Ec15 TB Chapter 8 Test Bank

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EC15 TB chapter 8 - Test Bank
ECON (The University of British Columbia)
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E-commerce 2019: business. technology. society., 15e (Laudon/Traver)

Chapter 8 Ethical, Social, and Political Issues in E-commerce
1) Which of the following e-commerce technology dimensions creates greater opportunities for
cyberbullying?
A) information density
B) interactivity
C) social technology
D) ubiquity
Answer: C
Difficulty: Moderate
AACSB: Application of knowledge
Learning Objective: 8.1: Understand why e-commerce raises ethical, social, and political issues.
2) Which of the following e-commerce technology dimensions has the potential to reduce
cultural diversity in products?
A) ubiquity
B) interactivity
C) information density
D) global reach
Answer: D
3) Which of the following is not one of the four basic principles shared by ethical schools of
thought in western culture?
A) accountability
B) privacy
C) responsibility
D) liability
Answer: B
AACSB: Ethical understanding and reasoning
4) What is the first step in analyzing an ethical dilemma?

A) Define the conflict or dilemma and identify the higher-order values involved.
B) Identify the potential consequences of your opinions.
C) Identify the options you can reasonably take.
D) Identify and describe the facts.
Answer: D
5) Which ethical principle states that, when confronted with an ethical dilemma, individuals
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should take the action that achieves the greater value for all of society?
A) the Golden Rule
B) Risk Aversion
C) the Collective Utilitarian principle
D) the Social Contract Rule
Answer: C
6) Which ethical principle emphasizes putting oneself into the place of others and thinking of
oneself as the object of the decision?
A) the Golden Rule
B) Universalism
C) the Collective Utilitarian principle
Answer: A
7) Which ethical principle asks you to assume that virtually all tangible and intangible objects are
owned by someone else unless there is a specific declaration otherwise?
A) the Golden Rule
B) the Slippery Slope
C) the Social Contract Rule
D) No Free Lunch
Answer: D
8) Which ethical principle states that if an action cannot be taken repeatedly, then it's not right to
take at all?
A) Universalism
B) the Slippery Slope
D) the Golden Rule
Answer: B
9) Which ethical principle asks you to consider the impact of your decision if the principles
underlying your decision became an organizing principle of the entire society?
A) the Golden Rule
B) Risk Aversion
C) the Slippery Slope
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Answer: D
10) Which ethical principle tells you that it is wise to assume perfect information markets?
A) the Golden Rule
B) the New York Times test
D) the Collective Utilitarian principle
Answer: B
11) Which ethical principle states that when confronted with an ethical dilemma, an individual
should take the action that produces the least harm, or the least potential cost?
A) the Slippery Slope
B) Risk Aversion
C) No Free Lunch
D) the Collective Utilitarian principle
Answer: B
12) A social consequence of the richness of Internet information is:

