590 Chapter 11
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.
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.
The term ________ refers 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.
Which of the following has the highest penetration of social network usage among the general population? A) North America B) Latin America C) Europe D) Asia-Pacific
Answer: A Difficulty: Easy AACSB: Application of knowledge Learning Objective: 11.1: Describe the different types of social networks and online communities and their business models.
1) One of the first online virtual communities 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.
5) A website designed to give horse enthusiasts a common discussion area is classified as a(n): A) interest-based social network. B) affinity community. C) practice network. D) sponsored community.
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.
Portals are not subject to network effects.
Answer: FALSE Difficulty: Easy AACSB: Application of knowledge Learning Objective: 11.3: Describe the major types of Internet portals and their business models.
Which of the following companies was an early investor in Facebook? A) Google B) Apple C) Microsoft D) LinkedIn
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.
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. 4 Copyright © 2019 Pearson Education, Inc.
Open bidding offers the advantage of herd effects.
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. 17 Copyright © 2019 Pearson Education, Inc.
The original portals in the early days of e-commerce were search engines.
Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 11.3: Describe the major types of Internet portals and their business models.
Which of the following is a leading social network in Russia? A) VK 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.
Which of the following statements about Instagram is not true? A) Instagram is owned by Twitter. 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 than 10 minutes a day on Instagram.
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.
One partial solution to high monitoring costs is ________ pricing. A) fixed B) dynamic 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.
Keeping bid increments low decreases the number of bidders and lowers the frequency of their bids.
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.
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.
A(n) ________ offers members focused discussion groups, help, information, and knowledge related to an area of shared practice. 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.
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.
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.
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. 11 Copyright © 2019 Pearson Education, Inc.
After Google, the next portal/search engine site with the most unique visitors is: A) Yahoo. B) Microsoft. C) AOL. D) Facebook.
Answer: A Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 11.3: Describe the major types of Internet portals and their business models.
________ is the market leader in C2C auctions. A) Amazon B) eBay C) uBid D) eBid
Answer: B 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.
9) Which of the following is the second leading social network in the United States in terms of monthly unique visitors? A) Twitter B) LinkedIn 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.
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) Myspace. 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.
Facebook was the leader in U.S. ad spending revenues on social networks in 2017. 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.
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.
4) Marilyn's Secret is an example of a(n): A) interest-based social network. B) affinity community. C) sponsored community. D) practice network.
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. 2 Copyright © 2019 Pearson Education, Inc.
8) Around what percentage of the total United States population uses social networks? A) 50% B) 60% C) 70% D) 80%
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. 3 Copyright © 2019 Pearson Education, Inc.
Which of the following early leaders in social networking has been reinvented as a music- oriented social network? A) Vevo B) Myspace C) Polyvore D) Tumblr
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 Copyright © 2019 Pearson Education, Inc.
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. 7 Copyright © 2019 Pearson Education, Inc.
All of the following types of auctions involve single units except: A) English auction. B) Dutch Internet. C) Name Your Own Price 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.
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.
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.
Which of the following types of auctions "shields the brand" of the seller? A) English auction B) Name Your Own Price auction C) Dutch 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.
________ 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.
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. 14 Copyright © 2019 Pearson Education, Inc.
Which of the following statements illustrates the network effects that portals are subject to? 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. 21 Copyright © 2019 Pearson Education, Inc.
________ 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. 16 Copyright © 2019 Pearson Education, Inc.
Which of the following now 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.
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.
6) Instagram is an example of a(n): A) interest-based social network. B) affinity community/social network. C) general community/social network. D) practice 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.
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) newsfeed D) friends' 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.
In 2016, Fortune 500 companies used ________ more than Facebook. A) no other social network 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.
On which of the following do users spent the least amount of time per day? 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.
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. 5 Copyright © 2019 Pearson Education, Inc.
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.
