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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. The practice of bundling several different products together and selling them at a single "bundle" price






2. Steel - autos - colas - airlines






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






4. 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






5. Demand line is above ATC curve






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






7. 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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8. The reward received by a player in a game - such as the profit earned by an oligopolist






9. 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"






10. Maximize economic profit by producing the quantity at which MC=MR






11. Game in which each player makes decisions without knowledge of the other player's decisions






12. 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






13. The competition for sales between the products of one industry and the products of another industry






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






15. The exclusive right to a product for a period of 20 years from the date the product is invented






16. A game that is played over and over again forever and in which players receive payoffs during each play of the game






17. Ranks industries according to how much social welfare would improve if the output in an industry were increased by a small amount






18. Single seller in an industry - Strong barriers to entry - Profit maximization - faces market demand and sets MR=MC - Unexploited gains from trade






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






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






21. 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






22. 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






23. 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






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






25. 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






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






27. 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






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






30. Price Sensitive






31. A situation where one firm is able to provide a service at a lower cost than could several competing firms






32. The maximum price that a buyer is willing to pay for a good - or the minimum price that a seller will accept






33. The practice of charging different prices to consumers for the same good or service






34. 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






35. Simultaneous move game that is not repeated






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






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






38. 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






39. 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






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






41. A merger of firms in unrelated industries. Example: If Purina Dow Chow merged with Pampers Diaper Company






42. 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






43. Set marginal cost for the cartel equal to marginal revenue for the cartel; -cartel's marginal cost curve is the horizontal sum of the MC curves of the two firms; -Marginal revenue curve is like that of a monopoly






44. 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






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






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






47. 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)






48. When managers are able to charge each consumer their reservation price. Examples are car and home sales






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






50. 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