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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 merger between two firms in the same industry. Example: 2004 K-Mart merged with Sears
Dansby-Willig performance index
Nonprime competition
Natural Monopoly (local phone or electric company)
Horizontal Merger/Integration
2. 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
Contestable market
Bargaining Power of Buyers
Oligopoly
Bargaining Power of Suppliers
3. 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
Perfect Competitor Characteristics
Two-part pricing
Cournot oligopoly
Strategic behavior
4. 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
Maximizing profit in Oligopoly games
Kinked demand curve model
Open Collusion
Joint Venture
5. Revenue-Costs
Profit
One-shot game
Cournot equilibrium
Leader
6. 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.)
Competitive market
Monopolistic Characteristics:
Simultaneous decision games
Contestable market
7. 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
Follower
Randomized pricing
Market
Oligopoly
8. Increases in the value of a product to each user - including existing users - as the total number of users rises
Inter-industry competition
Network effects
Monopolistic Characteristics:
Non-cooperative behavior
9. All firms and individuals willing and able to buy or sell a particular product
Joint Venture
Indefinitely repeated game
Open Collusion
Market
10. The price that is low enough to deter entry
Limit price
Common knowledge
Reservation Price
Third-Degree Price Discrimination
11. Price of a product that enables its producer to obtain a normal profit & that is equal to the ATC of producing it
Examples of Monopolistic Competition
Fair return price
Bertrand oligopoly
Third-degree price discrimination
12. A representation of a game indicating the players - their possible strategies - and the payoffs resulting from alternative strategies
Pure monopoly
Reservation Price
Normal-form game
Bargaining Power of Suppliers
13. A simpler way to operationalize first-degree price discrimination
Two-part Tariff Method of Pricing
Credible threat
Basis for Product Differentiation
Primary Sources of Monopolistic Power
14. In game theory - a statement of harmful intent easily dismissed by recipient because threat not considered believable
Equilibrium
Barrier to entry
Empty threat
Kinked demand curve model
15. Face competition from companies that currently are not in the market but might enter
Mixed (randomized) strategy
Economies of scale
Block pricing
The Threat from Potential Entrants Firms
16. Competition based on factors that are not related to price - such as product quality - service and financing - business location - and reputation
Cheating
Cooperation
Double marginalization
Nonprime competition
17. Single seller in an industry - Strong barriers to entry - Profit maximization - faces market demand and sets MR=MC - Unexploited gains from trade
Transfer pricing
Tacit collusion
Price war
Monopoly (characteristics)
18. 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
Third-degree price discrimination
Examples of Oligopoly
Lerner index
Implicit Collusion
19. When no one firm has a monopoly - but producers nonetheless realize that they can affect market prices. Firms compete but possess market power
Imperfect competition
Examples of Oligopoly
Covert Collusion
Price matching
20. Pricing strategy in which a firm intentionally varies its price in an attempt to "hide" price information from consumers and rivals
Indefinitely repeated game
Mixed (randomized) strategy
Payoff
Randomized pricing
21. When something can be consumed without reducing the benefits available for subsequent consumption; can be consumed without supporting rivalry between consumers
Commodity bundling
Stackelberg oligopoly
Non-rivalrous consumption
Conglomerate Merger
22. 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
Third-Degree Price Discrimination
Unbalanced Oligopoly
Block pricing
Cross-subsidy pricing
23. The actions by persons - firms - or unions to gain special benefits from government at taxpayer's or someone else's expense
Rent-seeking behavior
Cournot oligopoly
Cheating
Cutthroat Competition
24. Produce identical products
Perfect Competitor Characteristics
Double marginalization
Unbalanced Oligopoly
Economies of scale
25. 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
Fair return price
Perfect Competition Long Run Supply
Four-firm concentration ratio
26. 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
Non-rivalrous consumption
Simultaneous-move game
Monopoly (characteristics)
27. A business arrangement in which two or more firms undertake a specific economic activity together. Once the activity is over - the firms go their own way
Joint Venture
Peak-load pricing
Block pricing
Strategic behavior
28. A situation in which neither firm has incentive to change its output given the other firm's output
First-mover advantage
Price discrimination
Mutual interdependence
Cournot equilibrium
29. 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
Tacit collusion
Prisoner's dilemma
Perfect Competitor Characteristics
Extensive-form game
30. The reward received by a player in a game - such as the profit earned by an oligopolist
Dansby-Willig performance index
Cutthroat Competition
Payoff
High Price Elasticity
31. The practice of charging different prices to consumers for the same good or service
Vertical Merger
Leader
Price discrimination
Collusion
32. A situation in which all decision makers know the payoff table - and they believe all other decision makers also know the payoff table
Common knowledge
Secure strategy
Strategy
Bargaining Power of Suppliers
33. 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
Brand Multiplication
First-mover advantage
Monopolistic Competition
Price discrimination
34. The derivative of total revenue
Marginal Revenue
Product differentiation
Natural Monopoly (local phone or electric company)
Secure strategy
35. If production of a good requires a particular input - then control of that input can be a barrier to entry
Tacit collusion
Ownership of a Key Input
Primary Sources of Monopolistic Power
Two-part pricing
36. The practice of bundling several different products together and selling them at a single "bundle" price
Commodity bundling
Profit
Perfect Competition Long Run Supply
Patent
37. Identical or substitutable
Imperfect competition
Tacit collusion
Market
Undifferentiated
38. 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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39. A table showing - for every possible combination of decisions players can make - the outcomes or "payoffs" for each of the players in each decision combination
Monopolistic Characteristics:
Payoff table
Inefficiency
Undifferentiated
40. An oligopoly in which the sales of the leading (top four) firms are distributed unevenly among them
Non-price competition
Examples of Monopolistic Competition
Basis for Product Differentiation
Unbalanced Oligopoly
41. A strategy whereby a player randomizes over two or more available actions in order to keep rivals from being able to predict his action
Mixed (randomized) strategy
Covert Collusion
Disappearing invisible hand
Common knowledge
42. An equilibrium in a game in which players cooperate to increase their mutual payoff
Tacit collusion
Cooperative equilibrium
Bargaining Power of Buyers
Sequential-move game
43. 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)
Commodity bundling
Brand Multiplication
Stackelberg oligopoly
Mutual Interdependence
44. Game in which one player makes a move after observing the other player's move
The Threat from Potential Entrants Firms
Maximizing profit in Oligopoly games
Open Collusion
Sequential-move game
45. 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
Patent
Non-rivalrous consumption
Differentiated oligopoly
46. A strategy in which a firm advertises a price and a promise to match any lower prices offered by a competitor
Collusion
Price matching
Price discrimination
Two-part pricing
47. 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
Dominant strategy equilibrium
Two-part pricing
Homogenous oligopoly
Price matching
48. 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
Normal-form game
Collusion
Kinked-demand curve
Contestable market
49. Toothpaste - shampoo - restaurants - banks
Examples of Monopolistic Competition
The Threat from Potential Entrants Firms
Non-rivalrous consumption
Import competition
50. Where a firm can charge different groups of consumers different prices for the same product. Example: student or senior discounts
Herfindahl-Hirschman index (HHI)
Nonprime competition
Third-degree price discrimination
Credible threat