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Test your basic knowledge |
Business Competition
Start Test
Study First
Subject
:
business-skills
Instructions:
Answer 50 questions in 15 minutes.
If you are not ready to take this test, you can
study here
.
Match each statement with the correct term.
Don't refresh. All questions and answers are randomly picked and ordered every time you load a test.
This is a study tool. The 3 wrong answers for each question are randomly chosen from answers to other questions. So, you might find at times the answers obvious, but you will see it re-enforces your understanding as you take the test each time.
1. Revenue-Costs
Barrier to entry
Examples of Monopolistic Competition
Profit
Conglomerate Merger
2. A measure of the difference between price and marginal cost as a fraction of the product's price. L=(P-MC)/P - refactoring gives: P=MC(1/(1-L)) - which gives us the "1/(1-L)" markup factor
Prisoner's dilemma
Lerner index
Import competition
Examples of Oligopoly
3. The practice of bundling several different products together and selling them at a single "bundle" price
Ownership of a Key Input
Price Leadership
Commodity bundling
Open Collusion
4. A situation in which competing firms must make their individual decisions without knowing the decisions of their rivals
Third-Degree Price Discrimination
Minimum efficient scale (full capacity)
Prisoner's dilemma
Simultaneous decision games
5. Competition based on factors that are not related to price - such as product quality - service and financing - business location - and reputation
Product Differentiation
Nonprime competition
Price matching
Repeated game
6. Pricing strategy in which a firm intentionally varies its price in an attempt to "hide" price information from consumers and rivals
Price discrimination
Randomized pricing
Bargaining Power of Suppliers
Rent-seeking behavior
7. Involves price-fixing
Payoff table
Covert Collusion
Credible threat
Non-price competition
8. A pricing strategy in which profits gained from the sale of one product are used to subsidize sales of a related product
Cross-subsidy pricing
Dominant strategy
Tacit collusion
Empty threat
9. In game theory - game where parties make their moves in turn - one party making the first move followed by the other
Second-Degree Price Discrimination
Sequential game
Contestable market
Inter-industry competition
10. When each firm has an incentive to cheat - but both are worse off if both cheat -- illustrates why cooperation is difficult to maintain even when it is mutually beneficial to do so
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11. The maximum price that a buyer is willing to pay for a good - or the minimum price that a seller will accept
Reservation Price
Profit
Limit price
Mutual interdependence
12. Keeps the price just where it is to maximize profit
Cournot equilibrium
Perfect Competitor Making a Profit
Cutthroat Competition
Commodity bundling
13. In game theory - a game that is played again sometime after the previous game ends
Perfect Competition (characteristics)
Repeated game
Dominant strategy equilibrium
Prisoner's dilemma
14. Steel - autos - colas - airlines
Examples of Oligopoly
Dominant strategy
Concentration Ratio
Non-price competition
15. If buyers have enough bargaining power - they can insist on lower prices - higher-quality products - or additional services
Dominant strategy
Bargaining Power of Buyers
Covert Collusion
Prisoners' dilemma
16. A strategy in which a firm advertises a price and a promise to match any lower prices offered by a competitor
Price matching
Interdependence
Rothschild index
Mutual Interdependence
17. The competition that domestic firms encounter from the products and services of foreign producers
Economies of scale
Simultaneous consumption
Basis for Product Differentiation
Import competition
18. A strategy or action that always provides the best outcome no matter what decisions rivals make
Pure monopoly
Rothschild index
Dominant strategy
Import competition
19. The players end up worse off than they would if they were able to cooperate; -the pursuit of self-interest does not promote the social interest in these games
Inefficiency
Disappearing invisible hand
One-shot game
Herfindahl-Hirschman index (HHI)
20. A table that shows the payoffs for every possible action by each player for every possible action by the other player
Natural Monopoly (local phone or electric company)
Undifferentiated
Bargaining Power of Buyers
Payoff matrix
21. A product's ability to satisfy a large number of consumers at the same time
Product differentiation
First-mover advantage
Strategic behavior
Simultaneous consumption
22. Pricing strategy in which identical products are packaged together in order to enhance profits by forcing customers to make an all-or-none decision to purchase
Perfect Competitor Making a Profit
Block pricing
Price Leadership
Examples of Monopolistic Competition
23. The practice of charging different prices to consumers for the same good or service
Price discrimination
Peak-load pricing
The Threat from Potential Entrants Firms
