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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 strategy in which a firm advertises a price and a promise to match any lower prices offered by a competitor
Double marginalization
Price matching
Payoff matrix
Dominant firm oligopoly
2. Specific assets - Economies of scale - Excess capacity - Reputation effects
Pure monopoly
Perfect Competition Barriers to Entry
Two-part pricing
Randomized pricing
3. 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
Nash equilibrium
Import competition
Perfect Competitor Making a Profit
Rothschild index
4. 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)
Brand Multiplication
Non-rivalrous consumption
Equilibrium
Stackelberg oligopoly
5. Price of a product that enables its producer to obtain a normal profit & that is equal to the ATC of producing it
Monopolistic Competition
Competitive market
Fair return price
Non-rivalrous consumption
6. When something can be consumed without reducing the benefits available for subsequent consumption; can be consumed without supporting rivalry between consumers
Non-rivalrous consumption
Herfindahl-Hirschman index (HHI)
Cooperation
What is game?
7. 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
Patent
Monopolistic Competition
Socially optimal price
Third-Degree Price Discrimination
8. First firm to set its output (Stackelberg's model)
Dominant strategy equilibrium
Leader
Marginal Revenue
Payoff matrix
9. An index of market concentration. Sum of squared market shares of all the firms in the industry times 10K HHI=10 - 000Σwi2
Strategic behavior
Herfindahl-Hirschman index (HHI)
Cooperation
First-Degree Price Discrimination (Perfect)
10. 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
Maximizing profit in Oligopoly games
Dominant strategy
Barrier to entry
Block pricing
11. The reward received by a player in a game - such as the profit earned by an oligopolist
Natural Monopoly (local phone or electric company)
Cross-subsidy pricing
Perfect Competition Barriers to Entry
Payoff
12. Rules - strategies - payoffs - outcomes
What is game?
Kinked-demand curve
Import competition
Normal-form game
13. 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
Payoff matrix
Extensive-form game
Non-cooperative equilibrium
High Price Elasticity
14. Physical differences - Convenience - Ambience - Reputations - Appeals to vanity - Unconscious fears and desires - Snob appeal - Customized products
Competitive market
First-Degree Price Discrimination (Perfect)
Basis for Product Differentiation
Payoff matrix
15. An oligopoly in which the sales of the leading (top four) firms are distributed unevenly among them
Dansby-Willig performance index
Cournot oligopoly
Unbalanced Oligopoly
Simultaneous consumption
16. 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
Disappearing invisible hand
Bargaining Power of Suppliers
Dansby-Willig performance index
Natural Monopoly (local phone or electric company)
17. 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
Trigger strategy
Disappearing invisible hand
Ownership of a Key Input
Rent-seeking behavior
18. Multiple firms make the same pricing decisions even though they have not explicitly consulted with each other
Implicit Collusion
Credible threat
Non-cooperative equilibrium
Dansby-Willig performance index
19. Long-run marginal cost curve above long-run average cost
Perfect Competition Long Run Supply
Network effects
Trigger strategy
One-shot game
20. Single firm is sole producer of a product for which there are no close substitutes
Pure monopoly
Bargaining Power of Buyers
Commodity bundling
Mutual interdependence
21. A combination of two or more companies into one company
Sequential game
Mutual Interdependence
Merger
Perfect Competition (characteristics)
22. Pricing strategy in which a firm intentionally varies its price in an attempt to "hide" price information from consumers and rivals
Mutual Interdependence
Open Collusion
Simultaneous-move game
Randomized pricing
23. Cooperation among firms that does not involve an explicit agreement
Price matching
Tacit collusion
Nash equilibrium
Reservation Price
24. Toothpaste - shampoo - restaurants - banks
Joint Venture
Examples of Monopolistic Competition
High Price Elasticity
Open Collusion
25. A situation in which a change in price strategy by one firm affects sales and profits of another
Marginal Revenue
What is game?
Barrier to entry
Mutual interdependence
26. 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
Finding profit for oligopoly games
Ownership of a Key Input
Prisoners' dilemma
Two-part Tariff Method of Pricing
27. If production of a good requires a particular input - then control of that input can be a barrier to entry
Cournot equilibrium
Ownership of a Key Input
Bargaining Power of Buyers
Homogenous oligopoly
28. An oligopoly in which the firms produce a standardized product
Examples of Oligopoly
Homogenous oligopoly
Strategy
Price matching
29. Simultaneous move game that is not repeated
Non-price competition
Concentration Ratio
Unbalanced Oligopoly
One-shot game
30. 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
Cutthroat Competition
Price matching
Profit
31. A product's ability to satisfy a large number of consumers at the same time
Simultaneous consumption
Dominant strategy
Cross-subsidy pricing
Payoff table
32. 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
Secure strategy
Trigger strategy
Economies of scale
Barrier to entry
33. A representation of a game indicating the players - their possible strategies - and the payoffs resulting from alternative strategies
Normal-form game
Collusion
Present Value (PV)
Dominant firm oligopoly
34. 1/(1+i)n
Common knowledge
Interdependence
Monopolistic Characteristics:
Present Value (PV)
35. 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
Dominant strategy
Indefinitely repeated game
Price war
Dominant firm oligopoly
36. 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
Tacit collusion
Socially optimal price
Monopoly (characteristics)
37. A game that is played over and over again forever and in which players receive payoffs during each play of the game
Indefinitely repeated game
Perfect Competitor Making a Profit
Two-part Tariff Method of Pricing
Commodity bundling
38. 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
Cutthroat Competition
Covert Collusion
Subgame perfect equilibrium
Payoff matrix
39. Ranks industries according to how much social welfare would improve if the output in an industry were increased by a small amount
Examples of Monopolistic Competition
Differentiated oligopoly
Concentration Ratio
Dansby-Willig performance index
40. 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.)
Disappearing invisible hand
Examples of Monopolistic Competition
Monopolistic Characteristics:
What is game?
41. Sellers can identify different types of customers and offer each a different price. Examples are special prices for students or the elderly
What is game?
Third-Degree Price Discrimination
Joint Venture
Network effects
42. Many buyers and sellers - product homogeneity - low cost and accurate information - free entry and exit - best regarded as a benchmark
Perfect Competition (characteristics)
Subgame perfect equilibrium
Prisoner's dilemma
Barrier to entry
43. The price that is low enough to deter entry
High Price Elasticity
Limit price
Bargaining Power of Suppliers
Mixed (randomized) strategy
44. 2 firms - simplest case in an oligopoly. Profits higher if limiting their production
Monopolistic Characteristics:
Examples of Oligopoly
Mixed (randomized) strategy
Duopoly
45. Actions taken by firms to plan for and react to competition from rival firms
Credible threat
Strategic behavior
Maximizing profit in Oligopoly games
Transfer pricing
46. The derivative of total revenue
Marginal Revenue
Peak-load pricing
Tit-for-tat strategy
Perfect Competition Short Run Supply
47. The maximum price that a buyer is willing to pay for a good - or the minimum price that a seller will accept
Collusion
Reservation Price
Fair return price
Simultaneous consumption
48. Ignoring the effects of their actions on each others' profits
Non-cooperative behavior
Empty threat
Implicit Collusion
Monopolistic Competition
49. Operates like the alleged Mafia. Region division of the market among the firms in the industry
Simultaneous decision games
One-shot game
Maximizing profit in Oligopoly games
Open Collusion
50. 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
Stackelberg oligopoly
Perfect Competition (characteristics)
Sweezy oligopoly
Monopolistic Characteristics: