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Test your basic knowledge |
Business Competition
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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. Involves price-fixing
Covert Collusion
Non-price competition
Payoff
Conglomerate Merger
2. In game theory - a decision rule that describes the actions a player will take at each decision point
Mixed (randomized) strategy
Monopolistic Competition
Strategy
High Price Elasticity
3. 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
Third-degree price discrimination
Examples of Oligopoly
Rothschild index
Business strategy
4. An establishment firm commits to setting price below the profit-maximizing level to prevent entry
Limit pricing
Second-Degree Price Discrimination
Fair return price
Credible threat
5. A merger between firms who have a buyer/supplier relationship. Example: BF Goodrich merging with rubber plantations
Barrier to entry
Simultaneous decision games
Dominant strategy
Vertical Merger
6. The competition that domestic firms encounter from the products and services of foreign producers
Nash equilibrium
Product differentiation
Import competition
Interdependence
7. A strategy in which a firm advertises a price and a promise to match any lower prices offered by a competitor
Profit
Price matching
Inter-industry competition
Merger
8. In game theory - game where parties make their moves in turn - one party making the first move followed by the other
Common knowledge
Cross-subsidy pricing
Subgame perfect equilibrium
Sequential game
9. An agreement among firms in a market about quantities to produce or prices to charge in attempts to limit competition
Rothschild index
Differentiated oligopoly
Collusion
Payoff
10. A game that is played over and over again forever and in which players receive payoffs during each play of the game
Price discrimination
Open Collusion
Sequential game
Indefinitely repeated game
11. Face competition from companies that currently are not in the market but might enter
Business strategy
Implicit Collusion
The Threat from Potential Entrants Firms
Non-price competition
12. Pricing strategy in which higher prices are charged during peak hours than during off-peak hours
Minimum efficient scale (full capacity)
Kinked demand curve model
Peak-load pricing
Price discrimination
13. A situation in which a change in price strategy by one firm affects sales and profits of another
Joint Venture
Block pricing
Mutual interdependence
Cheating
14. A condition describing a set of strategies that constitutes a Nash equilibrium and allows no player to improve their own payoff at any stage of the game by changing strategies
Subgame perfect equilibrium
One-shot game
Rent-seeking behavior
Finding profit for oligopoly games
15. 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
Cournot oligopoly
Business strategy
Perfect Competition (characteristics)
Joint Venture
16. Marginal cost curve above average variable cost - P* = SRMC
Merger
Kinked-demand curve
Perfect Competition Short Run Supply
The Threat from Potential Entrants Firms
17. An oligopoly in which the firms produce a standardized product
Trigger strategy
Homogenous oligopoly
Secure strategy
Ownership of a Key Input
18. If buyers have enough bargaining power - they can insist on lower prices - higher-quality products - or additional services
Merger
Tit-for-tat strategy
Bargaining Power of Buyers
Primary Sources of Monopolistic Power
19. Produce identical products
Import competition
Simultaneous-move game
Product differentiation
Perfect Competitor Characteristics
20. 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
Mixed (randomized) strategy
Sequential-move game
Dominant firm oligopoly
Second-Degree Price Discrimination
21. 2 firms - simplest case in an oligopoly. Profits higher if limiting their production
Minimum efficient scale (full capacity)
Duopoly
Perfect Competition Short Run Supply
Bertrand oligopoly
22. Long-run marginal cost curve above long-run average cost
Price Leadership
Perfect Competition Long Run Supply
What is game?
Two-part Tariff Method of Pricing
23. Physical differences - Convenience - Ambience - Reputations - Appeals to vanity - Unconscious fears and desires - Snob appeal - Customized products
Monopoly (characteristics)
Primary Sources of Monopolistic Power
Lerner index
Basis for Product Differentiation
24. When the decisions of two or more firms significantly affect each others' profits
Interdependence
Extensive-form game
Barrier to entry
Mutual interdependence
25. (1) Economies of Scale; (2) Economies of Scope; (3) Cost Complementarity; and (4)Patents & Other Legal Barriers
Competitive market
Primary Sources of Monopolistic Power
Simultaneous consumption
Bargaining Power of Buyers
26. Both players have dominant strategies and play them
Price Leadership
Dominant strategy equilibrium
Horizontal Merger/Integration
Inter-industry competition
27. In game theory - a statement of harmful intent easily dismissed by recipient because threat not considered believable
Covert Collusion
Peak-load pricing
Empty threat
Competitive market
28. A firm whose price decisions are tacitly accepted and followed by others in the industry
Nonprime competition
Cross-subsidy pricing
Price Leadership
Prisoners' dilemma
29. Rival who sets its output after the leader (Stackelberg's model)
Imperfect competition
Follower
Cheating
Implicit Collusion
30. When a manager makes a noncooperative decision
Herfindahl-Hirschman index (HHI)
Cheating
Reservation Price
Mixed (randomized) strategy
31. Price Sensitive
High Price Elasticity
Kinked-demand curve
Examples of Monopolistic Competition
Conglomerate Merger
32. Cooperation among firms that does not involve an explicit agreement
High Price Elasticity
Non-cooperative equilibrium
Tacit collusion
First-Degree Price Discrimination (Perfect)
33. 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 Characteristics:
Monopolistic Competition
Perfect Competitor Characteristics
Implicit Collusion
34. Price of a product that enables its producer to obtain a normal profit & that is equal to the ATC of producing it
Fair return price
Simultaneous-move game
Non-price competition
Rent-seeking behavior
35. 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
Bargaining Power of Suppliers
Contestable market
Monopolistic Competition
Price discrimination
36. An attempt by a firm to convince buyers that its product is different from the products of other firms in the industry
Price war
Tacit collusion
First-mover advantage
Product differentiation
37. The price that is low enough to deter entry
Limit price
Non-cooperative behavior
Homogenous oligopoly
Kinked-demand curve
38. When managers are able to charge each consumer their reservation price. Examples are car and home sales
Rent-seeking behavior
Block pricing
Contestable market
First-Degree Price Discrimination (Perfect)
39. The reward received by a player in a game - such as the profit earned by an oligopolist
Follower
Payoff
Maximizing profit in Oligopoly games
Limit pricing
40. 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
Natural Monopoly (local phone or electric company)
One-shot game
Kinked demand curve model
Subgame perfect equilibrium
41. 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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42. Rules - strategies - payoffs - outcomes
Strategy
Block pricing
What is game?
Lerner index
43. An index of market concentration. Sum of squared market shares of all the firms in the industry times 10K HHI=10 - 000Σwi2
Sequential-move game
Four-firm concentration ratio
Herfindahl-Hirschman index (HHI)
Cheating
44. Actions taken by a firm to achieve a goal - such as maximizing profits
Differentiated oligopoly
Business strategy
Third-Degree Price Discrimination
Double marginalization
45. A table that shows the payoffs for every possible action by each player for every possible action by the other player
Socially optimal price
Payoff matrix
Normal-form game
Network effects
46. When firms make decisions that make every firm better off than in a noncooperative Nash equilibrium
Simultaneous-move game
Cooperation
Competitive market
Cournot oligopoly
47. 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
Nonprime competition
Marginal Revenue
Socially optimal price
Disappearing invisible hand
48. 1/(1+i)n
Present Value (PV)
Stackelberg oligopoly
Monopolistic Competition
Repeated game
49. Sellers can identify different types of customers and offer each a different price. Examples are special prices for students or the elderly
Market
Third-Degree Price Discrimination
Interdependence
Simultaneous-move game
50. In game theory - a game that is played again sometime after the previous game ends
Inter-industry competition
Dominant firm oligopoly
Brand Multiplication
Repeated game