CPSC 155a Fall 2001 E Commerce Doing Business on the Internet FINAL EXAM Page 1 of 7 Final Exam December 18 2001 Instructions Answer exactly 12 of the following 14 questions Do not answer more than 12 If you answer more than 12 the first 12 answers in your blue books will be graded and the rest will be ignored Note that 12 questions worth eight points each add up to 96 points Everyone gets four points for free Please remember to put your name and e mail address on the cover of your blue book s Question 1 Open Source Free Software a 4 Points For a computer program to satisfy the Free Software Foundation s definition of free software users of this program must be free to do four things with it What are these four freedoms b 2 Points True or false Copylefted source code cannot be sold c 2 Points Give two examples of open source programs that are widely used Question 2 Copyright Law a 4 Points What is the First Sale Rule and why might it be less effective as a means of regulating digital objects such as software and MP3 files than it is as a means of regulating physically embodied works such as books and CDs b 2 Points True or false In order to be guilty of violating the Digital Millennium Copyright Act one has to be guilty of copyright infringement c 2 Points What is the possibly fatal flaw in the following argument It is illegal to distribute copyright material protected by a TPS that effectively prevents copying because under the Fair Use Doctrine of US copyright law I have a right to make copies for certain purposes CPSC 155a Fall 2001 E Commerce Doing Business on the Internet FINAL EXAM Page 2 of 7 Question 3 Internet Architecture a 4 Points What are the four major layers of the Internet architecture and what is the order of these layers By what is the order I mean which is the lowest layer which is built directly on top of the lowest which is built directly on top of the second lowest and which is built directly on top of the third lowest b 2 Points The architectural principle of layering is a key enabler of e commerce because i ii iii iv Technical innovation and commercial deployment of new products and services can take place on each layer independently without overall network redesign It prevents abuse of monopoly It prevents misuse of personal information that is collected in the course of web retail transactions None of the above c 2 Points Give an example of a company whose initial success demonstrates the power of the Internet architecture Question 4 B2C Commerce a 2 Points One of the main reasons that first generation B2C commerce seemed so promising was that it held out the hope of significantly lower prices for consumers Why was it widely believed that online retailers could offer significantly lower prices than B M retailers and still be profitable b 2 Points True or false Customers of successful online retailers typically experience significant switching costs c 2 Points True or false B2C companies are more dependent on massively scalable and continuously available operations systems than C2C companies d 2 Points Which of the following strategies currently seems most promising for B2C e commerce i ii iii iv Diversification into more low margin products Expansion into international markets Multi channel retailing Increased advertising CPSC 155a Fall 2001 E Commerce Doing Business on the Internet FINAL EXAM Page 3 of 7 Question 5 Information Economy a 3 points What are network effects b 3 points What is bundling c 2 points The following strategies and tools are commonly used by information businesses differential pricing versioning technical protection measures e g encryption legal protection measures e g copyright branding and sale of complementary products Which property of information products do all of these strategies and tools address i ii iii iv High fixed costs and low marginal costs The need for standardization The need for cross platform compatibility All of the above Question 6 Peer Production a 2 Points Give an example of peer production that predates the Internet b 2 Points Give two Internet based companies whose business models involve leveraging peer production c 2 Points Whether peer production is an effective way of accomplishing a particular task depends on the task s i ii iii iv modularity granularity cost of integration all of the above d 2 Points Two necessary preconditions for Benkler s vision of peer production are i ii iii iv strong property rights and corporate hierarchies information security and digital identity low cost communication and low cost access to information strong property rights and free markets CPSC 155a Fall 2001 E Commerce Doing Business on the Internet FINAL EXAM Page 4 of 7 Question 7 Privacy a 4 points According to Lessig there are four major ways in which privacy is protected in real space What are they b 2 points P3P provides i ii iii iv a machine readable format in which privacy policies can be encoded enforcement mechanisms that ensure that web retailers comply with their posted privacy policies enforcement mechanisms that ensure that web retailers comply with the OECD Fair Information Principles a mechanism for customers to use web retail services anonymously c 2 points The purchase by DoubleClick of Abacus Direct was viewed as a serious privacy threat Which key aspect of online data collection triggered this controversy i ii iii iv Data are often collected silently Users are not always given meaningful choices about data collection Data collected by web retailers is often used to create obnoxious targeted ads Data collected from many different sources can be merged in particular data collected online can be merged with data about users real space lives Question 8 Miscellaneous I a 2 Points Give one advantage and one disadvantage of the widespread use of cookies b 2 points Give two inherent difficulties with online ads c 2 Points Yahoo s main sources of revenue are i ii iii iv subscription fees and transaction fees web services advertising and business services none of the above d 2 Points Give two of the tools typically used by venture capitalists in the duediligence process CPSC 155a Fall 2001 E Commerce Doing Business on the Internet FINAL EXAM Page 5 of 7 Question 9 C2C Commerce a 2 points What is eBay s business model b 2 points As discussed in class eBay benefits from significant network effects True or false These network effects apply only to its C2C auction service e g its C2C fixed price sales do not