Which of the following involves a concern that one will never know how much the ultimate winner might have paid, or the true value to the final winner? A) herd behavior B) winner's regret C) seller's lament D) loser's lament
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.
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.
________ is the tendency to gravitate toward, and bid for, auction listings with one or more existing bids. 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.
________ of procurement officers use auctions to purchase goods. A) Approximately 80% B) Less than a quarter C) Over one third D) Approximately 25%
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.
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. 10 Copyright © 2019 Pearson Education, Inc.
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. 12 Copyright © 2019 Pearson Education, Inc.
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. 13 Copyright © 2019 Pearson Education, Inc.
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. 15 Copyright © 2019 Pearson Education, Inc.
Which of the following is not one of the three defining characteristics of a portal? A) commerce B) content 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.
________ refers to the feeling that one has paid too high a price for an item won at auction. A) Seller's lament B) Winner's lament C) Loser's regret D) Winner's regret
Answer: D 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.
________ purchased Yahoo. A) AT&T B) Microsoft C) AOL D) Verizon
Answer: D Difficulty: Easy AACSB: Application of knowledge Learning Objective: 11.3: Describe the major types of Internet portals 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.
In 2017, which age group had 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.
The amount of time visitors spend on a site is a measure of: 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.
Which of the following is an example of a practice network? A) PredictWallstreet B) Instagram C) DebatePolitics D) Just Plain Folks
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.
Priceline is an example of a(n): A) English auction. B) Dutch 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.
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.
ESPN.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.
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.
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 AACSB: Application of knowledge Learning Objective: 11.3: Describe the major types of Internet portals and their business models.
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.
In a Dutch Internet auction, a single seller puts up a single item for bidding.
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.
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 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 and Yahoo did not have well-developed search engines, and hence have not grown as fast as Google, which has a powerful search engine. Portal sites have invested billions of dollars 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. For instance, financial service firms pay premium advertising rates to advertise on portal finance service areas such as Yahoo's Finance pages. 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 sites like Google is to obtain more content to attract users for a long time and expose them to more ad pages (or screens). Difficulty: Moderate AACSB: Analytical thinking; Written and oral communication Learning Objective: 11.3: Describe the major types of Internet portals and their business models.
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 97% of the Fortune 500 using LinkedIn. Twitter is the second most popular, used by 86%, while 84% use Facebook. 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 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. 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.
Describe 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.
If a large number of Internet users set Facebook as their primary destination on their web browser, should Facebook be considered a portal?
Answer: Student answers will vary, but should include reference to social networks broadening their offerings to become more portal-like. An example answer is: While Facebook can be a primary destination, the goal of Facebook is to keep users occupied and communicating with each other. One of the main goals of a portal is to provide avenues to third party content and other areas of the Internet. Although social networks are aiming to include portal-like features, to keep and grow audiences, the primary goals of a portal currently don't include social 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.
Priceline's auctions utilize fixed pricing.
Answer: TRUE 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.
Facebook is the slowest growing of the most popular social networks.
Answer: TRUE Difficulty: Easy AACSB: Application of knowledge Learning Objective: 11.1: Describe the different types of social networks and online communities and their business models.
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.
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. 22 Copyright © 2019 Pearson Education, Inc.
More than two-thirds 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.
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. 8 Copyright © 2019 Pearson Education, Inc.
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.
Consumers in auctions are not driven solely by value maximization.
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.
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, 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. 20 Copyright © 2019 Pearson Education, Inc.
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, photo sharing features. As the Internet user population expanded, more and more 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 new crop of social networks launched since 2008 (i.e., Snapchat and Watsapp) focus on messaging. 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.
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). 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. 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. 19 Copyright © 2019 Pearson Education, Inc.
What are the benefits of Internet auctions to sellers, buyers, and market makers in an auction?
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.
What business models do social networks 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 number 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. 9 Copyright © 2019 Pearson Education, Inc.
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 on- site 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. 18 Copyright © 2019 Pearson Education, Inc.
