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Test your basic knowledge |
Business Competition
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Subject
:
business-skills
Instructions:
Answer 50 questions in 15 minutes.
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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. An attempt by a firm to convince buyers that its product is different from the products of other firms in the industry
Product differentiation
Payoff matrix
Bargaining Power of Suppliers
Leader
2. 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
Disappearing invisible hand
Dominant strategy
Basis for Product Differentiation
Mutual interdependence
3. 1/(1+i)n
Dominant strategy equilibrium
Extensive-form game
Present Value (PV)
Tacit collusion
4. Many buyers and sellers - product homogeneity - low cost and accurate information - free entry and exit - best regarded as a benchmark
Mutual Interdependence
Perfect Competition (characteristics)
Secure strategy
No cooperative equilibrium
5. Physical differences - Convenience - Ambience - Reputations - Appeals to vanity - Unconscious fears and desires - Snob appeal - Customized products
Mixed (randomized) strategy
Cournot oligopoly
Basis for Product Differentiation
Block pricing
6. Occurs when a firm produces output - whatever its level - at a higher cost than is necessary to produce it
Inefficiency
The Threat from Potential Entrants Firms
Payoff matrix
Limit pricing
7. Where a firm can charge different groups of consumers different prices for the same product. Example: student or senior discounts
Perfect Competition Long Run Supply
Collusion
Herfindahl-Hirschman index (HHI)
Third-degree price discrimination
8. 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)
Dominant strategy equilibrium
Barrier to entry
Simultaneous-move game
Mutual Interdependence
9. First firm to set its output (Stackelberg's model)
Leader
Cournot oligopoly
Minimum efficient scale (full capacity)
Limit pricing
10. The practice of charging different prices to consumers for the same good or service
Minimum efficient scale (full capacity)
Price discrimination
Economies of scale
Transfer pricing
11. (1) Economies of Scale; (2) Economies of Scope; (3) Cost Complementarity; and (4)Patents & Other Legal Barriers
Common knowledge
Tacit collusion
Profit
Primary Sources of Monopolistic Power
12. Maximize economic profit by producing the quantity at which MC=MR
Open Collusion
Maximizing profit in Oligopoly games
Payoff matrix
Patent
13. An oligopoly in which the firms produce a differentiated product
Differentiated oligopoly
Primary Sources of Monopolistic Power
Profit
Present Value (PV)
14. An oligopoly in which the sales of the leading (top four) firms are distributed unevenly among them
Second-Degree Price Discrimination
Payoff table
Unbalanced Oligopoly
Market
15. A strategy whereby a player randomizes over two or more available actions in order to keep rivals from being able to predict his action
Perfect Competition Barriers to Entry
Inter-industry competition
Implicit Collusion
Mixed (randomized) strategy
16. 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
Cooperative equilibrium
Two-part pricing
Import competition
Subgame perfect equilibrium
17. An oligopoly in which the firms produce a standardized product
Follower
First-Degree Price Discrimination (Perfect)
Homogenous oligopoly
Merger
18. A situation in which neither firm has incentive to change its output given the other firm's output
Barrier to entry
Tit-for-tat strategy
Cournot equilibrium
Non-cooperative behavior
19. Variations on one good so that a firm can increase market sharea
Payoff matrix
Subgame perfect equilibrium
Brand Multiplication
Vertical Merger
20. 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
Stackelberg oligopoly
Limit price
Network effects
Extensive-form game
21. Game in which one player makes a move after observing the other player's move
Sequential-move game
Monopolistic Competition
One-shot game
Product Differentiation
22. The maximum price that a buyer is willing to pay for a good - or the minimum price that a seller will accept
Ownership of a Key Input
Reservation Price
Examples of Monopolistic Competition
Finding profit for oligopoly games
23. Specific assets - Economies of scale - Excess capacity - Reputation effects
Perfect Competition Barriers to Entry
Cournot oligopoly
Mutual Interdependence
Marginal Revenue
24. 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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25. Face competition from companies that currently are not in the market but might enter
Empty threat
Horizontal Merger/Integration
Vertical Merger
The Threat from Potential Entrants Firms
