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






2. A firm whose price decisions are tacitly accepted and followed by others in the industry






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






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






5. 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






6. 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






7. 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






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






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






10. (1) Economies of Scale; (2) Economies of Scope; (3) Cost Complementarity; and (4)Patents & Other Legal Barriers






11. 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






12. 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






13. A merger between firms who have a buyer/supplier relationship. Example: BF Goodrich merging with rubber plantations






14. When the decisions of two or more firms significantly affect each others' profits






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






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






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






18. A merger between two firms in the same industry. Example: 2004 K-Mart merged with Sears






19. 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)






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






21. Face competition from companies that currently are not in the market but might enter






22. An oligopoly in which the firms produce a standardized product






23. Increases in the value of a product to each user - including existing users - as the total number of users rises






24. 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






25. 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






26. In game theory - game where parties make their moves in turn - one party making the first move followed by the other






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






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






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






30. A strategy that guarantees the highest payoff given the worst possible scenario






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






32. 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






33. Where a firm can charge different groups of consumers different prices for the same product. Example: student or senior discounts






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






35. 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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36. When no one firm has a monopoly - but producers nonetheless realize that they can affect market prices. Firms compete but possess market power






37. 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






38. Revenue-Costs






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






40. 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






41. Rival who sets its output after the leader (Stackelberg's model)






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






43. 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






44. A pricing strategy in which profits gained from the sale of one product are used to subsidize sales of a related product






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






46. Game in which one player makes a move after observing the other player's move






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






48. Long-run marginal cost curve above long-run average cost






49. A market in which: (1) all have access to the same technology; (2) consumers respond quickly to price changes; (3) existing firms cannot respond quickly to entry by lowering their prices; and (4) there are no sunk costs






50. 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