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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. Toothpaste - shampoo - restaurants - banks
Basis for Product Differentiation
Two-part pricing
Examples of Monopolistic Competition
No cooperative equilibrium
2. 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
First-Degree Price Discrimination (Perfect)
Rothschild index
Socially optimal price
Barrier to entry
3. Operates like the alleged Mafia. Region division of the market among the firms in the industry
Mutual interdependence
Open Collusion
Oligopoly
Dominant strategy equilibrium
4. Both players have dominant strategies and play them
Dominant strategy equilibrium
Bargaining Power of Suppliers
Sweezy oligopoly
The Threat from Potential Entrants Firms
5. A situation in which neither firm has incentive to change its output given the other firm's output
Fair return price
Cournot equilibrium
Undifferentiated
Reservation Price
6. In game theory - a game that is played again sometime after the previous game ends
Perfect Competition Short Run Supply
Commodity bundling
Four-firm concentration ratio
Repeated game
7. A table that shows the payoffs for every possible action by each player for every possible action by the other player
Non-cooperative behavior
Peak-load pricing
Payoff matrix
Horizontal Merger/Integration
8. 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
Non-cooperative equilibrium
Bertrand oligopoly
Strategic behavior
Business strategy
9. Specific assets - Economies of scale - Excess capacity - Reputation effects
Perfect Competition Barriers to Entry
Unbalanced Oligopoly
First-mover advantage
Perfect Competitor Making a Profit
10. 1/(1+i)n
Socially optimal price
Double marginalization
Conglomerate Merger
Present Value (PV)
11. Physical differences - Convenience - Ambience - Reputations - Appeals to vanity - Unconscious fears and desires - Snob appeal - Customized products
Conglomerate Merger
Basis for Product Differentiation
High Price Elasticity
Extensive-form game
12. 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
Block pricing
Imperfect competition
What is game?
Primary Sources of Monopolistic Power
13. The exclusive right to a product for a period of 20 years from the date the product is invented
Patent
Two-part Tariff Method of Pricing
What is game?
Stackelberg oligopoly
14. A situation where one firm is able to provide a service at a lower cost than could several competing firms
Sequential game
Natural Monopoly (local phone or electric company)
Cooperation
Rothschild index
15. Rival who sets its output after the leader (Stackelberg's model)
Leader
Follower
Contestable market
Mutual Interdependence
16. Face competition from companies that currently are not in the market but might enter
Limit pricing
The Threat from Potential Entrants Firms
Product Differentiation
Cheating
17. 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)
Concentration Ratio
Barrier to entry
Minimum efficient scale (full capacity)
Non-cooperative equilibrium
18. Steel - autos - colas - airlines
Transfer pricing
Two-part Tariff Method of Pricing
Examples of Oligopoly
Simultaneous-move game
19. 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
Limit pricing
Mutual interdependence
Dominant firm oligopoly
20. Pricing strategy in which consumers are charged a fixed fee for the right to purchase a product - plus a per-unit charge for each unit purchased
Two-part pricing
Cournot oligopoly
Second-Degree Price Discrimination
Duopoly
21. 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
Non-cooperative behavior
Pure monopoly
Dominant firm oligopoly
Payoff table
22. An establishment firm commits to setting price below the profit-maximizing level to prevent entry
Limit pricing
Monopoly (characteristics)
Rothschild index
Monopolistic Competition
23. An attempt by a firm to convince buyers that its product is different from the products of other firms in the industry
Product differentiation
Conglomerate Merger
Business strategy
Four-firm concentration ratio
24. Variations on one good so that a firm can increase market sharea
Four-firm concentration ratio
First-Degree Price Discrimination (Perfect)
Cournot oligopoly
Brand Multiplication
25. Pricing strategy in which a firm optimally sets the internal price at which an upstream division wells an input to a downstream division
Homogenous oligopoly
Transfer pricing
Simultaneous-move game
Duopoly
26. An index of market concentration. Sum of squared market shares of all the firms in the industry times 10K HHI=10 - 000Σwi2
