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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. Ignoring the effects of their actions on each others' profits
Mutual interdependence
Non-cooperative behavior
Monopolistic Competition
Inter-industry competition
2. Many buyers and sellers - product homogeneity - low cost and accurate information - free entry and exit - best regarded as a benchmark
Disappearing invisible hand
Mutual interdependence
Perfect Competition (characteristics)
Open Collusion
3. 1/(1+i)n
Two-part Tariff Method of Pricing
Perfect Competition Barriers to Entry
Present Value (PV)
Commodity bundling
4. An oligopoly in which the firms produce a standardized product
Inter-industry competition
Simultaneous decision games
Kinked-demand curve
Homogenous oligopoly
5. Maximize economic profit by producing the quantity at which MC=MR
Dominant firm oligopoly
Monopolistic Competition
Maximizing profit in Oligopoly games
Dansby-Willig performance index
6. The competition for sales between the products of one industry and the products of another industry
Kinked-demand curve
Import competition
Strategic behavior
Inter-industry competition
7. A merger between two firms in the same industry. Example: 2004 K-Mart merged with Sears
Interdependence
Horizontal Merger/Integration
Economies of scale
Randomized pricing
8. Game in which one player makes a move after observing the other player's move
Double marginalization
Two-part Tariff Method of Pricing
Sequential-move game
Non-cooperative equilibrium
9. 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
One-shot game
Finding profit for oligopoly games
Commodity bundling
Barrier to entry
10. When firms make decisions that make every firm better off than in a noncooperative Nash equilibrium
Payoff table
Rothschild index
Non-cooperative behavior
Cooperation
11. Toothpaste - shampoo - restaurants - banks
Examples of Monopolistic Competition
Non-price competition
Non-cooperative behavior
Peak-load pricing
12. A game that is played over and over again forever and in which players receive payoffs during each play of the game
Merger
Indefinitely repeated game
Non-price competition
Price Leadership
13. 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
Joint Venture
Cournot equilibrium
Contestable market
Payoff
14. Marginal cost curve above average variable cost - P* = SRMC
Strategic behavior
Dansby-Willig performance index
Perfect Competition Short Run Supply
Mixed (randomized) strategy
15. 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
Rothschild index
Economies of scale
Monopolistic Characteristics:
Nash equilibrium
16. Actions taken by a firm to achieve a goal - such as maximizing profits
Lerner index
Disappearing invisible hand
Simultaneous decision games
Business strategy
17. The physical characteristics of the market within which firms interact
Tit-for-tat strategy
Cutthroat Competition
Market Structure
Horizontal Merger/Integration
18. The derivative of total revenue
Homogenous oligopoly
Profit
Subgame perfect equilibrium
Marginal Revenue
19. When a manager makes a noncooperative decision
Sweezy oligopoly
Limit price
Cheating
No cooperative equilibrium
20. 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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21. 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)
One-shot game
Barrier to entry
Product differentiation
Prisoner's dilemma
22. The price of a product that results in the most efficient allocation of an economy's resources and that is equal to the marginal cost of the product
Socially optimal price
Dansby-Willig performance index
Nonprime competition
First-mover advantage
23. 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)
Stackelberg oligopoly
Open Collusion
Cutthroat Competition
Bargaining Power of Buyers
24. A strategy whereby a player randomizes over two or more available actions in order to keep rivals from being able to predict his action
One-shot game
Primary Sources of Monopolistic Power
Inefficiency
Mixed (randomized) strategy
25. Operates like the alleged Mafia. Region division of the market among the firms in the industry
Herfindahl-Hirschman index (HHI)
Open Collusion
Sequential game
Product differentiation
26. Variations on one good so that a firm can increase market sharea
Equilibrium
Brand Multiplication
Lerner index
Ownership of a Key Input
27. An equilibrium in a game in which players cooperate to increase their mutual payoff
Cooperative equilibrium
Sequential-move game
Leader
Cross-subsidy pricing
28. Involves price-fixing
Covert Collusion
Contestable market
Secure strategy
Payoff matrix
29. A table that shows the payoffs that each firm earns from every combination of strategies by the firms
Dominant strategy equilibrium
Payoff matrix
Minimum efficient scale (full capacity)
Nash equilibrium
30. An index of market concentration. Sum of squared market shares of all the firms in the industry times 10K HHI=10 - 000Σwi2
Peak-load pricing
Payoff
Implicit Collusion
Herfindahl-Hirschman index (HHI)
31. Specific assets - Economies of scale - Excess capacity - Reputation effects
Prisoners' dilemma
Non-rivalrous consumption
Payoff table
Perfect Competition Barriers to Entry
32. If buyers have enough bargaining power - they can insist on lower prices - higher-quality products - or additional services
Randomized pricing
Market
Bargaining Power of Buyers
Sweezy oligopoly
33. Both players have dominant strategies and play them
Import competition
Herfindahl-Hirschman index (HHI)
Dominant strategy equilibrium
Payoff matrix
34. Ranks industries according to how much social welfare would improve if the output in an industry were increased by a small amount
Cooperative equilibrium
Oligopoly
Fair return price
Dansby-Willig performance index
35. An oligopoly in which the firms produce a differentiated product
Dominant firm oligopoly
Limit pricing
Double marginalization
Differentiated oligopoly
36. A product's ability to satisfy a large number of consumers at the same time
Simultaneous consumption
Present Value (PV)
Collusion
Inter-industry competition
37. Demand line is above ATC curve
Third-Degree Price Discrimination
Perfect Competitor Characteristics
Price discrimination
Perfect Competitor Making a Profit
38. 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
Credible threat
Market Structure
Block pricing
Perfect Competition Barriers to Entry
39. A strategy or action that always provides the best outcome no matter what decisions rivals make
Dominant strategy
Rent-seeking behavior
Limit pricing
Kinked demand curve model
40. 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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41. An establishment firm commits to setting price below the profit-maximizing level to prevent entry
Limit pricing
Differentiated oligopoly
Randomized pricing
Tit-for-tat strategy
42. Rival who sets its output after the leader (Stackelberg's model)
Follower
Disappearing invisible hand
First-mover advantage
Peak-load pricing
43. A merger between firms who have a buyer/supplier relationship. Example: BF Goodrich merging with rubber plantations
Vertical Merger
Strategic behavior
Bargaining Power of Buyers
Brand Multiplication
44. When no one firm has a monopoly - but producers nonetheless realize that they can affect market prices. Firms compete but possess market power
Fair return price
Concentration Ratio
Imperfect competition
Sequential-move game
45. Sellers can identify different types of customers and offer each a different price. Examples are special prices for students or the elderly
Limit price
Nash equilibrium
Third-Degree Price Discrimination
Subgame perfect equilibrium
46. In game theory - benefit obtained by party that moves first in a sequential game
Rent-seeking behavior
First-mover advantage
Stackelberg oligopoly
Price matching
47. Revenue-Costs
Imperfect competition
Non-price competition
Competitive market
Profit
48. An agreement among firms in a market about quantities to produce or prices to charge in attempts to limit competition
Non-rivalrous consumption
Collusion
Tit-for-tat strategy
Perfect Competitor Making a Profit
49. A situation in which all decision makers know the payoff table - and they believe all other decision makers also know the payoff table
Contestable market
Common knowledge
Tacit collusion
Open Collusion
50. Actions taken by firms to plan for and react to competition from rival firms
Price matching
Strategic behavior
Perfect Competitor Making a Profit
Kinked demand curve model