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Business Competition

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. A measure of market power - the percentage of all sales that is accounted for by the four or eight largest firms in the market






2. Using advertising and other means to try to increase a firm's sales






3. A strategy or action that always provides the best outcome no matter what decisions rivals make






4. Each firm believes that if it raises its price - its competitors will not follow - but if it lowers its price all of its competitors will follow; -a model in which firms in an oligopoly match price cuts by other firms - but do not match price hike






5. In game theory - game where parties make their moves in turn - one party making the first move followed by the other






6. The price of a product that results in the most efficient allocation of an economy's resources and that is equal to the marginal cost of the product






7. Rules - strategies - payoffs - outcomes






8. When firms limit production and raise prices in a way that raises each others' profits - even though they have not made any formal agreement






9. A situation in which neither firm has incentive to change its output given the other firm's output






10. Single seller in an industry - Strong barriers to entry - Profit maximization - faces market demand and sets MR=MC - Unexploited gains from trade






11. 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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12. An agreement among firms in a market about quantities to produce or prices to charge in attempts to limit competition






13. A combination of two or more companies into one company






14. Set marginal cost for the cartel equal to marginal revenue for the cartel; -cartel's marginal cost curve is the horizontal sum of the MC curves of the two firms; -Marginal revenue curve is like that of a monopoly






15. A trigger strategy that punishes after an episode of cheating and returns to cooperation if cheating ends






16. Different units of a product are sold at different prices. Examples are buying in bulk - or - commodity-bundling






17. 2 firms - simplest case in an oligopoly. Profits higher if limiting their production






18. If many firms can supply an input and the input is not specialized - the suppliers are unlikely to have the bargaining power to limit a firm's profits






19. Occurs when a firm produces output - whatever its level - at a higher cost than is necessary to produce it






20. 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






21. A situation in which all decision makers know the payoff table - and they believe all other decision makers also know the payoff table






22. Nash equilibrium - the result when each player in a game chooses the action that maximizes his or her payoff given the actions of other players - ignoring the effects of his or her action on the payoffs received by those players (when you confess w






23. Price Sensitive






24. Sellers can identify different types of customers and offer each a different price. Examples are special prices for students or the elderly






25. All firms and individuals willing and able to buy or sell a particular product






26. The situation when a firm's long-run average costs fall as it increases output






27. Maximize economic profit by producing the quantity at which MC=MR






28. Anything that keeps new firms from entering an industry in which firms are earning economic profits (e.g. Ownership of a Key Input - Capital - Patents - Economies of scale)






29. The reward received by a player in a game - such as the profit earned by an oligopolist






30. Industry in which (1) few firms serving many customers; (2) firms produce identical products t constant marginal cost; (3) firms compete in price and react optimally to competitor's prices; (4) consumers have perfect information and here are no trans






31. When a manager makes a noncooperative decision






32. A merger between two firms in the same industry. Example: 2004 K-Mart merged with Sears






33. A situation in which no one wants to change his or her behavior






34. In game theory - a statement of harmful intent by one party that the other party views as believable-- "if you do this - we will do that"






35. Where a firm can charge different groups of consumers different prices for the same product. Example: student or senior discounts






36. When firms make decisions that make every firm better off than in a noncooperative Nash equilibrium






37. Identical or substitutable






38. 1/(1+i)n






39. Pricing strategy in which higher prices are charged during peak hours than during off-peak hours






40. The maximum price that a buyer is willing to pay for a good - or the minimum price that a seller will accept






41. Many buyers and sellers - product homogeneity - low cost and accurate information - free entry and exit - best regarded as a benchmark






42. The rules describe the setting of the game - the actions the players may take - and the consequences of those actions; -Advertising and R&D are also prisoners' dilemmas

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43. A pricing strategy in which profits gained from the sale of one product are used to subsidize sales of a related product






44. Sets the price at the highest level that is consistent with keeping the potential entrant out. -The strategy of reducing the price to deter entry






45. Intense competition in which competitors cut retail prices to gain business--oligopolistic competition






46. The practice of charging different prices to consumers for the same good or service






47. A merger between firms who have a buyer/supplier relationship. Example: BF Goodrich merging with rubber plantations






48. A condition describing a set of strategies in which no player can improve their payoff by unilaterally changing their own strategy given the other player's strategy






49. Competition based on factors that are not related to price - such as product quality - service and financing - business location - and reputation






50. A situation in which a change in price strategy by one firm affects sales and profits of another