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Business Competition
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Subject
:
business-skills
Instructions:
Answer 50 questions in 15 minutes.
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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. All firms and individuals willing and able to buy or sell a particular product
Market
Ownership of a Key Input
Examples of Oligopoly
Horizontal Merger/Integration
2. The reward received by a player in a game - such as the profit earned by an oligopolist
Payoff
Indefinitely repeated game
Limit pricing
Two-part Tariff Method of Pricing
3. Actions taken by a firm to achieve a goal - such as maximizing profits
Business strategy
Minimum efficient scale (full capacity)
Cournot oligopoly
Commodity bundling
4. 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
Simultaneous-move game
Commodity bundling
Secure strategy
5. 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.)
Undifferentiated
Nash equilibrium
Monopolistic Characteristics:
Inter-industry competition
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
Perfect Competitor Making a Profit
Randomized pricing
Payoff
7. 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
Simultaneous-move game
Market
Strategic behavior
Bargaining Power of Suppliers
8. 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
Socially optimal price
Kinked demand curve model
Cutthroat Competition
Maximizing profit in Oligopoly games
9. A representation of a game indicating the players - their possible strategies - and the payoffs resulting from alternative strategies
Rothschild index
Stackelberg oligopoly
Reservation Price
Normal-form game
10. A table that shows the payoffs that each firm earns from every combination of strategies by the firms
Inefficiency
Payoff matrix
Sweezy oligopoly
Oligopoly
11. An agreement among firms in a market about quantities to produce or prices to charge in attempts to limit competition
Cooperative equilibrium
Socially optimal price
Collusion
Normal-form game
12. A situation in which a change in price strategy by one firm affects sales and profits of another
Monopolistic Characteristics:
Homogenous oligopoly
Monopolistic Competition
Mutual interdependence
13. Identical or substitutable
Undifferentiated
Nash equilibrium
Payoff table
The Threat from Potential Entrants Firms
14. Intense competition in which competitors cut retail prices to gain business--oligopolistic competition
Reservation Price
Price war
Non-cooperative equilibrium
Basis for Product Differentiation
15. 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
Peak-load pricing
Limit pricing
Finding profit for oligopoly games
Two-part Tariff Method of Pricing
16. 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
Nonprime competition
Two-part pricing
Sequential-move game
Perfect Competitor Characteristics
17. In game theory - a game that is played again sometime after the previous game ends
Empty threat
Repeated game
Stackelberg oligopoly
Brand Multiplication
18. Variations on one good so that a firm can increase market sharea
Brand Multiplication
Non-cooperative equilibrium
Transfer pricing
Kinked-demand curve
19. Cooperation among firms that does not involve an explicit agreement
Non-cooperative behavior
Business strategy
Tacit collusion
Pure monopoly
20. (1) Economies of Scale; (2) Economies of Scope; (3) Cost Complementarity; and (4)Patents & Other Legal Barriers
Conglomerate Merger
Primary Sources of Monopolistic Power
Sequential game
Prisoner's dilemma
21. An equilibrium in a game in which players cooperate to increase their mutual payoff
Third-degree price discrimination
Price discrimination
Cooperative equilibrium
First-Degree Price Discrimination (Perfect)
22. Marginal cost curve above average variable cost - P* = SRMC
Perfect Competition Short Run Supply
Import competition
Non-price competition
Merger
23. Increases in the value of a product to each user - including existing users - as the total number of users rises
Basis for Product Differentiation
Network effects
Subgame perfect equilibrium
No cooperative equilibrium
24. A measure of market power - the percentage of all sales that is accounted for by the four or eight largest firms in the market
Concentration Ratio
Homogenous oligopoly
Nash equilibrium
Prisoners' dilemma
25. In game theory - a decision rule that describes the actions a player will take at each decision point
Dominant strategy
Covert Collusion
Basis for Product Differentiation
Strategy
26. 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
Block pricing
Nash equilibrium
Sequential-move game
Strategy
27. Rules - strategies - payoffs - outcomes
What is game?
Double marginalization
Subgame perfect equilibrium
Extensive-form game
28. A strategy or action that always provides the best outcome no matter what decisions rivals make
Perfect Competition Long Run Supply
Kinked demand curve model
Implicit Collusion
Dominant strategy
29. The exclusive right to a product for a period of 20 years from the date the product is invented
Patent
Peak-load pricing
Secure strategy
Dominant firm oligopoly
30. The maximum price that a buyer is willing to pay for a good - or the minimum price that a seller will accept
Undifferentiated
Perfect Competitor Making a Profit
Reservation Price
Sweezy oligopoly
31. A merger between two firms in the same industry. Example: 2004 K-Mart merged with Sears
Fair return price
Horizontal Merger/Integration
Oligopoly
Price war
32. A strategy whereby a player randomizes over two or more available actions in order to keep rivals from being able to predict his action
Rent-seeking behavior
Mixed (randomized) strategy
Business strategy
Subgame perfect equilibrium
33. 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
Perfect Competition Short Run Supply
Socially optimal price
Tacit collusion
Economies of scale
34. Demand line is above ATC curve
Perfect Competitor Making a Profit
Limit price
Follower
Simultaneous consumption
35. Steel - autos - colas - airlines
Mixed (randomized) strategy
Examples of Oligopoly
Payoff
Competitive market
36. 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
Network effects
Disappearing invisible hand
Sequential game
Mixed (randomized) strategy
37. When managers are able to charge each consumer their reservation price. Examples are car and home sales
Non-price competition
Examples of Oligopoly
First-Degree Price Discrimination (Perfect)
Lerner index
38. An oligopoly in which the firms produce a differentiated product
Socially optimal price
Concentration Ratio
Prisoners' dilemma
Differentiated oligopoly
39. 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
Marginal Revenue
Contestable market
Cutthroat Competition
40. The competition that domestic firms encounter from the products and services of foreign producers
Price matching
Import competition
Trigger strategy
Cutthroat Competition
41. Face competition from companies that currently are not in the market but might enter
Import competition
The Threat from Potential Entrants Firms
Inefficiency
Sweezy oligopoly
42. 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
Non-cooperative equilibrium
Kinked demand curve model
Payoff matrix
Inefficiency
43. 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
Patent
The Threat from Potential Entrants Firms
Mixed (randomized) strategy
44. A combination of two or more companies into one company
Dominant firm oligopoly
First-Degree Price Discrimination (Perfect)
Merger
Business strategy
45. 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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46. Price of a product that enables its producer to obtain a normal profit & that is equal to the ATC of producing it
Simultaneous consumption
Fair return price
Limit pricing
Cooperation
47. A merger between firms who have a buyer/supplier relationship. Example: BF Goodrich merging with rubber plantations
Simultaneous-move game
Payoff matrix
Vertical Merger
What is game?
48. Pricing strategy in which a firm optimally sets the internal price at which an upstream division wells an input to a downstream division
Transfer pricing
Third-degree price discrimination
Merger
Randomized pricing
49. Ranks industries according to how much social welfare would improve if the output in an industry were increased by a small amount
Perfect Competitor Making a Profit
Competitive market
Dansby-Willig performance index
Imperfect competition
50. Game in which one player makes a move after observing the other player's move
Dominant strategy
Simultaneous decision games
Sequential-move game
Mixed (randomized) strategy
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