Chapter 1: Introduction to Electronic Commerce
TRUE/FALSE
1. IBM defines electronic business as "the transformation of key business processes through the use
of Internet technologies."
ANS: T PTS: 1 REF: 5
2. A transaction is an exchange of value.
ANS: T PTS: 1 REF: 6
3. A transaction always has one or more activities associated with it, and an activity will always be
related to a transaction.
ANS: F PTS: 1 REF: 7
4. Transferring funds, placing orders, sending invoices, and shipping goods to customers are all
types of activities or transactions.
ANS: T PTS: 1 REF: 7
5. Business-to-consumer electronic commerce occurs when a person sells an item through a Web
auction site to another person.
ANS: F PTS: 1 REF: 7
6. The U.S. government is one of the largest EDI trading partners in the world.
, ANS: T PTS: 1 REF: 9
7. Firms such as Wal-Mart and General Electric have been pioneers in using EDI to improve their
purchasing processes and their relationships with suppliers.
ANS: T PTS: 1 REF: 9
8. A value added network (VAN) is an independent firm that offers connection and EDI transaction-
forwarding services to buyers and sellers engaged in EDI.
ANS: T PTS: 1 REF: 9
9. The increase in broadband connections in homes is a key element in the B2C component of the
second wave.
ANS: T PTS: 1 REF: 11
10. In some cases, business processes use traditional commerce activities very effectively, and
technology cannot improve upon them.
ANS: T PTS: 1 REF: 14
11. The skills of merchandising and personal selling can be easy to practice remotely.
ANS: F PTS: 1 REF: 15
12. A small-denomination item is a product or service that is hard to distinguish from the same
product or services provided by other sellers.
ANS: F PTS: 1 REF: 15
,13. An outsourcing profile is the collection of attributes that affect how easily a product can be
packaged and delivered.
ANS: F PTS: 1 REF: 15
14. An airline ticket is an excellent example of an item with a high value-to-weight ratio.
ANS: T PTS: 1 REF: 16
15. A product that has a strong brand reputation is easier to sell over the Web than an unbranded
item.
ANS: T PTS: 1 REF: 16
16. Electronic commerce provides buyers with an easy way to customize the level of detail in the
information they obtain about a prospective purchase.
ANS: T PTS: 1 REF: 17
17. Electronic commerce reduces the speed and accuracy with which businesses can exchange
information.
ANS: F PTS: 1 REF: 17
18. Electronic payment can be easier to audit and monitor than payment made by check.
ANS: T PTS: 1 REF: 18
19. The legal environment in which electronic commerce is conducted is full of clear and concise
laws.
, ANS: F PTS: 1 REF: 19
20. Economists use a formal definition of a market that includes two conditions: first, the potential
sellers of a good come into contact with potential buyers and second, that a medium of exchange
is available.
ANS: T PTS: 1 REF: 20
21. Most economists agree that markets are weak and ineffective mechanisms for allocating scarce
resources.
ANS: F PTS: 1 REF: 20
22. Businesses and individuals can use electronic commerce to reduce transaction costs by improving
the flow of information and increasing the coordination of actions.
ANS: T PTS: 1 REF: 24
23. Sellers and buyers in commodity markets experience significant transaction costs.
ANS: F PTS: 1 REF: 24
24. Using the value chain reinforces the idea that electronic commerce should be a business solution,
not technology implemented for its own sake.
ANS: T PTS: 1 REF: 31
25. Researchers estimate that about 20 percent of the content available on the Internet today is in
English.
ANS: F PTS: 1 REF: 34
TRUE/FALSE
1. IBM defines electronic business as "the transformation of key business processes through the use
of Internet technologies."
ANS: T PTS: 1 REF: 5
2. A transaction is an exchange of value.
ANS: T PTS: 1 REF: 6
3. A transaction always has one or more activities associated with it, and an activity will always be
related to a transaction.
ANS: F PTS: 1 REF: 7
4. Transferring funds, placing orders, sending invoices, and shipping goods to customers are all
types of activities or transactions.
ANS: T PTS: 1 REF: 7
5. Business-to-consumer electronic commerce occurs when a person sells an item through a Web
auction site to another person.
ANS: F PTS: 1 REF: 7
6. The U.S. government is one of the largest EDI trading partners in the world.
, ANS: T PTS: 1 REF: 9
7. Firms such as Wal-Mart and General Electric have been pioneers in using EDI to improve their
purchasing processes and their relationships with suppliers.
ANS: T PTS: 1 REF: 9
8. A value added network (VAN) is an independent firm that offers connection and EDI transaction-
forwarding services to buyers and sellers engaged in EDI.
ANS: T PTS: 1 REF: 9
9. The increase in broadband connections in homes is a key element in the B2C component of the
second wave.
ANS: T PTS: 1 REF: 11
10. In some cases, business processes use traditional commerce activities very effectively, and
technology cannot improve upon them.
ANS: T PTS: 1 REF: 14
11. The skills of merchandising and personal selling can be easy to practice remotely.
ANS: F PTS: 1 REF: 15
12. A small-denomination item is a product or service that is hard to distinguish from the same
product or services provided by other sellers.
ANS: F PTS: 1 REF: 15
,13. An outsourcing profile is the collection of attributes that affect how easily a product can be
packaged and delivered.
ANS: F PTS: 1 REF: 15
14. An airline ticket is an excellent example of an item with a high value-to-weight ratio.
ANS: T PTS: 1 REF: 16
15. A product that has a strong brand reputation is easier to sell over the Web than an unbranded
item.
ANS: T PTS: 1 REF: 16
16. Electronic commerce provides buyers with an easy way to customize the level of detail in the
information they obtain about a prospective purchase.
ANS: T PTS: 1 REF: 17
17. Electronic commerce reduces the speed and accuracy with which businesses can exchange
information.
ANS: F PTS: 1 REF: 17
18. Electronic payment can be easier to audit and monitor than payment made by check.
ANS: T PTS: 1 REF: 18
19. The legal environment in which electronic commerce is conducted is full of clear and concise
laws.
, ANS: F PTS: 1 REF: 19
20. Economists use a formal definition of a market that includes two conditions: first, the potential
sellers of a good come into contact with potential buyers and second, that a medium of exchange
is available.
ANS: T PTS: 1 REF: 20
21. Most economists agree that markets are weak and ineffective mechanisms for allocating scarce
resources.
ANS: F PTS: 1 REF: 20
22. Businesses and individuals can use electronic commerce to reduce transaction costs by improving
the flow of information and increasing the coordination of actions.
ANS: T PTS: 1 REF: 24
23. Sellers and buyers in commodity markets experience significant transaction costs.
ANS: F PTS: 1 REF: 24
24. Using the value chain reinforces the idea that electronic commerce should be a business solution,
not technology implemented for its own sake.
ANS: T PTS: 1 REF: 31
25. Researchers estimate that about 20 percent of the content available on the Internet today is in
English.
ANS: F PTS: 1 REF: 34
