Info Systems 2 Final Exam

Which of the following statements is true regarding network effects?

A. Network effects diminish the value of a product or service as more users join the network.

B. Network effects are exclusively beneficial in the technology sector and do not impact other industries.

C. Network effects refer to the negative impact on performance as the number of users increases on a platform.

D. Network effects occur when the value of a product or service increases as more people use it.

E. Network effects are most commonly observed in industries without digital components.

D. Network effects occur when the value of a product or service increases as more people use it.

How did Netflix's application of the long tail concept in its business model differ from Blockbuster's approach to video rentals?

A. Netflix focused primarily on the most popular titles to ensure high turnover rates, similar to Blockbuster’s strategy.

B. Netflix utilized physical stores across the country to provide immediate access to video content, mirroring Blockbuster’s distribution method.

C. Netflix targeted a broader inventory of niche and less-demanded titles, in contrast to Blockbuster's focus on popular new releases.

D. Both Netflix and Blockbuster used a per-title rental fee structure with late fees to maximize revenue.

E. Netflix required customers to visit physical locations to pick up DVDs, similar to Blockbuster’s operational model.

C. Netflix targeted a broader inventory of niche and less-demanded titles, in contrast to Blockbuster's focus on popular new releases.

How does Netflix's recommendation system enhance user experience and contribute to its business model?

A. The system decreases content visibility by limiting the range of recommended titles to top rated films only.

B. It generates random recommendations to introduce unpredictability and broaden user exposure to diverse genres.

C. The recommendation system optimizes inventory by suggesting titles that are underperforming in viewership.

D. The system primarily recommends new releases to ensure that high-cost content yields immediate returns.

E. Netflix's recommendation system personalizes content suggestions based on individual and peer viewing habits, lowering consumer search costs.

E. Netflix's recommendation system personalizes content suggestions based on individual and peer viewing habits, lowering consumer search costs.

4. Network effects imply that the more users who join a network, the less valuable the service becomes to each user.

A. True

B. False

B. False

The windowing strategy in media distribution involves releasing content on all available platforms simultaneously to maximize reach.

A. True

B. False

B. False

Trust is not a significant factor in the success of sharing economy platforms, as transactions are primarily automated and impersonal.

A. True

B. False

B. False

Digital goods are unique in that they can be distributed globally without significant additional costs once the initial product is developed.

A. True

B. False

A. True

Crowdsourcing involves a company hiring a specific group of skilled professionals to solve a problem.

A. True

B. False

B. False

Search engine advertising solely depends on the advertiser's budget to determine the positioning of their ads.

A. True

B. False

B. False

Why do markets with significant network effects frequently exhibit a "winner-takes-all" tendency?

A. Because the costs of switching between providers in these markets are generally low, allowing new entrants to easily displace established players.

B. Due to the high initial investment required, these markets tend to have very few participants from the start.

C. The first entrant into the market always receives governmental subsidies, discouraging competition.

D. As the user base grows, the value of the service increases exponentially, which tends to favor the largest provider over smaller competitors.

E. These markets typically have very limited technological advancements, making it difficult for new companies to offer improved services or products.

D. As the user base grows, the value of the service increases exponentially, which tends to favor the largest provider over smaller competitors.

What is a defining characteristic of a two-sided market?

A. It only operates in the digital realm and cannot exist in physical marketplaces.

B. It is characterized by having a single customer group whose needs are met without interactions with any other group.

C. It facilitates interactions between two distinct but interdependent groups of users, each of which benefits from the presence of the other.

D. The market's success is solely dependent on technological innovation, with no influence from network effects.

E. Transactions in a two-sided market typically occur without the need for a platform to mediate or facilitate interactions.

C. It facilitates interactions between two distinct but interdependent groups of users, each of which benefits from the presence of the other.

In Microsoft Access, when using the Query Design tool, what is the primary purpose of utilizing the Group By function in the Total row?

