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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. 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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2. A combination of two or more companies into one company
Differentiated oligopoly
Covert Collusion
Merger
Product differentiation
3. 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
Collusion
Nash equilibrium
Secure strategy
Monopolistic Competition
4. 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
Conglomerate Merger
Basis for Product Differentiation
Common knowledge
5. 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
Equilibrium
Minimum efficient scale (full capacity)
Disappearing invisible hand
Import competition
6. Keeps the price just where it is to maximize profit
Empty threat
Strategy
Cutthroat Competition
Fair return price
7. Simultaneous move game that is not repeated
Price war
One-shot game
Bargaining Power of Suppliers
Business strategy
8. The physical characteristics of the market within which firms interact
Repeated game
Market Structure
Examples of Oligopoly
Perfect Competition Barriers to Entry
9. The practice of bundling several different products together and selling them at a single "bundle" price
Commodity bundling
Rent-seeking behavior
Maximizing profit in Oligopoly games
Follower
10. Demand line is above ATC curve
Inefficiency
Transfer pricing
Perfect Competitor Making a Profit
Mixed (randomized) strategy
11. The competition for sales between the products of one industry and the products of another industry
Economies of scale
Inter-industry competition
Tacit collusion
Perfect Competition Short Run Supply
12. A simpler way to operationalize first-degree price discrimination
Second-Degree Price Discrimination
Two-part Tariff Method of Pricing
Dansby-Willig performance index
Strategy
13. A measure of market power - the percentage of all sales that is accounted for by the four or eight largest firms in the market
Transfer pricing
Concentration Ratio
Commodity bundling
Rothschild index
14. 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
Product differentiation
Sequential game
Two-part pricing
Competitive market
15. 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
Transfer pricing
Subgame perfect equilibrium
Implicit Collusion
Perfect Competitor Characteristics
16. Game in which each player makes decisions without knowledge of the other player's decisions
Indefinitely repeated game
Profit
Examples of Oligopoly
Simultaneous-move game
17. The derivative of total revenue
Double marginalization
Marginal Revenue
Market
Implicit Collusion
18. First firm to set its output (Stackelberg's model)
Cutthroat Competition
Empty threat
Leader
Herfindahl-Hirschman index (HHI)
19. Single firm is sole producer of a product for which there are no close substitutes
Kinked-demand curve
Pure monopoly
Dominant strategy
Four-firm concentration ratio
20. 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
Common knowledge
Non-price competition
Leader
Cournot oligopoly
21. A strategy or action that always provides the best outcome no matter what decisions rivals make
Limit pricing
Dominant strategy
Oligopoly
Implicit Collusion
22. The smallest quantity at which the average cost curve reaches its minimum
Limit pricing
Minimum efficient scale (full capacity)
Nonprime competition
Bertrand oligopoly
23. 1/(1+i)n
Cooperation
Import competition
Present Value (PV)
Open Collusion
24. A merger of firms in unrelated industries. Example: If Purina Dow Chow merged with Pampers Diaper Company
Merger
The Threat from Potential Entrants Firms
Conglomerate Merger
Ownership of a Key Input
25. 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)
Empty threat
The Threat from Potential Entrants Firms
Monopolistic Characteristics:
Barrier to entry
26. Sellers can identify different types of customers and offer each a different price. Examples are special prices for students or the elderly
Third-Degree Price Discrimination
Rothschild index
Profit
Subgame perfect equilibrium
27. 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
Non-price competition
Price matching
Common knowledge
Rothschild index
28. 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
Subgame perfect equilibrium
Unbalanced Oligopoly
Block pricing
Follower
29. A product's ability to satisfy a large number of consumers at the same time
Simultaneous consumption
Tit-for-tat strategy
Monopoly (characteristics)
Bargaining Power of Buyers
30. Takes Place inside the Mind of the consumer
Tacit collusion
Basis for Product Differentiation
Open Collusion
Product Differentiation
31. 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
Strategic behavior
Payoff
Brand Multiplication
32. 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
Prisoner's dilemma
Extensive-form game
Double marginalization
Conglomerate Merger
33. Actions taken by firms to plan for and react to competition from rival firms
Strategic behavior
Interdependence
Two-part Tariff Method of Pricing
Tacit collusion
34. Pricing strategy in which a firm optimally sets the internal price at which an upstream division wells an input to a downstream division
Common knowledge
Transfer pricing
First-Degree Price Discrimination (Perfect)
Perfect Competition (characteristics)
35. 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
Tacit collusion
Price war
Limit pricing
Implicit Collusion
36. A pricing strategy in which profits gained from the sale of one product are used to subsidize sales of a related product
Normal-form game
Market Structure
Tacit collusion
Cross-subsidy pricing
37. When the decisions of two or more firms significantly affect each others' profits
Monopoly (characteristics)
Limit price
Common knowledge
Interdependence
38. 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)
Stackelberg oligopoly
Market
Transfer pricing
Limit pricing
39. Occurs when a firm produces output - whatever its level - at a higher cost than is necessary to produce it
Perfect Competitor Characteristics
Cheating
Randomized pricing
Inefficiency
40. A situation in which neither firm has incentive to change its output given the other firm's output
Sequential-move game
Cournot equilibrium
Peak-load pricing
Minimum efficient scale (full capacity)
41. The competition that domestic firms encounter from the products and services of foreign producers
Equilibrium
Implicit Collusion
Strategy
Import competition
42. In game theory - a game that is played again sometime after the previous game ends
Reservation Price
Prisoner's dilemma
Mixed (randomized) strategy
Repeated game
43. A strategy that is contingent on the past play of a game and ion which some particular past action "triggers" a different action by a player
Trigger strategy
Conglomerate Merger
Vertical Merger
Present Value (PV)
44. An oligopoly in which the sales of the leading (top four) firms are distributed unevenly among them
Minimum efficient scale (full capacity)
Payoff matrix
Pure monopoly
Unbalanced Oligopoly
45. Revenue-Costs
One-shot game
Profit
Tacit collusion
Market Structure
46. In game theory - a decision rule that describes the actions a player will take at each decision point
Strategy
Leader
Empty threat
Perfect Competition (characteristics)
47. Intense competition in which competitors cut retail prices to gain business--oligopolistic competition
Perfect Competition (characteristics)
High Price Elasticity
Third-degree price discrimination
Price war
48. Multiple firms make the same pricing decisions even though they have not explicitly consulted with each other
Differentiated oligopoly
Marginal Revenue
Profit
Implicit Collusion
49. An establishment firm commits to setting price below the profit-maximizing level to prevent entry
Inefficiency
Payoff matrix
Payoff
Limit pricing
50. Ranks industries according to how much social welfare would improve if the output in an industry were increased by a small amount
Socially optimal price
Dansby-Willig performance index
Finding profit for oligopoly games
Examples of Oligopoly