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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. When an upstream divisions leverages "monopoly like" power to charge higher marginal cost to a downstream division - resulting in failure of the firm to optimize profits based on the wrong quantity decision at the firms level
Indefinitely repeated game
Double marginalization
Oligopoly
Monopolistic Characteristics:
2. Sellers can identify different types of customers and offer each a different price. Examples are special prices for students or the elderly
Dominant firm oligopoly
Mutual interdependence
Third-Degree Price Discrimination
Prisoners' dilemma
3. Different units of a product are sold at different prices. Examples are buying in bulk - or - commodity-bundling
Second-Degree Price Discrimination
Examples of Monopolistic Competition
The Threat from Potential Entrants Firms
Patent
4. A combination of two or more companies into one company
Open Collusion
Transfer pricing
Perfect Competitor Characteristics
Merger
5. An index of market concentration. Sum of squared market shares of all the firms in the industry times 10K HHI=10 - 000Σwi2
Herfindahl-Hirschman index (HHI)
Perfect Competition Short Run Supply
Vertical Merger
Repeated game
6. In game theory - a statement of harmful intent easily dismissed by recipient because threat not considered believable
Block pricing
Empty threat
Perfect Competitor Characteristics
Tit-for-tat strategy
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
Conglomerate Merger
Finding profit for oligopoly games
Bargaining Power of Suppliers
Perfect Competitor Characteristics
8. Using advertising and other means to try to increase a firm's sales
Non-price competition
Tacit collusion
Cheating
High Price Elasticity
9. 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"
Inter-industry competition
Tacit collusion
Credible threat
Merger
10. A strategy in which a firm advertises a price and a promise to match any lower prices offered by a competitor
Price matching
Perfect Competition Barriers to Entry
Bargaining Power of Suppliers
Mutual Interdependence
11. Produce identical products
Perfect Competitor Characteristics
Bertrand oligopoly
Stackelberg oligopoly
Business strategy
12. A situation in which competing firms must make their individual decisions without knowing the decisions of their rivals
Non-price competition
Reservation Price
Simultaneous decision games
Examples of Oligopoly
13. Simultaneous move game that is not repeated
Follower
One-shot game
Rothschild index
Common knowledge
14. An agreement among firms in a market about quantities to produce or prices to charge in attempts to limit competition
Secure strategy
Tit-for-tat strategy
Collusion
Present Value (PV)
15. Long-run marginal cost curve above long-run average cost
Perfect Competition Long Run Supply
Homogenous oligopoly
Fair return price
Limit price
16. 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
Finding profit for oligopoly games
Two-part pricing
Joint Venture
Monopolistic Competition
17. A merger between firms who have a buyer/supplier relationship. Example: BF Goodrich merging with rubber plantations
Vertical Merger
Patent
Reservation Price
Sequential game
18. Multiple firms make the same pricing decisions even though they have not explicitly consulted with each other
Implicit Collusion
Randomized pricing
Two-part pricing
Contestable market
19. 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
Minimum efficient scale (full capacity)
Disappearing invisible hand
Conglomerate Merger
Lerner index
20. Price Sensitive
Unbalanced Oligopoly
Indefinitely repeated game
High Price Elasticity
Contestable market
21. 2 firms - simplest case in an oligopoly. Profits higher if limiting their production
Ownership of a Key Input
Simultaneous consumption
Duopoly
Dominant firm oligopoly
22. An oligopoly in which the firms produce a differentiated product
Subgame perfect equilibrium
Differentiated oligopoly
Minimum efficient scale (full capacity)
Product differentiation
23. In game theory - game where parties make their moves in turn - one party making the first move followed by the other
Dominant strategy equilibrium
Sequential game
Sequential-move game
Payoff matrix
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
Duopoly
Perfect Competitor Making a Profit
Price matching
Mixed (randomized) strategy
25. 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
Prisoner's dilemma
Trigger strategy
Dansby-Willig performance index
Two-part pricing
26. 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)
Sweezy oligopoly
Barrier to entry
Double marginalization
Commodity bundling
27. 1/(1+i)n
Cournot oligopoly
Four-firm concentration ratio
Present Value (PV)
Import competition
28. A game that is played over and over again forever and in which players receive payoffs during each play of the game
Perfect Competitor Making a Profit
Payoff
Network effects
Indefinitely repeated game
29. When a manager makes a noncooperative decision
Homogenous oligopoly
Minimum efficient scale (full capacity)
Dominant firm oligopoly
Cheating
30. Maximize economic profit by producing the quantity at which MC=MR
Sequential-move game
Maximizing profit in Oligopoly games
Rent-seeking behavior
Socially optimal price
31. The price that is low enough to deter entry
Limit price
What is game?
Simultaneous decision games
Non-rivalrous consumption
32. 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
Price Leadership
Import competition
Sweezy oligopoly
Subgame perfect equilibrium
33. Steel - autos - colas - airlines
Examples of Oligopoly
Finding profit for oligopoly games
Two-part pricing
Strategy
34. The practice of charging different prices to consumers for the same good or service
Dominant strategy
Price Leadership
Sequential-move game
Price discrimination
35. 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)
Cooperative equilibrium
Economies of scale
Stackelberg oligopoly
Vertical Merger
36. Game in which one player makes a move after observing the other player's move
Perfect Competitor Making a Profit
Randomized pricing
Limit pricing
Sequential-move game
37. Actions taken by firms to plan for and react to competition from rival firms
Cutthroat Competition
Commodity bundling
Strategic behavior
Ownership of a Key Input
38. 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
Undifferentiated
Contestable market
Tacit collusion
Open Collusion
39. 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
Equilibrium
Cross-subsidy pricing
Sweezy oligopoly
40. A situation where one firm is able to provide a service at a lower cost than could several competing firms
Perfect Competition Barriers to Entry
Natural Monopoly (local phone or electric company)
Patent
Open Collusion
41. Cooperation among firms that does not involve an explicit agreement
Equilibrium
Empty threat
Open Collusion
Tacit collusion
42. 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.)
Simultaneous consumption
Undifferentiated
Disappearing invisible hand
Monopolistic Characteristics:
43. Many buyers and sellers - product homogeneity - low cost and accurate information - free entry and exit - best regarded as a benchmark
Perfect Competition (characteristics)
Bargaining Power of Buyers
Lerner index
Repeated game
44. A strategy or action that always provides the best outcome no matter what decisions rivals make
Dominant strategy
Subgame perfect equilibrium
Natural Monopoly (local phone or electric company)
Imperfect competition
45. Rival who sets its output after the leader (Stackelberg's model)
Herfindahl-Hirschman index (HHI)
Follower
The Threat from Potential Entrants Firms
Covert Collusion
46. When managers are able to charge each consumer their reservation price. Examples are car and home sales
First-Degree Price Discrimination (Perfect)
Tacit collusion
Cournot equilibrium
Network effects
47. Keeps the price just where it is to maximize profit
Patent
Cutthroat Competition
Tacit collusion
Minimum efficient scale (full capacity)
48. Price of a product that enables its producer to obtain a normal profit & that is equal to the ATC of producing it
Prisoner's dilemma
Homogenous oligopoly
Fair return price
Monopolistic Characteristics:
49. A situation in which neither firm has incentive to change its output given the other firm's output
One-shot game
Tit-for-tat strategy
Cournot equilibrium
Interdependence
50. Game in which each player makes decisions without knowledge of the other player's decisions
Perfect Competition (characteristics)
Simultaneous-move game
Second-Degree Price Discrimination
Network effects
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