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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. 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






2. 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"






3. 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






4. When managers are able to charge each consumer their reservation price. Examples are car and home sales






5. The derivative of total revenue






6. An index of market concentration. Sum of squared market shares of all the firms in the industry times 10K HHI=10 - 000Σwi2






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






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






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






10. In game theory - a statement of harmful intent easily dismissed by recipient because threat not considered believable






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






12. 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






13. The smallest quantity at which the average cost curve reaches its minimum






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






15. 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






16. 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






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






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






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






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






21. 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






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






23. 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






24. 2 firms - simplest case in an oligopoly. Profits higher if limiting their production






25. When a manager makes a noncooperative decision






26. Price Sensitive






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






28. A table that shows the payoffs for every possible action by each player for every possible action by the other player






29. Cooperation among firms that does not involve an explicit agreement






30. 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






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






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






33. If buyers have enough bargaining power - they can insist on lower prices - higher-quality products - or additional services






34. Operates like the alleged Mafia. Region division of the market among the firms in the industry






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






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






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






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






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






40. 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






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






42. 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






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






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






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






46. Multiple firms make the same pricing decisions even though they have not explicitly consulted with each other






47. 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






48. An establishment firm commits to setting price below the profit-maximizing level to prevent entry






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






50. 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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