Test your basic knowledge |

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. Specific assets - Economies of scale - Excess capacity - Reputation effects






2. First firm to set its output (Stackelberg's model)






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






4. Ignoring the effects of their actions on each others' profits






5. 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






6. A situation in which neither firm has incentive to change its output given the other firm's output






7. (1) Economies of Scale; (2) Economies of Scope; (3) Cost Complementarity; and (4)Patents & Other Legal Barriers






8. 2 firms - simplest case in an oligopoly. Profits higher if limiting their production






9. 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






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






11. Industry in which (1) few firms serving many customers; (2) firms produce identical products t constant marginal cost; (3) firms compete in price and react optimally to competitor's prices; (4) consumers have perfect information and here are no trans






12. Actions taken by firms to plan for and react to competition from rival firms






13. 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






14. 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






15. Single firm is sole producer of a product for which there are no close substitutes






16. 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






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






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






19. An oligopoly in which the firms produce a standardized product






20. Pricing strategy in which a firm intentionally varies its price in an attempt to "hide" price information from consumers and rivals






21. 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






22. Price of a product that enables its producer to obtain a normal profit & that is equal to the ATC of producing it






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






24. Actions taken by a firm to achieve a goal - such as maximizing profits






25. Sellers can identify different types of customers and offer each a different price. Examples are special prices for students or the elderly






26. A product's ability to satisfy a large number of consumers at the same time






27. When firms make decisions that make every firm better off than in a noncooperative Nash equilibrium






28. Toothpaste - shampoo - restaurants - banks






29. A strategy or action that always provides the best outcome no matter what decisions rivals make






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






31. 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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32. A situation in which all decision makers know the payoff table - and they believe all other decision makers also know the payoff table






33. 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






34. 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






35. 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






36. 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"






37. Simultaneous move game that is not repeated






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






39. In game theory - game where parties make their moves in turn - one party making the first move followed by the other






40. 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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41. The price that is low enough to deter entry






42. When a manager makes a noncooperative decision






43. A merger between firms who have a buyer/supplier relationship. Example: BF Goodrich merging with rubber plantations






44. Identical or substitutable






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






46. 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.)






47. The situation when a firm's long-run average costs fall as it increases output






48. 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






49. Long-run marginal cost curve above long-run average cost






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