Monopolistic Competition
24. A merger between two firms in the same industry. Example: 2004 K-Mart merged with Sears
Common knowledge
Socially optimal price
Horizontal Merger/Integration
Dominant firm oligopoly
25. A merger between firms who have a buyer/supplier relationship. Example: BF Goodrich merging with rubber plantations
Double marginalization
Extensive-form game
Price matching
Vertical Merger
26. A measure of market power - the percentage of all sales that is accounted for by the four or eight largest firms in the market
Concentration Ratio
Bertrand oligopoly
Economies of scale
Dominant strategy equilibrium
27. 1/(1+i)n
Stackelberg oligopoly
Price matching
Concentration Ratio
Present Value (PV)
28. A strategy that is contingent on the past play of a game and ion which some particular past action "triggers" a different action by a player
Bertrand oligopoly
Cooperation
Price war
Trigger strategy
29. A measure of the sensitivity to price of a product group as a whole relative to the sensitivity of the quantity demanded of a single firm to a change in its price. R=Et/Ef
Oligopoly
Perfect Competition Long Run Supply
Monopolistic Characteristics:
Rothschild index
30. An attempt by a firm to convince buyers that its product is different from the products of other firms in the industry
Second-Degree Price Discrimination
Payoff matrix
Product differentiation
Limit price
31. Both players have dominant strategies and play them
Non-cooperative equilibrium
Subgame perfect equilibrium
Limit price
Dominant strategy equilibrium
32. Physical differences - Convenience - Ambience - Reputations - Appeals to vanity - Unconscious fears and desires - Snob appeal - Customized products
Conglomerate Merger
Basis for Product Differentiation
Trigger strategy
Simultaneous-move game
33. Actions taken by firms to plan for and react to competition from rival firms
Strategic behavior
Bargaining Power of Suppliers
Present Value (PV)
Indefinitely repeated game
34. (1) Economies of Scale; (2) Economies of Scope; (3) Cost Complementarity; and (4)Patents & Other Legal Barriers
Sequential-move game
Transfer pricing
Primary Sources of Monopolistic Power
Stackelberg oligopoly
35. Game in which one player makes a move after observing the other player's move
Oligopoly
Extensive-form game
Sequential-move game
Cutthroat Competition
36. The derivative of total revenue
Double marginalization
Tacit collusion
Marginal Revenue
Profit
37. Actions taken by a firm to achieve a goal - such as maximizing profits
Business strategy
Bargaining Power of Suppliers
Inter-industry competition
Credible threat
38. A situation in which all decision makers know the payoff table - and they believe all other decision makers also know the payoff table
High Price Elasticity
Common knowledge
Nonprime competition
Sweezy oligopoly
39. An agreement among firms in a market about quantities to produce or prices to charge in attempts to limit competition
Inefficiency
Implicit Collusion
Cross-subsidy pricing
Collusion
40. Operates like the alleged Mafia. Region division of the market among the firms in the industry
Competitive market
Open Collusion
Cooperation
Subgame perfect equilibrium
41. Toothpaste - shampoo - restaurants - banks
Inter-industry competition
Perfect Competition Barriers to Entry
Examples of Monopolistic Competition
Import competition
42. Where a firm can charge different groups of consumers different prices for the same product. Example: student or senior discounts
Leader
Examples of Oligopoly
Third-degree price discrimination
Nash equilibrium
43. Demand line is above ATC curve
Perfect Competitor Making a Profit
Cooperative equilibrium
Socially optimal price
Perfect Competition Short Run Supply
44. Many buyers and sellers - product homogeneity - low cost and accurate information - free entry and exit - best regarded as a benchmark
Monopoly (characteristics)
Perfect Competition (characteristics)
First-mover advantage
Payoff matrix
45. Occurs when a firm produces output - whatever its level - at a higher cost than is necessary to produce it
Stackelberg oligopoly
Inefficiency
Monopolistic Competition
Fair return price
46. An oligopoly in which the sales of the leading (top four) firms are distributed unevenly among them
Bertrand oligopoly
Ownership of a Key Input
Non-price competition
Unbalanced Oligopoly
47. A firm whose price decisions are tacitly accepted and followed by others in the industry
Perfect Competition Long Run Supply
Extensive-form game
High Price Elasticity
Price Leadership
48. The situation when a firm's long-run average costs fall as it increases output
Examples of Monopolistic Competition
Maximizing profit in Oligopoly games
Cross-subsidy pricing
Economies of scale
49. 2 firms - simplest case in an oligopoly. Profits higher if limiting their production
Duopoly
Price war
Kinked demand curve model
Sequential-move game
50. Ranks industries according to how much social welfare would improve if the output in an industry were increased by a small amount
Profit
Dansby-Willig performance index
Mutual interdependence
Dominant strategy