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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. Long-run marginal cost curve above long-run average cost
Stackelberg oligopoly
Imperfect competition
Perfect Competition Long Run Supply
Two-part pricing
2. In game theory - game where parties make their moves in turn - one party making the first move followed by the other
Simultaneous-move game
Sequential game
Randomized pricing
Dominant strategy equilibrium
3. Ranks industries according to how much social welfare would improve if the output in an industry were increased by a small amount
Network effects
High Price Elasticity
Dansby-Willig performance index
The Threat from Potential Entrants Firms
4. A representation of a game that summarizes the players - the information available to them at each stage - the strategies available to them - the sequence of moves - and the payoffs resulting from alternative strategies
Present Value (PV)
Collusion
Sequential game
Extensive-form game
5. An equilibrium in a game in which players cooperate to increase their mutual payoff
Cooperative equilibrium
Examples of Oligopoly
Joint Venture
Perfect Competition Short Run Supply
6. Many buyers and sellers - product homogeneity - low cost and accurate information - free entry and exit - best regarded as a benchmark
Contestable market
Disappearing invisible hand
Open Collusion
Perfect Competition (characteristics)
7. A business arrangement in which two or more firms undertake a specific economic activity together. Once the activity is over - the firms go their own way
Joint Venture
Differentiated oligopoly
Cooperation
Covert Collusion
8. Price of a product that enables its producer to obtain a normal profit & that is equal to the ATC of producing it
Two-part Tariff Method of Pricing
Fair return price
Sequential game
Disappearing invisible hand
9. When the decisions of two or more firms significantly affect each others' profits
Pure monopoly
Import competition
Interdependence
Simultaneous decision games
10. An attempt by a firm to convince buyers that its product is different from the products of other firms in the industry
Homogenous oligopoly
Rent-seeking behavior
Product differentiation
Tacit collusion
11. A product's ability to satisfy a large number of consumers at the same time
Price Leadership
Simultaneous consumption
Subgame perfect equilibrium
First-mover advantage
12. Industry where (1) there are few firms serving many customers; (2) firms produce either differentiated or homogenous products; (3) each form believes rivals will hold their output constant if it changes its output; and (4) barriers to entry exist. Fi
Vertical Merger
Fair return price
Cournot oligopoly
Peak-load pricing
13. An agreement among firms in a market about quantities to produce or prices to charge in attempts to limit competition
Collusion
Kinked demand curve model
Barrier to entry
First-Degree Price Discrimination (Perfect)
14. The maximum price that a buyer is willing to pay for a good - or the minimum price that a seller will accept
Minimum efficient scale (full capacity)
Monopolistic Characteristics:
Non-price competition
Reservation Price
15. A simpler way to operationalize first-degree price discrimination
Two-part Tariff Method of Pricing
Examples of Oligopoly
Perfect Competition Short Run Supply
Credible threat
16. An oligopoly in which the sales of the leading (top four) firms are distributed unevenly among them
Tit-for-tat strategy
Rent-seeking behavior
Unbalanced Oligopoly
Rothschild index
17. Multiple firms produce similar products - Firms face downward sloping demand curves - Profit maximization occurs where MC=MR - With free entry and exit - firms compete away economic profits
Monopolistic Competition
Conglomerate Merger
Perfect Competition Short Run Supply
Perfect Competition Long Run Supply
18. 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
Trigger strategy
Cross-subsidy pricing
Basis for Product Differentiation
Socially optimal price
19. Marginal cost curve above average variable cost - P* = SRMC
Normal-form game
Network effects
Profit
Perfect Competition Short Run Supply
20. 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
Finding profit for oligopoly games
The Threat from Potential Entrants Firms
Sweezy oligopoly
Duopoly
21. 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
Randomized pricing
Monopolistic Characteristics:
Socially optimal price
Patent
22. In game theory - a statement of harmful intent easily dismissed by recipient because threat not considered believable
Mutual Interdependence
Contestable market
Empty threat
Kinked demand curve model
23. Involves price-fixing
Covert Collusion
No cooperative equilibrium
Joint Venture
Strategy
24. A firm whose price decisions are tacitly accepted and followed by others in the industry
Market
Perfect Competition (characteristics)
Follower
Price Leadership
25. The derivative of total revenue
Perfect Competition Long Run Supply
Cutthroat Competition
Marginal Revenue
Mutual interdependence
26. Competition based on factors that are not related to price - such as product quality - service and financing - business location - and reputation
Nonprime competition
Third-Degree Price Discrimination
Conglomerate Merger
Double marginalization
27. Rival who sets its output after the leader (Stackelberg's model)
Follower
Strategic behavior
Simultaneous decision games
What is game?