Price discrimination
Bargaining Power of Suppliers
Herfindahl-Hirschman index (HHI)
Perfect Competition Barriers to Entry
27. 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
Natural Monopoly (local phone or electric company)
Bargaining Power of Suppliers
Nash equilibrium
Reservation Price
28. An equilibrium in a game in which players cooperate to increase their mutual payoff
Interdependence
Cooperative equilibrium
Block pricing
Cheating
29. When no one firm has a monopoly - but producers nonetheless realize that they can affect market prices. Firms compete but possess market power
Network effects
Bertrand oligopoly
Imperfect competition
Bargaining Power of Buyers
30. A merger between two firms in the same industry. Example: 2004 K-Mart merged with Sears
Second-Degree Price Discrimination
Non-cooperative behavior
Horizontal Merger/Integration
Perfect Competition (characteristics)
31. Keeps the price just where it is to maximize profit
Second-Degree Price Discrimination
Dominant strategy
Cutthroat Competition
Rothschild index
32. A situation in which all decision makers know the payoff table - and they believe all other decision makers also know the payoff table
Subgame perfect equilibrium
Monopolistic Characteristics:
Common knowledge
Third-degree price discrimination
33. 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
Horizontal Merger/Integration
Sequential game
Kinked-demand curve
Natural Monopoly (local phone or electric company)
34. The derivative of total revenue
What is game?
Marginal Revenue
Four-firm concentration ratio
Horizontal Merger/Integration
35. 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
Collusion
Simultaneous-move game
Sweezy oligopoly
Tit-for-tat strategy
36. The actions by persons - firms - or unions to gain special benefits from government at taxpayer's or someone else's expense
Bargaining Power of Suppliers
Conglomerate Merger
Rent-seeking behavior
Contestable market
37. A strategy or action that always provides the best outcome no matter what decisions rivals make
Dominant strategy
Mutual Interdependence
Block pricing
Disappearing invisible hand
38. The smallest quantity at which the average cost curve reaches its minimum
Perfect Competitor Making a Profit
First-Degree Price Discrimination (Perfect)
Minimum efficient scale (full capacity)
Dominant firm oligopoly
39. 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
Ownership of a Key Input
Product Differentiation
Herfindahl-Hirschman index (HHI)
Double marginalization
40. The competition that domestic firms encounter from the products and services of foreign producers
Perfect Competition (characteristics)
First-mover advantage
Interdependence
Import competition
41. 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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42. A merger of firms in unrelated industries. Example: If Purina Dow Chow merged with Pampers Diaper Company
Inefficiency
Conglomerate Merger
Simultaneous-move game
Prisoner's dilemma
43. A situation in which no one wants to change his or her behavior
Bertrand oligopoly
Equilibrium
Competitive market
Extensive-form game
44. A situation in which a change in price strategy by one firm affects sales and profits of another
Mutual interdependence
Kinked-demand curve
Business strategy
Contestable market
45. A strategy in which a firm advertises a price and a promise to match any lower prices offered by a competitor
Kinked demand curve model
Payoff
Dansby-Willig performance index
Price matching
46. A game that is played over and over again forever and in which players receive payoffs during each play of the game
Indefinitely repeated game
Pure monopoly
Trigger strategy
Cross-subsidy pricing
47. 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
Economies of scale
Limit pricing
Perfect Competition Barriers to Entry
Payoff table
48. Single seller in an industry - Strong barriers to entry - Profit maximization - faces market demand and sets MR=MC - Unexploited gains from trade
Limit pricing
Horizontal Merger/Integration
Herfindahl-Hirschman index (HHI)
Monopoly (characteristics)
49. In game theory - a decision rule that describes the actions a player will take at each decision point
Limit price
Perfect Competition Barriers to Entry
Price war
Strategy
50. A situation in which competing firms must make their individual decisions without knowing the decisions of their rivals
Tacit collusion
Simultaneous decision games
Common knowledge
Market