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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. 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"
Profit
Credible threat
Ownership of a Key Input
Mutual interdependence
2. Identical or substitutable
Undifferentiated
Simultaneous decision games
No cooperative equilibrium
Four-firm concentration ratio
3. The demand curve for a non-collusive oligopolist - which is based on the assumption that rivals will match a price decrease and will ignore a price increase
The Threat from Potential Entrants Firms
Cournot equilibrium
Kinked-demand curve
Dansby-Willig performance index
4. A pricing strategy in which profits gained from the sale of one product are used to subsidize sales of a related product
Cross-subsidy pricing
Leader
Monopoly (characteristics)
Basis for Product Differentiation
5. Using advertising and other means to try to increase a firm's sales
Price Leadership
Empty threat
Non-price competition
Examples of Oligopoly
6. Pricing strategy in which higher prices are charged during peak hours than during off-peak hours
Peak-load pricing
Cournot oligopoly
Basis for Product Differentiation
Collusion
7. The derivative of total revenue
Marginal Revenue
Cheating
High Price Elasticity
Normal-form game
8. 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
Bargaining Power of Buyers
Competitive market
Contestable market
High Price Elasticity
9. An oligopoly in which the firms produce a standardized product
Homogenous oligopoly
Present Value (PV)
Third-Degree Price Discrimination
Empty threat
10. An industry where (1) there are few firms serving many customers; (2) firms produce differentiated products; (3) each firm believes rivals will respond to price reductions but will not follow price increases; and (4) barriers to entry exist
Nonprime competition
Peak-load pricing
Tacit collusion
Sweezy oligopoly
11. A strategy that guarantees the highest payoff given the worst possible scenario
Secure strategy
Normal-form game
Mutual interdependence
Prisoner's dilemma
12. In game theory - a decision rule that describes the actions a player will take at each decision point
Strategy
First-Degree Price Discrimination (Perfect)
Four-firm concentration ratio
Leader
13. 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
Competitive market
Dominant firm oligopoly
Mutual Interdependence
Kinked demand curve model
14. Keeps the price just where it is to maximize profit
Network effects
Simultaneous decision games
Cutthroat Competition
Secure strategy
15. The exclusive right to a product for a period of 20 years from the date the product is invented
Merger
Patent
Imperfect competition
Simultaneous consumption
16. 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
The Threat from Potential Entrants Firms
Vertical Merger
Economies of scale
17. Demand line is above ATC curve
Natural Monopoly (local phone or electric company)
Finding profit for oligopoly games
Perfect Competitor Making a Profit
Non-price competition
18. When something can be consumed without reducing the benefits available for subsequent consumption; can be consumed without supporting rivalry between consumers
Repeated game
Inter-industry competition
Interdependence
Non-rivalrous consumption
19. 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
Homogenous oligopoly
Two-part Tariff Method of Pricing
Disappearing invisible hand
Product differentiation
20. Rival who sets its output after the leader (Stackelberg's model)
Ownership of a Key Input
Two-part pricing
Perfect Competition Barriers to Entry
Follower
21. (1) Economies of Scale; (2) Economies of Scope; (3) Cost Complementarity; and (4)Patents & Other Legal Barriers
Third-degree price discrimination
Extensive-form game
Primary Sources of Monopolistic Power
Profit
22. When a manager makes a noncooperative decision
Prisoners' dilemma
Network effects
Cooperation
Cheating
23. The price that is low enough to deter entry
Limit price
Herfindahl-Hirschman index (HHI)
Payoff matrix
Prisoners' dilemma
24. The competition for sales between the products of one industry and the products of another industry
Two-part pricing
Perfect Competition Barriers to Entry
First-mover advantage
Inter-industry competition
25. 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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26. 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
Basis for Product Differentiation
Payoff table
Vertical Merger
Perfect Competition (characteristics)
27. When no one firm has a monopoly - but producers nonetheless realize that they can affect market prices. Firms compete but possess market power
Economies of scale
Imperfect competition
Non-cooperative equilibrium
Equilibrium
28. A strategy whereby a player randomizes over two or more available actions in order to keep rivals from being able to predict his action
Mixed (randomized) strategy
The Threat from Potential Entrants Firms
Unbalanced Oligopoly
Payoff
29. Intense competition in which competitors cut retail prices to gain business--oligopolistic competition
Trigger strategy
No cooperative equilibrium
Payoff table
Price war
30. A situation where one firm is able to provide a service at a lower cost than could several competing firms
Natural Monopoly (local phone or electric company)
First-mover advantage
Competitive market
Mixed (randomized) strategy
31. Rules - strategies - payoffs - outcomes
Non-price competition
Merger
What is game?
Leader
32. The percentage of the total industry sales accounted for by the four largest firms in the industry. OUTPUT of 4 largest firms over TOTAL output in industry. C4=(S1+...+S4)/St or (w1+...+w4)
Duopoly
Import competition
Third-Degree Price Discrimination
Four-firm concentration ratio
33. Actions taken by firms to plan for and react to competition from rival firms
Subgame perfect equilibrium
Commodity bundling
Strategic behavior
Two-part pricing
34. 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
Kinked demand curve model
Implicit Collusion
Pure monopoly
Prisoner's dilemma
35. A combination of two or more companies into one company
Merger
Interdependence
Payoff matrix
Collusion
36. Price of a product that enables its producer to obtain a normal profit & that is equal to the ATC of producing it
Natural Monopoly (local phone or electric company)
Import competition
Fair return price
Simultaneous-move game
37. In game theory - a statement of harmful intent easily dismissed by recipient because threat not considered believable
Empty threat
Dansby-Willig performance index
Inter-industry competition
No cooperative equilibrium
38. A strategy in which a firm advertises a price and a promise to match any lower prices offered by a competitor
Kinked-demand curve
Price matching
Maximizing profit in Oligopoly games
Price war
39. Where a firm can charge different groups of consumers different prices for the same product. Example: student or senior discounts
Third-degree price discrimination
Strategic behavior
Mutual interdependence
Cheating
40. A representation of a game indicating the players - their possible strategies - and the payoffs resulting from alternative strategies
Monopolistic Characteristics:
Simultaneous-move game
Normal-form game
Limit pricing
41. A table that shows the payoffs that each firm earns from every combination of strategies by the firms
Competitive market
Common knowledge
Payoff matrix
One-shot game
42. 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
Present Value (PV)
Market Structure
Monopolistic Competition
Finding profit for oligopoly games
43. 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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44. 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
Payoff table
Kinked-demand curve
Interdependence
Nash equilibrium
45. 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
Imperfect competition
Double marginalization
Sequential-move game
Patent
46. Physical differences - Convenience - Ambience - Reputations - Appeals to vanity - Unconscious fears and desires - Snob appeal - Customized products
Basis for Product Differentiation
Second-Degree Price Discrimination
Nonprime competition
Sequential game
47. 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
Strategy
Lerner index
Examples of Oligopoly
Market Structure
48. When managers are able to charge each consumer their reservation price. Examples are car and home sales
First-Degree Price Discrimination (Perfect)
Inefficiency
Disappearing invisible hand
Cooperation
49. The practice of bundling several different products together and selling them at a single "bundle" price
Commodity bundling
Rothschild index
Nonprime competition
Mixed (randomized) strategy
50. 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
Joint Venture
Bertrand oligopoly
Differentiated oligopoly
Payoff