A) an increase in shallowness.
B) an increase in the ease of creating misleading information.
C) very persuasive messages might reduce the need for multiple independent sources of
information.
D) an increase in vulnerability to hacking attacks.
Answer: C
Difficulty: Difficult
13) Downloading a music track owned by a record company without paying for it is an example
of a violation of:
A) patent law.
B) copyright law.
C) trademark law.
D) privacy law.
Answer: B
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14) Which of the following features of e-commerce technology can result in work and shopping
invading family life?
A) interactivity
B) ubiquity
C) information density
D) global reach
Answer: B
15) Liability is a feature of political systems in which a body of law is in place that permits
individuals to recover damages done to them by other actors, systems, or organizations.
Answer: TRUE
16) The principle of responsibility means that individuals, organizations, and societies should be
held accountable to others for the consequences of their actions.
Answer: FALSE
17) The ethical principle of Universalism states that if an action is not right for all situations,
then it is not right for any situation.
Answer: TRUE
18) Discuss in depth one ethical, social, or political issue that is presently in the news
surrounding the Internet and e-commerce.
Answer: A student might answer this issue by focusing on any one of a number of ethical, social,
or political issues currently surrounding the Internet and e-commerce. Possible topics include
privacy issues, intellectual property rights issues (copyright, patents, or trademarks), taxation,
Internet governance issues such as net neutrality and the impact of “big tech,” and Internet public
safety and welfare issues such as the regulation of online pornography, gambling, or the sale of
drugs.
AACSB: Analytical thinking; Information technology; Written and oral communication
19) Describe the five-step process that can be used to analyze an ethical dilemma. What other
guidelines are there to help in understanding a complicated ethical or moral situation?
Answer: The five-step process is:
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1. Identify and describe the facts. Find out who did what to whom, and where, when, and how.
It helps to get the opposing parties involved in an ethical dilemma to agree on the facts.
2. Define the conflict or dilemma and identify the higher-order values involved. Ethical,
social, and political issues always reference higher values. Otherwise, there would be no debate.
The parties to a dispute all claim to be pursuing higher values (e.g., freedom, privacy, protection
of property, and the free enterprise system).
3. Identify the stakeholders. Every ethical, social, and political issue has stakeholders: players
in the game who have an interest in the outcome, who have invested in the situation, and usually
who have vocal opinions. Find out the identity of these groups and what they want. This will be
useful later when designing a solution.
4. Identify the options that you can reasonably take. You may find that none of the options
satisfies all the interests involved, but that some options do a better job than others. Sometimes,
arriving at a "good" or ethical solution may not always be a balancing of consequences to
stakeholders.
5. Identify the potential consequences of your options. Some options may be ethically correct,
but disastrous from other points of view. Other options may work in this one instance, but not in
other similar instances. Always ask yourself, "What if I choose this option consistently over
time?"
Other things to consider when appraising an ethical dilemma include basic ethical concepts such
as responsibility, accountability, and liability and how these play into the situation. Additionally,
you can judge the situation against candidate ethical principles, such as the Golden Rule, the
Slippery Slope theory, Universalism, the Collective Utilitarian principle, Risk Aversion theory,
the No Free Lunch theory, the New York Times test (Perfect Information rule), and the Social
Contract rule. Actions that do not easily pass these guidelines deserve some very close attention
and a great deal of caution because the appearance of unethical behavior may do as much harm
to you and your company as the actual behavior.
AACSB: Analytical thinking; Written and oral communication; Ethical understanding and
reasoning
20) Which of the following basic ethical concepts plays an important role in defining privacy?
A) responsibility
B) accountability
C) liability
D) due process
Answer: D
Learning Objective: 8.2: Understand basic concepts related to privacy and information rights,
the practices of e-commerce companies that threaten privacy, and the different methods that can
be used to protect online privacy.
21) Which of the following is not aimed at strengthening the ability of law enforcement agencies
to monitor Internet users without their knowledge?
A) USA PATRIOT Act
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B) Homeland Security Act

