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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. A table that shows the payoffs for every possible action by each player for every possible action by the other player
Payoff matrix
Tacit collusion
Present Value (PV)
Mutual interdependence
2. One large firm that has a significant cost advantage over many other - smaller competing firms; -the large firm operates as a monopoly: setting price and output to maximize profit; -the small firms act as perfect competitors: taking as given the mar
Monopolistic Characteristics:
Dominant firm oligopoly
Non-rivalrous consumption
Kinked-demand curve
3. 1/(1+i)n
Payoff table
Tacit collusion
Maximizing profit in Oligopoly games
Present Value (PV)
4. Produce differentiated products. Make a profit or take a lost in the short run - in the long run the firm will break even. (MOST number of firms.)
Monopolistic Characteristics:
Reservation Price
Conglomerate Merger
Market Structure
5. Actions taken by firms to plan for and react to competition from rival firms
Strategic behavior
Basis for Product Differentiation
Market Structure
Four-firm concentration ratio
6. 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
Disappearing invisible hand
Third-Degree Price Discrimination
Import competition
Nash equilibrium
7. 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
Payoff
Marginal Revenue
Sweezy oligopoly
Duopoly
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
Extensive-form game
Two-part pricing
Contestable market
Perfect Competition (characteristics)
9. 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
Economies of scale
Monopolistic Competition
Brand Multiplication
Limit pricing
10. 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
Cooperation
Oligopoly
Examples of Monopolistic Competition
Four-firm concentration ratio
11. 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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12. A situation in which neither firm has incentive to change its output given the other firm's output
Examples of Monopolistic Competition
Cournot equilibrium
Equilibrium
Homogenous oligopoly
13. Specific assets - Economies of scale - Excess capacity - Reputation effects
Perfect Competition Barriers to Entry
Payoff matrix
Ownership of a Key Input
Brand Multiplication
14. A merger between two firms in the same industry. Example: 2004 K-Mart merged with Sears
Horizontal Merger/Integration
Concentration Ratio
Dansby-Willig performance index
Inefficiency
15. 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
Product Differentiation
Rent-seeking behavior
Extensive-form game
Tacit collusion
16. Revenue-Costs
Maximizing profit in Oligopoly games
Perfect Competition (characteristics)
Profit
Differentiated oligopoly
17. An oligopoly in which the firms produce a differentiated product
Differentiated oligopoly
Dominant strategy
Extensive-form game
Kinked-demand curve
18. Occurs when a firm produces output - whatever its level - at a higher cost than is necessary to produce it
Inefficiency
Maximizing profit in Oligopoly games
Block pricing
Market Structure
19. 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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20. 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
Third-Degree Price Discrimination
Two-part pricing
Non-rivalrous consumption
Repeated game
21. A combination of two or more companies into one company
Pure monopoly
Limit price
Merger
Brand Multiplication
22. 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"
Credible threat
Price discrimination
Cheating
Contestable market
23. 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
Competitive market
Open Collusion
Monopoly (characteristics)
Kinked demand curve model
24. 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)
What is game?
Vertical Merger
Barrier to entry
Cooperation
25. A game that is played over and over again forever and in which players receive payoffs during each play of the game
Concentration Ratio
Market Structure
Kinked-demand curve
Indefinitely repeated game
26. An establishment firm commits to setting price below the profit-maximizing level to prevent entry
Limit pricing
Unbalanced Oligopoly
No cooperative equilibrium
Commodity bundling
27. 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)
Differentiated oligopoly
Stackelberg oligopoly
Economies of scale
Mutual Interdependence
28. 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)
First-mover advantage
Limit pricing
Extensive-form game
Four-firm concentration ratio
29. Demand line is above ATC curve
Perfect Competitor Making a Profit
Prisoners' dilemma
Market Structure
Bertrand oligopoly
30. If buyers have enough bargaining power - they can insist on lower prices - higher-quality products - or additional services
Bargaining Power of Buyers
Tacit collusion
Third-degree price discrimination
First-Degree Price Discrimination (Perfect)
31. When something can be consumed without reducing the benefits available for subsequent consumption; can be consumed without supporting rivalry between consumers
Conglomerate Merger
Interdependence
Imperfect competition
Non-rivalrous consumption
32. Marginal cost curve above average variable cost - P* = SRMC
Cutthroat Competition
Product differentiation
Secure strategy
Perfect Competition Short Run Supply
33. Single seller in an industry - Strong barriers to entry - Profit maximization - faces market demand and sets MR=MC - Unexploited gains from trade
Monopoly (characteristics)
Implicit Collusion
No cooperative equilibrium
Bargaining Power of Buyers
34. A situation in which no one wants to change his or her behavior
Payoff table
Equilibrium
Transfer pricing
Simultaneous-move game
35. 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
Cutthroat Competition
Present Value (PV)
Lerner index
Limit pricing
36. When a manager makes a noncooperative decision
Indefinitely repeated game
Cheating
Credible threat
Product Differentiation
37. Rules - strategies - payoffs - outcomes
Dominant firm oligopoly
What is game?
Herfindahl-Hirschman index (HHI)
Stackelberg oligopoly
38. Pricing strategy in which a firm intentionally varies its price in an attempt to "hide" price information from consumers and rivals
Randomized pricing
Sequential-move game
Indefinitely repeated game
Economies of scale
39. 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
Fair return price
Tacit collusion
Simultaneous consumption
40. When managers are able to charge each consumer their reservation price. Examples are car and home sales
First-Degree Price Discrimination (Perfect)
Payoff
Transfer pricing
Price matching
41. First firm to set its output (Stackelberg's model)
Follower
Profit
Leader
Sequential game
42. Toothpaste - shampoo - restaurants - banks
Vertical Merger
Examples of Monopolistic Competition
Merger
Finding profit for oligopoly games
43. In game theory - game where parties make their moves in turn - one party making the first move followed by the other
Monopolistic Competition
Sequential game
What is game?
Perfect Competitor Making a Profit
44. Actions taken by a firm to achieve a goal - such as maximizing profits
Non-cooperative behavior
Product differentiation
Price Leadership
Business strategy
45. An agreement among firms in a market about quantities to produce or prices to charge in attempts to limit competition
Reservation Price
One-shot game
Collusion
Contestable market
46. Ranks industries according to how much social welfare would improve if the output in an industry were increased by a small amount
Payoff matrix
Dansby-Willig performance index
Kinked demand curve model
Examples of Oligopoly
47. Game in which each player makes decisions without knowledge of the other player's decisions
Common knowledge
Kinked demand curve model
Simultaneous-move game
Cournot equilibrium
48. A strategy in which a firm advertises a price and a promise to match any lower prices offered by a competitor
Price matching
Credible threat
Implicit Collusion
Commodity bundling
49. In game theory - benefit obtained by party that moves first in a sequential game
Undifferentiated
Horizontal Merger/Integration
Perfect Competition Barriers to Entry
First-mover advantage
50. An oligopoly in which the firms produce a standardized product
First-Degree Price Discrimination (Perfect)
Tit-for-tat strategy
Homogenous oligopoly
Limit pricing