is still growing at approximately 25% annually.
3) The Internet shrinks information asymmetry.
4) Eighty-five percent of online retailers now have m-commerce Web sites.
5) All previous mass media in modern history, including the printing press, use a broadcast
model where content is created in a central location by experts.
Laudon/Laudon/Brabston, Management Information Systems, Seventh Canadian Edition
6) Disintermediation provides major benefits to the distributor.
7) In general, for digital goods, the marginal cost of producing another unit is about zero.
8) Telecommunications hardware and software is typically the least costly portion of a Web
site budget.
9) An example of the content provider business model is Barnesandnoble.com, a retailer of
printed books.
10) Amazon's recommender system is an example of the network notification feature of social
e-commerce.
Laudon/Laudon/Brabston, Management Information Systems, Seventh Canadian Edition
11) Podcasting allows subscribers to listen to live, streaming radio and other audio content.
12) Intellectual property refers to all forms of human expression, both tangible and intangible.
13) Ninety-six percent of all Canadian households with Internet access use a broadband
connection.
14) Behavioral targeting occurs at two levels: individual Web sites and through ISPs.
15) EDI standards that take advantage of network communications have yet to be fully
implemented at the industry level.
16) Net marketplaces may either support contractual purchasing based on long-term
relationships with designated suppliers or short-term spot purchasing.
Laudon/Laudon/Brabston, Management Information Systems, Seventh Canadian Edition
17) Exchanges have become one of the most popular types of Net marketplace because they
encourage competitive bidding that drives prices down.
18) Automobile manufacturing is an example of a vertical market.
19) In general, the cost of hardware, software, and telecommunications for building and
operating a Web site has fallen by over 50 percent since 2000.
20) Because of outsourcing and increased automation, the costs of system maintenance and
content creation have fallen and typically make up less than a quarter of Web site budgets.
21) E-commerce remains the fastest growing form of commerce when compared to physical
retail stores, services, and entertainment.
Laudon/Laudon/Brabston, Management Information Systems, Seventh Canadian Edition
22) A marketspace is a marketplace extended beyond traditional boundaries and removed from
a temporal and geographic location.
23) Search costs are the cost merchants must pay simply to bring their goods to market.
24) In transaction pricing, the price of a product varies depending on the demand characteristics
of the customer or the supply situation of the seller.
25) Airlines and hotels operating their own reservation sites online earn less per ticket because
they have eliminated travel agents as intermediaries.
26) ChemConnect’s Web site for buying and selling chemicals and plastics is an example of
B2B e-commerce.
Laudon/Laudon/Brabston, Management Information Systems, Seventh Canadian Edition
27) Streaming is a publishing method for music and video files that flows a continuous stream
of content to a user’s device without being stored locally on the device.
28) A firm’s revenue model describes how the firm will earn revenue, generate profits, and
produce a superior return on investment.
29) Micropayment systems provide content providers with a cost-effective method for
processing high volumes of very small monetary transactions (anywhere from $.25 to $5.00
per transaction).
30) The largest macropayment system on the Web is Apple’s iTunes Store, which has more
than 250 million credit customers who frequently purchase individual music tracks for 99
cents.
Laudon/Laudon/Brabston, Management Information Systems, Seventh Canadian Edition
31) Through what channel did e-commerce first evolve?
A) online advertising sales
B) Internet portals
C) online book sales
D) Internet service providers
32) Which of the following is not one of the current main areas of growth in mobile e-commerce?
A) sales of financial services
B) retail sales at the top mobile companies
C) sales of digital content
D) sales of apps
33) Which of the following is an example of a geosocial mobile service?
A) Kickstarter.com
B) Foursquare
C) Shopkick
D) Facebook
34) How are the Internet and e-commerce causing severe disruption to the existing advertising
business model?
A) Ties between customer and businesses are being rethought.
B) Technology players such as Yahoo! seek to dominate online advertising and expand into
offline ad brokerage.
Laudon/Laudon/Brabston, Management Information Systems, Seventh Canadian Edition
C) New methods of advertising, such as blog advertising, are emerging.
D) The market entry costs for online advertising services are extremely low.
35) The quality of ubiquity, as it relates to e-commerce, is illustrated by
A) the same set of standards being used across the globe.
B) the spread of plentiful, cheap information.
C) the enabling of commerce worldwide.
D) the availability of the Internet everywhere and anytime.
36) Which of the following is not one of the unique features of e-commerce technology?
A) information density
B) transparency
C) richness
D) social technology
37) Which feature of Internet technology has had the most effect in the Internet's rapid spread
across the globe?
A) ubiquity
B) global reach
C) universal standards
D) social technology
Laudon/Laudon/Brabston, Management Information Systems, Seventh Canadian Edition
38) The act of engaging consumers in a dialog that dynamically adjusts the experience to the
individual describes which dimension of e-commerce technology?
A) ubiquity
B) personalization/customization
C) richness
D) interactivity
39) The integration of video, audio, and text marketing messages into a single marketing
message and consumer experience describes which dimension of e-commerce technology?
A) ubiquity
B) personalization/customization
C) richness
D) interactivity
40) The lowered costs of information storage, processing, and communication, along with the
improvement of data quality, has resulted in which unique quality of e-commerce?
A) information density
B) richness
C) customization
D) interactivity
Laudon/Laudon/Brabston, Management Information Systems, Seventh Canadian Edition
41) The effort required to locate a suitable product is called
A) price discrimination.
B) search costs.