C) Communications Assistance for Law Enforcement Act
D) USA Freedom Act
Answer: D
22) Which of the following is used to track individuals as they move among thousands of
websites?
A) first-party cookies
B) digital wallets
C) advertising networks
D) shopping carts
Answer: C
AACSB: Information technology
23) Which of the following uses software installed at the ISP level to track user clickstream
behavior?
A) shopping carts
B) trusted computing environments
C) deep packet inspection
D) DRM
Answer: C
Difficulty: Easy
24) Which of the following statements about industry self-regulation regarding privacy is not
true?
A) The AdChoices program is an industry-sponsored initiative to encourage websites to be more
transparent about how they use personal information and to make it more likely that appropriate
ads are shown to users.
B) The NAI offers consumers a global opt-out feature to prevent network advertising agencies
from placing cookies on a user's computer.
C) Industry efforts have not so far succeeded in reducing American fears of privacy invasion.
D) Critics argue that the most effective form of industry self-regulation to safeguard privacy are
online seal programs that attest to a company's privacy policies.
Answer: D
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25) The Spokeo case involved a claim for damages based on which of the following?
A) Fair Credit Reporting Act
B) Digital Millennium Copyright Act
C) Anticybersquatting Consumer Protection Act
D) Defend Trade Secrets Act
Answer: A
26) Which of the following requires financial institutions to inform consumers of their privacy
policies and permits consumers some control over their records?
A) Freedom of Information Act
B) Gramm-Leach-Bliley Act
C) COPPA
D) HIPAA
Answer: B
27) Which of the following is a core Fair Information Practices (FIP) principle?
A) Choice/Consent
B) Access/Participation
C) Security
D) Enforcement
Answer: A
28) Which of the FTC's Fair Information Practices (FIP) principles requires identification of the
collector of data?
A) Notice/Awareness
B) Choice/Consent
C) Access/Participation
D) Security
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Answer: A
29) Which of the FTC's Fair Information Practices (FIP) principles requires opt-in or opt-out
policies to be in place?
A) Notice/Awareness
B) Choice/Consent
C) Access/Participation
D) Security
Answer: B
30) What is the FTC recommendation regarding choice as it relates to personally identifiable
information (PII)?
A) Require firms to have consumers affirmatively opt-in before PII is collected.
B) Require firms to allow consumers to opt-out before PII is collected.
C) Make collection of PII illegal.
D) Require robust notice only before PII is collected.
Answer: A
31) "Do Not Track" falls under which of the following principles in the FTC's current privacy
framework?
A) Privacy by Design
B) Simplified Choice
C) Greater Transparency
D) Scope
Answer: B
32) Which of the following technologies reduces the ability to merge different files and de-
anonymize consumer data?
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A) anonymous surfing
B) anonymous remailers
C) differential privacy software
D) public key encryption
Answer: C
33) Which of the following is an example of a pay-for-privacy (PFP) approach?

A) AT&T’s GigaPower service
B) Meeco.me’s life management tool
C) Digi.me’s app
D) The Hub of All Thing’s open source project
Answer: A
34) All of the following are required for information to be considered a trade secret except:
A) it must have commercial value to its owner.
B) the owner must have taken steps to protect it.
C) it must be unique.
D) it must be something that others do not know.
Answer: C
Learning Objective: 8.3: Understand the various forms of intellectual property and the
challenges involved in protecting it.
35) According to data from Pew Research Center, which of the following is the action which the
highest percentage of Internet users has taken to preserve their privacy online?
A) used an anonymous web browsing service
B) encrypted their communications
C) cleared web browser history and cookies
D) posted comments online anonymously
Answer: C
36) Which of the following statements about the General Data Protection Regulation (GDPR) is
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not true?
A) The GDPR replaces the Data Protection Directive.
B) The GDPR applies to any firm operating in any E.U. country.
C) The GDPR eliminate the right to be forgotten.
D) The GDPR limits the ability of companies to use data for purposes other than those for which
it was collected.
Answer: C
37) Which of the following is not a privacy advocacy group?

A) EPIC
B) TIO
C) CDT
D) EFF
Answer: B
38) Which of the following was the first state law in the United States requiring owners of
commercial websites or online services to post a privacy policy.
A) California Consumer Privacy Act
B) California Net Neutrality Act
C) California Electronic Communications Privacy Act
D) California Online Privacy Protection Act
Answer: D
39) In the United States, Google is not required to remove results from its search engine if
requested.
Answer: TRUE
40) The main objective of the GDPR is to strengthen the rights of citizens to their own personal
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information and to strengthen oversight of firms to ensure that they implement these individual
rights.
Answer: TRUE
41) The opt-in model for informed consent requires an affirmative action by the consumer before
a company can collect and use information.
Answer: TRUE
42) The Federal Communications Commission's privacy rules, applicable to broadband ISPs,
were repealed by Congress in 2017.
Answer: TRUE
43) The TrustArc program is an industry-sponsored initiative to encourage websites to be more