26. Operates like the alleged Mafia. Region division of the market among the firms in the industry
Natural Monopoly (local phone or electric company)
Common knowledge
Price Leadership
Open Collusion
27. 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
Randomized pricing
Double marginalization
Nash equilibrium
Normal-form game
28. Using advertising and other means to try to increase a firm's sales
Product differentiation
Prisoner's dilemma
Non-price competition
Rent-seeking behavior
29. Actions taken by a firm to achieve a goal - such as maximizing profits
Product Differentiation
Business strategy
Market
Herfindahl-Hirschman index (HHI)
30. A strategy in which a firm advertises a price and a promise to match any lower prices offered by a competitor
Prisoner's dilemma
Follower
Price matching
Rent-seeking behavior
31. A strategy that guarantees the highest payoff given the worst possible scenario
Basis for Product Differentiation
Mutual Interdependence
Secure strategy
Perfect Competitor Making a Profit
32. The situation that exists when two or more groups need each other and must depend on each other to accomplish a goal that is important to each of them
Mutual Interdependence
Joint Venture
Non-rivalrous consumption
Nash equilibrium
33. Cooperation among firms that does not involve an explicit agreement
Transfer pricing
Competitive market
Examples of Monopolistic Competition
Tacit collusion
34. Intense competition in which competitors cut retail prices to gain business--oligopolistic competition
Price war
Monopolistic Characteristics:
Repeated game
Socially optimal price
35. An index of market concentration. Sum of squared market shares of all the firms in the industry times 10K HHI=10 - 000Σwi2
Cooperative equilibrium
Herfindahl-Hirschman index (HHI)
Brand Multiplication
Concentration Ratio
36. 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
Sweezy oligopoly
Product Differentiation
Competitive market
Natural Monopoly (local phone or electric company)
37. A firm whose price decisions are tacitly accepted and followed by others in the industry
Third-Degree Price Discrimination
Present Value (PV)
Price Leadership
Bargaining Power of Suppliers
38. If production of a good requires a particular input - then control of that input can be a barrier to entry
Basis for Product Differentiation
Ownership of a Key Input
Present Value (PV)
Patent
39. Involves price-fixing
Non-rivalrous consumption
Natural Monopoly (local phone or electric company)
Covert Collusion
Cournot equilibrium
40. 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
Cooperation
Price discrimination
Socially optimal price
Strategy
41. Single seller in an industry - Strong barriers to entry - Profit maximization - faces market demand and sets MR=MC - Unexploited gains from trade
Monopoly (characteristics)
Collusion
Basis for Product Differentiation
Interdependence
42. When the decisions of two or more firms significantly affect each others' profits
One-shot game
Interdependence
Second-Degree Price Discrimination
Tacit collusion
43. A representation of a game indicating the players - their possible strategies - and the payoffs resulting from alternative strategies
Kinked-demand curve
Cournot equilibrium
Normal-form game
Monopoly (characteristics)
44. Increases in the value of a product to each user - including existing users - as the total number of users rises
Herfindahl-Hirschman index (HHI)
No cooperative equilibrium
Non-rivalrous consumption
Network effects
45. The competition for sales between the products of one industry and the products of another industry
Inter-industry competition
Credible threat
Price war
Rent-seeking behavior
46. An agreement among firms in a market about quantities to produce or prices to charge in attempts to limit competition
One-shot game
Collusion
Equilibrium
Normal-form game
47. 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
Trigger strategy
Horizontal Merger/Integration
Cournot equilibrium
48. If buyers have enough bargaining power - they can insist on lower prices - higher-quality products - or additional services
Fair return price
Bargaining Power of Buyers
Sequential-move game
Oligopoly
49. Industry in which (1) there are few firms serving many customers; (2) firms produce either differentiated or homogenous products; (3) a single (leader) firm chooses an output quantity before their rivals select their outputs; (4) all other (follower)
Tit-for-tat strategy
Payoff
Stackelberg oligopoly
Cournot oligopoly
50. Price of a product that enables its producer to obtain a normal profit & that is equal to the ATC of producing it
Joint Venture
Cournot equilibrium
Equilibrium
Fair return price
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