C) menu costs.
D) shopping costs.
42) Information density refers to the
A) richness—complexity and content—of a message.
B) total amount and quantity of information delivered to consumers by merchants.
C) total amount and quantity of information available to all market participants.
D) amount of information available to reduce price transparency.
43) Selling the same goods to different targeted groups at different prices is called
A) cost customization.
B) cost optimization.
C) price gouging.
D) price discrimination.
Laudon/Laudon/Brabston, Management Information Systems, Seventh Canadian Edition
44) Information ________ exists when one party in a transaction has more information that is
important for the transaction than the other party.
A) transparency
B) asymmetry
C) complexity
D) discrimination
45) Varying a product's price according to the supply situation of the seller is called ________
pricing.
A) menu
B) flexible
C) dynamic
D) asymmetric
46) Reducing the business process layers in a distribution channel is called
A) disintermediation.
B) BPR.
C) market segmentation.
D) network effects.
47) Digital goods are goods that are
A) produced digitally.
B) sold over digital networks.
Laudon/Laudon/Brabston, Management Information Systems, Seventh Canadian Edition
C) delivered digitally.
D) used with digital equipment.
48) Compared to digital markets, traditional markets have
A) lower search costs.
B) stronger network effects.
C) higher delayed gratification effects.
D) higher transaction costs.
49) Compared to traditional goods, digital goods have
A) greater pricing flexibility.
B) lower marketing costs.
C) higher production costs.
D) higher inventory costs.
50) Compared to traditional markets, digital markets have
A) lower distributed delivery costs.
B) higher marginal costs per unit.
C) equivalent copying costs.
D) similar inventory costs.
Laudon/Laudon/Brabston, Management Information Systems, Seventh Canadian Edition
51) eBay is an example of
A) C2C e-commerce.
B) B2B e-commerce.
C) B2C e-commerce.
D) M-commerce.
52) Selling products and services directly to individual consumers via the Internet best describes
A) B2B e-commerce.
B) C2C e-commerce.
C) M-commerce.
D) B2C e-commerce.
53) Consumers selling goods and services electronically to other consumers best describes
A) disintermediation.
B) C2C e-commerce.
C) M-commerce.
D) B2C e-commerce.
Laudon/Laudon/Brabston, Management Information Systems, Seventh Canadian Edition
54) Which of the following businesses utilizes the content provider Internet business model?
A) Amazon.com
B) eBay.com
C) CNN.com
D) Motocross.com
55) Which of the following Internet business models does Amazon.com use?
A) content provider
B) portal
C) market creator
D) e-tailer
56) Transaction brokers
A) generate revenue from advertising or from directing buyers to sellers.
B) save users money and time by processing online sales transactions.
C) provide a digital environment where buyers and sellers can establish prices for products.
D) sell physical products directly to consumers or individual businesses.
57) Market creators
A) save users money and time by processing online sales transactions.
B) provide a digital environment where buyers and sellers can establish prices for products.
C) create revenue by providing digital content over the Web.
D) sell physical products directly to consumers or individual businesses.
Laudon/Laudon/Brabston, Management Information Systems, Seventh Canadian Edition
58) Which of the following best describes why small world theory is important to e-commerce?
A) The products bought online by one individual will influence purchases by others.
B) The greater the number of people using your product, the more valuable it becomes.
C) You do not need to attract a large consumer base to become profitable.
D) Global products create a global community.
59) Which of the following best illustrates the sales revenue model?
A) eBay receives a small fee from a seller if a seller is successful in selling an item.
B) Epinions receives a fee after steering a customer to a participating Web site where he or
she makes a purchase.
C) Flickr provides basic services for free, but charges a premium for advanced services.
D) Apple accepts micropayments for single music track downloads.
60) In which of the following revenue models does a Web site charge a fee for access to some
or all of its offerings on a continual, regular basis?
A) subscription
B) free/freemium
C) transaction fee
D) sales
Laudon/Laudon/Brabston, Management Information Systems, Seventh Canadian Edition
61) Which of the following best illustrates the affiliate revenue model?
A) eBay receives a small fee from a seller if a seller is successful in selling an item.
B) Epinions receives a fee after steering a customer to a participating Web site where he or
she makes a purchase.
C) Flickr provides basic services for free, but charges a premium for advanced services.
D) Apple accepts micropayments for single music track downloads.
62) Which of the following best illustrates the transaction fee revenue model?
A) eBay receives a small fee from a seller if a seller is successful in selling an item.
B) Epinions receives a fee after steering a customer to a participating Web site where he or
she makes a purchase.
C) Flickr provides basic services for free, but charges a premium for advanced services.
D) Apple accepts micropayments for single music track downloads.
63) ________ describes the concept that a large group of people is better at making correct
decisions than a single person.
A) The wisdom of crowds
B) Outsourcing
C) Crowdsourcing
D) Social graphing
Laudon/Laudon/Brabston, Management Information Systems, Seventh Canadian Edition
64) Netflix's public announcement of a reward for a technology solution to its movie
recommendation system is an example of
A) prediction markets.
B) behavioral targeting.
C) long-tail marketing.
D) crowdsourcing.
65) Exposing an individual to ads that are chosen and based on the recorded and analyzed
online behavior of the individual is referred to as
A) clickstream advertising.
B) behavioral targeting.
C) online profiling.
D) long tail marketing.
66) Which of the following was the leading online advertising format in 2012?
A) display ads
B) e-mail
C) classifieds
D) search engine