transparent about how they use personal information, and to make it more likely that appropriate
ads are shown to users.
Answer: FALSE
44) In what ways has the European environment turned against American firms such as
Facebook and Google?
Answer: The EU General Data Protection Regulation (GDPR) is clearly aimed at Facebook,
Google, Twitter, and other ad-based online businesses that build collections of personal data by
tracking individuals across the Web, merging that data with data from firms and data brokers in
order to build comprehensive digital images (profiles) and to target these persons with ads.
Google and Facebook are both extremely popular in Europe, and dominate their markets, but at
the same time are widely criticized for invading privacy and not protecting PII. European
regulators and politicians point to Facebook allowing Cambridge Analytica, a political consulting
firm, to gain access to over 100 million user accounts in 2016 and a 2018 data breach of 50
million Facebook accounts as evidence that Facebook is unable to protect the privacy of
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Europeans. Google is also in the cross-hairs of EU regulators for its monopoly on search in the
EU, abuse of that monopoly by ranking Google services above others on its search pages, and
abuse of its ownership of the Android operating system by requiring smartphone manufacturers
to pre-install Google apps on Android phones, as well as evading taxes on revenues earned in EU
countries. Both firms, along with Microsoft’s Windows 10 operating system, are accused of
“deceit by design” through the use of threats against users who choose strong privacy protections
on their services, and screen designs that encourage users to give up as much personal
information as possible.
AACSB: Application of knowledge; Written and oral communication
45) How is it possible to measure the strength of privacy policies?