28. The situation when a firm's long-run average costs fall as it increases output
Economies of scale
Perfect Competition Short Run Supply
Oligopoly
Four-firm concentration ratio
29. When no one firm has a monopoly - but producers nonetheless realize that they can affect market prices. Firms compete but possess market power
Secure strategy
Peak-load pricing
Imperfect competition
Dansby-Willig performance index
30. A situation in which competing firms must make their individual decisions without knowing the decisions of their rivals
Perfect Competition Barriers to Entry
Maximizing profit in Oligopoly games
Simultaneous decision games
Primary Sources of Monopolistic Power
31. A situation in which no one wants to change his or her behavior
Dominant strategy
Equilibrium
Sweezy oligopoly
Cournot oligopoly
32. 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
Simultaneous-move game
No cooperative equilibrium
Dominant firm oligopoly
Limit pricing
33. 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
Examples of Monopolistic Competition
Sweezy oligopoly
Block pricing
Bargaining Power of Suppliers
34. One large firm that has a significant cost advantage over many other - smaller competing firms; -the large firm operates as a monopoly: setting price and output to maximize profit; -the small firms act as perfect competitors: taking as given the mar
Conglomerate Merger
Joint Venture
Dominant firm oligopoly
Duopoly
35. Actions taken by firms to plan for and react to competition from rival firms
Strategic behavior
Non-cooperative equilibrium
Minimum efficient scale (full capacity)
Unbalanced Oligopoly
36. Maximize economic profit by producing the quantity at which MC=MR
Inefficiency
Vertical Merger
Maximizing profit in Oligopoly games
What is game?
37. A strategy in which a firm advertises a price and a promise to match any lower prices offered by a competitor
Basis for Product Differentiation
Open Collusion
Price matching
Credible threat
38. Identical or substitutable
Undifferentiated
Sweezy oligopoly
Non-cooperative equilibrium
Two-part Tariff Method of Pricing
39. All firms and individuals willing and able to buy or sell a particular product
Implicit Collusion
Kinked demand curve model
Simultaneous decision games
Market
40. 2 firms - simplest case in an oligopoly. Profits higher if limiting their production
Barrier to entry
Tit-for-tat strategy
Two-part pricing
Duopoly
41. 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
First-Degree Price Discrimination (Perfect)
Business strategy
Kinked demand curve model
Interdependence
42. 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
Strategy
Monopolistic Characteristics:
Limit price
Bertrand oligopoly
43. An establishment firm commits to setting price below the profit-maximizing level to prevent entry
Limit price
Profit
Prisoner's dilemma
Limit pricing
44. Variations on one good so that a firm can increase market sharea
Transfer pricing
Brand Multiplication
Herfindahl-Hirschman index (HHI)
Limit pricing
45. Takes Place inside the Mind of the consumer
Concentration Ratio
Product Differentiation
Sweezy oligopoly
Perfect Competitor Characteristics
46. Produce differentiated products. Make a profit or take a lost in the short run - in the long run the firm will break even. (MOST number of firms.)
Monopolistic Characteristics:
Basis for Product Differentiation
Equilibrium
Tit-for-tat strategy
47. The demand curve for a non-collusive oligopolist - which is based on the assumption that rivals will match a price decrease and will ignore a price increase
Cheating
Implicit Collusion
Kinked-demand curve
Basis for Product Differentiation
48. Face competition from companies that currently are not in the market but might enter
Simultaneous decision games
Dominant firm oligopoly
The Threat from Potential Entrants Firms
Merger
49. A table that shows the payoffs that each firm earns from every combination of strategies by the firms
Tacit collusion
Payoff matrix
Present Value (PV)
Non-rivalrous consumption
50. Demand line is above ATC curve
Transfer pricing
Perfect Competitor Making a Profit
Third-Degree Price Discrimination
Perfect Competitor Characteristics