1. According to the EC consumer behavior model, personal characteristics and environmental characteristics are classified as:

• independent variables.
• dependent variables.
• intervening variables.
• decision variables.

2. The major environmental variables influencing EC purchasing are:

• price, brand, frequency of purchase, and tangibility.
• social, cultural, community, regulatory, political, and legal.
• age, gender, ethnicity, education, and lifestyle.
• price, social, cultural, ethnicity, and lifestyle.

3. Banner advertising on Web sites helps trigger a realization that there is a gap between reality and a desired state, which occurs in the __________ stage of the EC purchase decision-making process.

• need identification
• information search
• evaluation, negotiation, and selection
• purchase, payment, and delivery

4. The unearned premium reserve:

• usually increases when premium volume of an insurer is decreasing.
• is a special group of assets reserved for catastrophe losses.
• consists primarily of cash and liquid near-cash investments.
• is a deferred income account carried on the balance sheet as a liability.
• none of the above.

5. Basically, a retrospectively rated insurance program is a:

• form of class rating.
• variation of schedule rating.
• cost-plus arrangement in which actual losses determine the final premium.
• a variation of experience rating, since past losses determine the current premium.
• none of the above.

6. Major differences between statutory accounting and Generally Accepted Accounting Principles (GAAP) include:

• the concept of non admitted assets.
• the way that the insurer's invested assets are valued.
• the matching of expenses and revenues.
• the degree of conservatism.
• all of the above.

7. What are the half-year and mid-quarter conventions?

8. What if a salary is deemed unreasonable by the IRS what happens then?

9. If an agent tells an insured that a breach of a policy condition will not affect the coverage, and a loss occurs, the insurer may:

• deny coverage if the breach contributed to the loss.
• be liable for the loss because the agent's acts are considered acts of the insurer.
• deny liability if the agent was not authorized to make such statements.
• deny liability because a waiver must be in writing before it is valid.
• none of the above.

10. Because of the fact that the terms of an insurance contract are fixed by the insurer instead of being determined by a bargaining process, the insurance policy is said to be:

• a contract of utmost good faith.
• an aleatory contract.
• a contract of indemnity.
• a unilateral contract.
• a contract of adhesion.

11. Major differences between statutory accounting and Generally Accepted Accounting Principles (GAAP) include:

• the concept of nonadmitted assets.
• the way that the insurer's invested assets are valued.
• the matching of expenses and revenues.
• the degree of conservatism.
• all of the above.

12. In general, what has been the impact of the introduction of EC on customer loyalty?

• Loyalty has increased because of targeted relationship marketing.
• Loyalty has decreased because of customers' ability to shop, compare, and shift vendors.
• There has been little change in loyalty because the impacts have cancelled each other out.
• It is not known whether loyalty has increased or decreased.

13. By increasing customer loyalty, EC companies can achieve each of the following benefits EXCEPT:

• lower marketing and advertising costs.
• lower warranty claims costs.
• lower resistance to competitors.
• lower transaction costs.

14. Procter & Gamble (P&G) used the Internet in the new product development of Whitestrips, a teeth-brightening product. Based on this experience, P&G:

• decided to add Internet research to its traditional marketing test model.
• learned that the cost of online surveys were about the same as similarly sized telephone surveys, but online surveys expedited research considerably.
• could not determine the target market segments for the Whitestrips.
• reduced the time-to-market from concept to market launch by approximately two years.