Answer: Very little attention has been paid to measuring the strength of privacy policies for
individual companies, comparing them to other companies, and understanding how privacy
policies have changed over time at a specific company. However, researchers have developed a
measure of privacy policies by applying 10 privacy policy principles when reviewing policies.
These principles are as follows:
• Can the privacy policy be easily found, reviewed, and understood by users?
• Does the privacy policy fully disclose how personal information will and will not be used by
the organization? Is information about users ever shared or sold without users' explicit
permission?
• Can users decide if they want to participate?
• Can users decide and actively indicate that they agree to be profiled, tracked, or targeted?
• Can users decide how and if their sensitive information is shared?
• Are users able to change any information that they input about themselves?
• Can users decide who can access their information?
• Are users notified promptly if their information is lost, stolen, or improperly accessed?
• Can users easily report concerns and get answers?
• Do users receive a copy of all disclosures of their information?
The dimensions are measured on a four-point scale from 0 to 4 (0 meaning the privacy policy
fails to meet the criterion and 4 indicating the criterion was fully achieved).
46) Describe the fantasy sport business and the issues it raises.
Answer: Two firms dominate the online fantasy sports market: DraftKings and FanDuel. Both
firms advertise heavily during college and professional sports games. In fantasy sports, players
assemble their ideal fantasy teams, drafting real-life athletes to their team, and then, based on the
performance of those players in real games, they can win significant prizes. The most popular
sports are college football and basketball, and professional football and baseball. Players are
given a budget that they can use to draft players, and some of the combined fees for each game
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make up the pool for which players compete. Entry fees range widely from less than a dollar, to
over $1,000. Fantasy sports were exempted from the Unlawful Internet Gambling Enforcement
Act of 2006 (UIGEA) under industry pressure from the then much smaller fantasy sports
business. The industry argued that fantasy sports are not gambling, but instead games of skill like
chess or Scrabble.
As the industry has grown to billion-dollar venture capital valuations, however, and with
allegations of cheating customers, deceptive practices, lack of transparency, and insider
irregularities, state and federal legislators are holding hearings and considering regulations. In
2015, the New York State attorney general told both DraftKings and FanDuel to stop taking
entries from New York State residents because, in the state's opinion, their operations constituted
illegal gambling and the sites engaged in false and misleading advertising. Citibank cut off credit
card processing for both sites.
After lengthy legislative hearings and strong support from sports fans, New York reversed its
position, agreeing that when played fairly, fantasy sports is a game of skill, not gambling. The
governor signed legislation legalizing fantasy sports as a state regulated industry, claiming it
would add $4 billion to the state's education fund. The sites also agreed to pay $12 million in
fines. In November 2016, DraftKings and FanDuel proposed to merge. Together the two
companies control more than 90% of the U.S. market. In June 2017, the FTC, along with the
attorneys general of California and the District of Columbia, sued to block the merger and in July
2017 the companies decided to abandon the plan.
Learning Objective: 8.5: Identify major public safety and welfare issues raised by e-commerce.
47) Define privacy, information privacy, the right to be forgotten, and informed consent.
Answer: Privacy is the moral right of individuals to be left alone, free from surveillance or
interference from other individuals including the state.
Information privacy includes both the right to prohibit certain information from being collected
by either governments or businesses, and the right to control the use of whatever information is
collected about you. The core concept is the control of your own personal information.
The right to be forgotten is the claim of individuals to be able to edit and delete personal
information online.
Informed consent means that an individual has knowledge of all the material facts needed to
make a rational decision and consent has been given to collect information. In the United States,
business firms and government agencies can gather transaction data from the marketplace and
use it for other marketing purposes without the informed consent of the individual. In Europe, on
the other hand, this is illegal. European businesses can only use transaction data to support the
current transaction if they have asked for and received the informed consent of the individual.
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48) Discuss the Authors Guild's lawsuit against Google with respect to Google's Library Project
and explain why the courts ultimately ruled in Google's favor.
Answer: Google's Library Project involved an effort by Google to scan all the books in several
university and public libraries, and then make snippets and parts of the book available online
without receiving permission from the publishers or paying royalties. Google said it would never
show a full page, just relevant portions of a page in response to searches. In 2005, the Authors
Guild and the large book publishers filed a lawsuit seeking to prevent Google from implementing
the Library Project. Google argued that the Library Project constituted fair use of publishers'
copyrighted works because it only published snippets. Moreover, Google claimed that it was
simply helping libraries do what they are intended to do, namely, lend books. Library lending is
considered a fair use following an agreement in the late 1930s with publishers, and such lending
was codified into the Copyright Act of 1976. Google claimed that helping libraries make books
more available to the public was in the broader public interest and extended existing rights of
libraries to encourage book availability. In 2013, a federal court finally found in favor of Google
without reservation by ruling that Google's scanning and making snippets of text available to the
public was "fair use" under U.S. copyright law. The judge believed the project had a broad public
purpose of making it easier for students, researchers, teachers, and the general public to find
books, while also preserving consideration for author and publisher rights. The Google project
was "transformative" in the court's view, giving books a new character and purpose, making it
easier to discover old books, and leading to increased sales. The Supreme Court ruled in 2016
that Google's Library Project was fair use, and the matter is settled from a legal perspective. In
the meantime, the project itself has stalled, and efforts to scan so-called orphan books in libraries
where the copyright holder could not be identified have ended. Google now appears less than
enthusiastic about pursuing the project, in part, analysts believe, because the project offered no
hope of ever making a return on the investment and created a rift with the author and publishing
community upon which it depends for content against which to show ads.
49) How does Apple’s Intelligent Tracking Prevention (ITP) technology work?
Answer: ITP uses machine learning techniques in the browser (not on a central server) to
identify which cookies represent a tracking threat and prevents them from communicating with
their servers, disarming them. Safari notifies the user when a cookie attempts to connect to a
third-party server, asking users if they want to allow it. If tracking cookies make three attempts
to communicate with external servers in 24 hours despite user choices, they are eliminated from
the browser.
50) Which of the following cases has chipped away at the Digital Millennium Copyright Act
(DMCA) safe harbor protection?
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A) Field v. Google, Inc.

