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Economics, 7/e

David Begg, Birkbeck College, University of London
Rudiger Dornbusch
Stanley Fischer

The information economy

Self-test Questions

Select the radio button corresponding to your choice of answer for each question, and then click on "Submit Answers" to find out how many you answered correctly.


1	The benefits of e-products are that they can be

		A)	transmitted rapidly
		B)	transmitted accurately
		C)	transmitted cheaply
		D)	all of the above

2	Buyers' need to____________ explains why sellers allow ______________

		A)	switch costs, information overload
		B)	experience, sampling and browsing
		C)	switch costs, sampling and browsing
		D)	experience, information overload

3	If a potential internet customer is confused by the volume of information, the internet supplier should use a____________

		A)	filter
		B)	editor
		C)	screening device
		D)	web designer

4	Suppliers of e-products are likely to subsidize customers' early entry to achieve _________

		A)	high sales volume
		B)	presence in the market place
		C)	network externalities
		D)	high share price

5	The high set up cost and low marginal cost of supplying e-products suggests that the most effective pricing is _____________

		A)	a once and for all payment
		B)	price equal to marginal cost
		C)	price equal to average cost
		D)	a two-part tariff

6	Software suppliers often provide full and 'light' editions of the same software at different prices, this is an example of ____________

		A)	bundling
		B)	switching costs
		C)	versioning
		D)	exploitation

7	Bundling different products reduces the need for _______________

		A)	switching costs
		B)	versioning
		C)	special offers
		D)	discrimination

8	The now defunct Betamax video cassette recorder technology is an example of the power of a ____________

		A)	standard
		B)	technology
		C)	product
		D)	patent

9	Asset price bubbles are caused by

		A)	good harvests
		B)	expectations
		C)	high consumer spending
		D)	tax cuts

10	When a speculative bubble bursts we expect prices to ________

		A)	rise
		B)	not move
		C)	fall
		D)	fluctuate around their current level

11	Information technology may allow personalized pricing that will facilitate the development of competitive markets

		A)	TRUE
		B)	FALSE

12	A strategic alliance is when group suppliers provide a range of competing products

		A)	TRUE
		B)	FALSE

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