Test your basic knowledge |

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. Actions taken by firms to plan for and react to competition from rival firms






2. Revenue-Costs






3. 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






4. A merger of firms in unrelated industries. Example: If Purina Dow Chow merged with Pampers Diaper Company






5. Specific assets - Economies of scale - Excess capacity - Reputation effects






6. 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.)






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






8. The situation that exists when two or more groups need each other and must depend on each other to accomplish a goal that is important to each of them






9. When no one firm has a monopoly - but producers nonetheless realize that they can affect market prices. Firms compete but possess market power






10. In game theory - a decision rule that describes the actions a player will take at each decision point






11. Steel - autos - colas - airlines






12. A table that shows the payoffs that each firm earns from every combination of strategies by the firms






13. A few firms produce most market output - Products may or may not be differentiated - Effective entry barriers protect firm profitability - Firm interdependence requires strategic thinking






14. 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






15. An oligopoly in which the sales of the leading (top four) firms are distributed unevenly among them






16. In game theory - a game that is played again sometime after the previous game ends






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






18. A situation where one firm is able to provide a service at a lower cost than could several competing firms






19. 1/(1+i)n






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






21. Price Sensitive






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






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






24. When the decisions of two or more firms significantly affect each others' profits






25. 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






26. A firm whose price decisions are tacitly accepted and followed by others in the industry






27. Each seller can sell all he wants to sell at the going price - Buyers and sellers are price takers - The goods offered by the different sellers are largely the same - The actions of any single buyer or seller will have a negligible impact on the m






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






29. The exclusive right to a product for a period of 20 years from the date the product is invented






30. When an upstream divisions leverages "monopoly like" power to charge higher marginal cost to a downstream division - resulting in failure of the firm to optimize profits based on the wrong quantity decision at the firms level






31. Both players have dominant strategies and play them






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






33. Game in which each player makes decisions without knowledge of the other player's decisions






34. A table showing - for every possible combination of decisions players can make - the outcomes or "payoffs" for each of the players in each decision combination






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






36. The percentage of the total industry sales accounted for by the four largest firms in the industry. OUTPUT of 4 largest firms over TOTAL output in industry. C4=(S1+...+S4)/St or (w1+...+w4)






37. If production of a good requires a particular input - then control of that input can be a barrier to entry






38. 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"






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






40. An attempt by a firm to convince buyers that its product is different from the products of other firms in the industry






41. 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






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






43. Identical or substitutable






44. Rival who sets its output after the leader (Stackelberg's model)






45. Industry in which (1) there are few firms serving many customers; (2) firms produce either differentiated or homogenous products; (3) a single (leader) firm chooses an output quantity before their rivals select their outputs; (4) all other (follower)






46. (1) Economies of Scale; (2) Economies of Scope; (3) Cost Complementarity; and (4)Patents & Other Legal Barriers






47. 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)






48. Price of a product that enables its producer to obtain a normal profit & that is equal to the ATC of producing it






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






50. A situation in which competing firms must make their individual decisions without knowing the decisions of their rivals