B) Alice Corporation Pty. Ltd. v. CLS Bank International
C) BMG Rights Management v. Cox Communications
D) Perfect 10, Inc. v. Amazon.com, Inc. et al.
Answer: A
51) What is the major reason why the Internet has such potential for destroying traditional
conceptions and implementations of intellectual property law?
A) the ability to make perfect copies of digital works at little cost
B) the anonymous nature of the Internet
C) the support for instant peer-to-peer communication
D) the use of standards for file formats
Answer: A
Difficulty: Easy
52) Which of the following protects original forms of expression in a tangible medium?
A) trade secret law
B) copyright law
C) patent law
D) trademark law
Answer: B
53) How long does copyright protection extend for corporate-owned works?
A) 25 years
B) 50 years
C) 75 years
D) 95 years
Answer: D
54) Which of the following situations would not qualify for the fair use exception to U.S.
copyright law?
A) A professor clips a newspaper article just before class and distributes copies of it to his class.
B) A journalist quotes a paragraph from a book in a review of the book.
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C) A student copies a photograph of his favorite band from a website created by the band's record
label and places it on the student's personal website.
D) Google posts thumbnail images of books in the Google Book Search Project.
Answer: C
AACSB: Analytical thinking
55) All of the following are factors that will be considered in determining whether use of
copyrighted material is "fair use" except the:
A) nature of the work used.
B) amount of the work used.
C) market effect of the use.
D) free availability of the work on the Web.
Answer: D
56) All of the following are possible penalties for violating the Digital Millennium Copyright Act
(DMCA) except:
A) up to ten years imprisonment for a first offense.
B) fines up to $500,000 for a first offense.
C) fines up to $1 million for a repeat offense.
D) restitution to the injured parties for any losses due to infringement.
Answer: A
57) All of the following statements about the Digital Millennium Copyright Act (DMCA) are
true except:
A) the DMCA makes it illegal to circumvent technological measures to protect works.
B) the DMCA makes Internet Service Providers (ISPs) responsible and accountable for hosting
websites or providing services to infringers regardless of whether the ISP is aware of
infringement.
C) the DMCA requires search engines to block access to infringing sites.
D) the DMCA allows libraries to make digital copies of works for internal use only.
Answer: B
58) Which of the following allows someone to obtain an exclusive monopoly on the ideas behind
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an invention for 20 years?

A) copyright law
B) trade secret law
C) patent law
D) trademark law
Answer: C
59) All of the following statements about patents are true except:
A) it is more difficult to obtain a copyright than it is to obtain a patent.
B) the four types of inventions protected by patent law are machines, manmade products,
compositions of matter, and processing methods.
C) computer programs can be patented.
D) in order to be patented, an invention must be nonobvious.
Answer: A
60) Which case was instrumental in paving the way for Internet business methods patents?
A) Bilski et al. v. Kappos
B) State Street Bank & Trust Co. v. Signature Financial Group, Inc.
C) Alice Corporation Pty. Ltd. v. CLS Bank International
D) Ticketmaster Corp. v. Tickets.com
Answer: B
61) Which of the following is considered one of the most contentious e-commerce patents?
A) Acacia Technologies’ patent on streaming video media transmission
B) Priceline’s patent on buyer-driven name your price tools
C) Amazon’s patent on one-click purchasing
D) Google's PageRank patent
Answer: C
62) Disputes over federal trademarks involve establishing:

A) underlying ideas.
B) intent.
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C) piracy.
D) infringement.
Answer: D
63) Registering a domain name similar or identical to trademarks of others to extort profits from
legitimate holders is an example of:
A) cybersquatting.
B) cyberpiracy.
C) framing.
D) metatagging.
Answer: A
Difficulty: Easy
64) Which of the following handles cybersquatting cases under its Uniform Dispute Resolution
procedures?
A) ICANN
B) FTC
C) WIPO
D) USPTO
Answer: C
65) Registering a domain name similar or identical to trademarks of others to divert web traffic
to their own sites is an example of:
A) cybersquatting.
B) cyberpiracy.
C) framing.
D) metatagging.
Answer: B
66) Registering the domain name Faceboik.com with the intent to divert web traffic from people
misspelling Facebook.com is an example of:
A) cybersquatting.
B) typosquatting.
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C) metatagging.
D) linking.
Answer: B
Difficulty: Easy
67) In which of the following cases did the U.S. Supreme Court rule that basic business methods
cannot be patented?
A) State Street Bank & Trust v. Signature Financial Group, Inc.
B) Bilski et al. v. Kappos
C) Alice Corporation Pty. Ltd. v. CLS Bank International
D) BMG Rights Management v. Cox Communications
Answer: C
68) The display of a third-party's website or page within your own website is called:
A) cybersquatting.
B) metatagging.
C) framing.
D) deep linking.
Answer: C
69) Safe harbor provisions of the Digital Millennium Copyright Act (DMCA) were at issue in all
the following lawsuits except:
A) a lawsuit filed by the Authors Guild and five major publishing companies against Google
B) a lawsuit brought by Viacom against YouTube and Google
C) BMG Rights Management v. Cox Communications.
D) Mavrix Photographs, LLC v. LiveJournal, Inc.
Answer: A
70) According to the chapter-ending case study, all of the following are examples of big tech
firms that have engaged in activities that raise antitrust issues, except:
A) Amazon
B) Apple
C) Google Drive
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D) Facebook
Answer: B
Learning Objective: Learning Objective: 8.4: Understand how the Internet is governed and why
taxation of e-commerce raises governance and jurisdiction issues.
71) Which of the following cases involved the issue of keywording?

