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. 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






2. Price Sensitive






3. The competition for sales between the products of one industry and the products of another industry






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






5. Physical differences - Convenience - Ambience - Reputations - Appeals to vanity - Unconscious fears and desires - Snob appeal - Customized products






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






7. 1/(1+i)n






8. 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"






9. A strategy that guarantees the highest payoff given the worst possible scenario






10. 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






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






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






13. Pricing strategy in which a firm intentionally varies its price in an attempt to "hide" price information from consumers and rivals






14. Toothpaste - shampoo - restaurants - banks






15. Steel - autos - colas - airlines






16. 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)






17. The price that is low enough to deter entry






18. A representation of a game indicating the players - their possible strategies - and the payoffs resulting from alternative strategies






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






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 competing firms must make their individual decisions without knowing the decisions of their rivals






22. An industry where (1) there are few firms serving many customers; (2) firms produce differentiated products; (3) each firm believes rivals will respond to price reductions but will not follow price increases; and (4) barriers to entry exist






23. 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)






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






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






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






27. The practice of bundling several different products together and selling them at a single "bundle" price






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






29. 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






30. The actions by persons - firms - or unions to gain special benefits from government at taxpayer's or someone else's expense






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






32. Rules - strategies - payoffs - outcomes






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






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






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






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






37. An equilibrium in a game in which players cooperate to increase their mutual payoff






38. The derivative of total revenue






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






40. Long-run marginal cost curve above long-run average cost






41. 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






42. 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






43. Demand line is above ATC curve






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






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






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






47. An oligopoly in which the firms produce a differentiated product






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






49. Pricing strategy in which a firm optimally sets the internal price at which an upstream division wells an input to a downstream division






50. Marginal cost curve above average variable cost - P* = SRMC