A. To duplicate the records for each group defined in the query.

B. To specify which columns to include as unique records in the output without any aggregation.

C. To sort the query results alphabetically based on the grouped columns.

D. To aggregate data from one or more columns based on one or more other grouped columns.

E. To restrict the number of records returned in the query results based on group criteria.

D. To aggregate data from one or more columns based on one or more other grouped columns.

What of the following is correct about Web 2.0's "Smart Crowd"?
A. The smart crowd predominantly uses outdated technology, reducing effectiveness.
B. The smart crowd's divergent backgrounds make it difficult to control content flows.
C. There is a high financial cost to maintaining a smart crowd.
D. Smart crowds significantly reduce the speed of web interactions.

B. The smart crowd's divergent backgrounds make it difficult to control content flows.

Which of the following is NOT a primary value derived from network
effects?
A. Exchange
B. Complementary benefits
C. Initial cost reduction
D. Staying power

C. Initial cost reduction

Which of the following best describes the 'long tail effect'?
A. A decline in the variety of digital goods over time.
B. The dominance of a few best-selling products.
C. The significant role of niche markets in online sales.
D. The quick turnover rate of digital products.

C. The significant role of niche markets in online sales.

The marginal cost of digital goods is significantly lower compared to physical
goods.
A. True

B. False

A. True

Google’s PageRank algorithm is only based on the quality of content rather than the number of incoming links.

A. True

B. False

B. False

Database query can only be performed on a single table, not multiple tables.

A. True

B. False

B. False

What is a data asset in information systems?

Customer viewing/purchasing history that holds value and can be used strategically.

What is collaborative filtering?

Software that monitors trends among customers and personalizes an individual customer’s experience.

What is windowing?

Content is available to a given distribution channel for a specified time window under a different revenue model.

What are network effects?

When network effects are present, the value of a product or service increases as the number of users grows.

What are direct network effects?

Same side: value increases with number of users.

What are indirect network effects?

Cross side: value increases with complementary products or user group, e.g., two-sided platform.

What is Preferential Attachment?

The rich get richer, platforms/users with early advantages keep growing faster.

What is a risk of Preferential Attachment in platforms?

Dependence on few influencers.

What’s the difference between one-sided and two-sided markets?

One-sided: serves one user group (e.g., messaging apps); Two-sided: connects two interdependent groups (e.g., Uber).

What is viral promotion?

Allows individuals to boost activities rapidly to a wide audience starting with close contacts.

What are the three primary values derived from network effects?

Exchange, Staying power, Complementary benefits.

What is staying power?

Long-term viability of a product or service.

What are complementary benefits?

Products or services that add additional value to the primary product or service that makes up a network

What is an example of complementary benefits?

Each add-on of an iOS product enhances the value of choosing it over a rival.

What is first-mover advantage in markets with network effects?

Entering early can lock in users and make it hard for others to catch up.

What is Amazon’s overall strategy?

Provide a wide variety of products in large scale with low price to customers.

What are the three pillars of Amazon’s strategy?

Large selection, customer experience, low prices.

Why would even rivals trust AWS?

Lower costs, Scalability, Expertise, Speed and flexibility.

What is PageRank?

It ranks pages based on the number of incoming links, and how important they are.

What is SEO?

The process of improving a page’s organic search rankings.

What does a web crawler do?

Discovers documents (pages) for indexing and retrieval.

What is a cache used for?

Temporary storage to store index and speed up computing tasks (serving as the area where the user’s searches are actually performed).

What is the deep web?

A website that is not listed on a public server, not linked to from another public page, and not submitted to a search engine.

What is CPC (Cost Per Click)?

An ad payment model where advertisers only pay when someone clicks.

How are top-performing Google ads ranked?

By considering Maximum CPC, Advertisement’s quality score, and Ad formats/expected impact of extensions.

What is the formula for Ad Rank?

Ad Rank = Maximum CPC × Quality Score × Expected impact of extensions.

What determines ad quality score?

Click-through rate (CTR), relevance of the ad’s text to the query, and user experience on the landing page.

What is CPM?

Cost per thousand impressions.

What is CPA?

Cost per acquisition, paying when users perform a specific action like a purchase or signup.

What is PPC?

Pay-per-click, advertisers do not pay unless someone clicks.

What is a landing page?

The web page displayed when a user clicks on an ad.

What is ad rank?

The position of an advertisement on the search engine’s result screen.