A) Ticketmaster Corp. v. Tickets.com
B) Bernina of America, Inc. v. Fashion Fabrics Int'l, Inc.
C) Government Employees Insurance Company v. Google, Inc.
D) E. & J. Gallo Winery v. Spider Webs Ltd.
Answer: C
72) Which of the following involves bypassing the target site's home page and going directly to a
content page?
A) cybersquatting
B) metatagging
C) framing
D) deep linking
Answer: D
73) All of the following cases involved the doctrine of fair use except:
A) Spokeo v. Robins
B) Perfect 10, Inc. v. Amazon.com, Inc. et al.
C) Field v. Google, Inc.
D) Kelly v. Arriba Soft.
Answer: A
74) Copyright protection protects against others copying the underlying ideas in a work.
Answer: FALSE
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75) Owners of gTLDs have the right to create and sell new domains with the gTLD suffix.
Answer: TRUE
76) Google defended its Library Project on the grounds of fair use.
Answer: TRUE
77) Describe the purpose of intellectual property law and outline the main types of intellectual
property protection.
Answer: The purpose of intellectual property law is to balance two competing interests: the
public and the private. The public interest is served by the creation of inventions, works of art,
music, literature, and other types of intellectual expression. The private interest is served by
rewarding creators of intellectual property by a time-limited monopoly that grants exclusive use
to the creator.
There are three main types of intellectual property protection: copyright, patent, and trademark
law. Copyright law protects original forms of expression such as books, periodicals, and other
forms of written expression, art, drawings, photographs, music, movies, performances, and
computer programs. Patents grant the owner a 20-year exclusive monopoly on the ideas behind
an invention. There are four types of inventions for which patents are granted under patent law:
machines, manmade products, compositions of matter, and processing methods. Trademark law
is used to protect trademarks — marks used to identify and distinguish goods and indicate their
source.
AACSB: Analytical thinking; Written and oral communication
78) Which of the following Supreme Court cases established that states can compel online
retailers to collect and remit sales taxes even if they do not have a physical presence within the
state?
A) South Dakota v. Wayfair
B) Bilski et al. v. Kappos
C) Quill v. North Dakota
D) Alice Corporation v. CLS Bank International
Answer: A
Learning Objective: 8.4: Understand how the Internet is governed and why taxation of e-
commerce raises governance and jurisdiction issues.
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79) The Day of Action was a protest to proposed changes in regulations pertaining to which of
the following?
A) fantasy sports
B) Internet sales taxes
C) net neutrality
D) the online sale of prescription drugs
Answer: C
80) Net neutrality refers to the idea that Internet service providers (ISPs), including cable
Internet and wireless carriers, should treat all data on the Internet in the same manner, and not
discriminate or price differentially by content, protocol, platform, hardware, or application.
Answer: TRUE
81) Explain why the taxation of e-commerce raises governance and jurisdiction issues.
Answer: The taxation of e-commerce illustrates the complexity of the governance and
jurisdictional issues in the global economy. Most of the issues surround the sales tax imposed by
various states or countries on products sold to residents of their state or country. Governments
the world over rely on sales taxes to fund various types of government initiatives and programs
including the building of roads, schools, and sewers or other utilities to support business
development.
In the United States, between the fifty states and the multiple counties and municipalities, there
are thousands of different tax rates and policies. For example, food is not taxed at all in some
states, and there are a myriad of different exceptions and inclusions depending on the locality.
The development of MOTO (mail order/telephone) retail in the 1970s began the discussion on
the taxing of remote sales. State and local tax authorities wanted MOTO retailers to collect taxes
based upon the address of the recipients, but the Supreme Court originally ruled that states could
not force MOTO retailers to collect taxes unless the business had a physical presence in the state.
Legislation to the contrary was never able to garner sufficient support in Congress due to
pressure from the catalog merchants, leaving intact an effective tax subsidy for MOTO
merchants.
The explosive growth of e-commerce raised the issue of how — and if — to tax online sales.
Since its inception, e-commerce has benefited from a tax subsidy of up to 13% for goods shipped
