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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. Many buyers and sellers - product homogeneity - low cost and accurate information - free entry and exit - best regarded as a benchmark






2. Involves price-fixing






3. The situation when a firm's long-run average costs fall as it increases output






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






5. The derivative of total revenue






6. 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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7. Actions taken by a firm to achieve a goal - such as maximizing profits






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






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






10. 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






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






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






13. Toothpaste - shampoo - restaurants - banks






14. An equilibrium in a game in which players do not cooperate but pursue their own self-interest






15. First firm to set its output (Stackelberg's model)






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






17. 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






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






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






20. 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






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






22. The price that is low enough to deter entry






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






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






25. 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






26. 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






27. 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






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






29. A strategy in which a firm advertises a price and a promise to match any lower prices offered by a competitor






30. 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"






31. 2 firms - simplest case in an oligopoly. Profits higher if limiting their production






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






33. A strategy whereby a player randomizes over two or more available actions in order to keep rivals from being able to predict his action






34. A trigger strategy that punishes after an episode of cheating and returns to cooperation if cheating ends






35. When something can be consumed without reducing the benefits available for subsequent consumption; can be consumed without supporting rivalry between consumers






36. 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






37. The physical characteristics of the market within which firms interact






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






39. A situation in which no one wants to change his or her behavior






40. When a manager makes a noncooperative decision






41. 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






42. 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






43. Using advertising and other means to try to increase a firm's sales






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






45. 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






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






47. A business arrangement in which two or more firms undertake a specific economic activity together. Once the activity is over - the firms go their own way






48. 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






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






50. 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.)