to high sales tax areas. Local retail merchants complained bitterly about the e-commerce tax
subsidy. E-commerce merchants argued that e-commerce needed to be nurtured and encouraged,
and that in any event, the crazy quilt of sales and use tax regimes would be difficult to administer
for Internet merchants. Online giants like Amazon originally argued they should not have to pay
taxes in states where they had no operations because they did not benefit from local schools,
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police, fire, and other governmental services. State and local governments meanwhile saw
billions of tax dollars slipping from their reach. As Amazon's business model changed with its
building of large distribution centers close to urban areas to enable next-day delivery, its
opposition to paying sales taxes softened. In 2015, the Supreme Court upheld a challenge to a
Colorado law that would have required firms to report online sales to state residents as one step
to ensure the residents paid taxes on such sales in Colorado, which is required by state law.
In 2018, in the landmark South Dakota v. Wayfair case, the Supreme Court reversed its earlier
position and ruled that states can levy sales taxes on online sales. The businesses that may be
most drastically affected by the Wayfair ruling are smaller sellers, such as third-party Amazon
merchants, sellers on smaller marketplaces such as Etsy, and other independent e-commerce
retailers who will now have to comply with thousands of tax jurisdiction requirements across the
country. These sellers will be forced to invest in tax reporting software and other compliance
technology, which may prove prohibitive for businesses without the profit margins to sustain the
additional costs. Congress is expected to introduce legislation protecting small businesses from
potential overreach from states by 2019. A group of senators from states that do not levy sales
taxes have already put forth a bill that would reverse the Wayfair decision and reintroduce the
provisions of the Quill ruling and regulate the powers of the states to control interstate e-
commerce. It’s not clear that this bill will succeed where so many others have failed, but at the
very least, small businesses will now be eagerly looking to Congress to create federal guidelines
for regulatory compliance, relieving businesses of much of the burden facing them in the wake of
Wayfair.
AACSB: Analytical thinking; Written and oral communication
82) Which of the following is not an e-commerce public safety and welfare issue?
A) regulation of gambling
B) regulation of cigarette sales
C) regulation of pornography
D) regulation of taxation
Answer: D
83) The Children's Internet Protection Act (CIPA) has been struck down by the U.S. Supreme
Court as unconstitutional.
Answer: FALSE
84) Section 230 of the Communications Decency Act (CDA) provides immunity for providers
and users of interactive computer services (such as ISPs and websites) from being considered a
publisher that might be liable for harmful content posted by others.
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Answer: TRUE
85) Online gambling is now legal throughout the United States.

Answer: FALSE
Difficulty: Easy
24

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EC15 TB chapter 8 - Test Bank

ECON (The University of British Columbia)

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E-commerce 2019: business. technology. society., 15e (Laudon/Traver)

4) What is the first step in analyzing an ethical dilemma?

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D) the Social Contract Rule

12) A social consequence of the richness of Internet information is:

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B) Homeland Security Act

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AACSB: Application of knowledge

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33) Which of the following is an example of a pay-for-privacy (PFP) approach?

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37) Which of the following is not a privacy advocacy group?

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43) The TrustArc program is an industry-sponsored initiative to encourage websites to be more

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45) How is it possible to measure the strength of privacy policies?

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A) Field v. Google, Inc.

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an invention for 20 years?

62) Disputes over federal trademarks involve establishing:

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71) Which of the following cases involved the issue of keywording?

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85) Online gambling is now legal throughout the United States.

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