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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. The derivative of total revenue






2. When the decisions of two or more firms significantly affect each others' profits






3. Face competition from companies that currently are not in the market but might enter






4. Rules - strategies - payoffs - outcomes






5. A table that shows the payoffs for every possible action by each player for every possible action by the other player






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






7. 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






8. Demand line is above ATC curve






9. A merger of firms in unrelated industries. Example: If Purina Dow Chow merged with Pampers Diaper Company






10. Both players have dominant strategies and play them






11. A strategy that guarantees the highest payoff given the worst possible scenario






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






13. 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






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






15. Rival who sets its output after the leader (Stackelberg's model)






16. Using advertising and other means to try to increase a firm's sales






17. The practice of charging different prices to consumers for the same good or service






18. Multiple firms make the same pricing decisions even though they have not explicitly consulted with each other






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






20. In game theory - a decision rule that describes the actions a player will take at each decision point






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






22. Pricing strategy in which higher prices are charged during peak hours than during off-peak hours






23. The percentage of the total industry sales accounted for by the four largest firms in the industry. OUTPUT of 4 largest firms over TOTAL output in industry. C4=(S1+...+S4)/St or (w1+...+w4)






24. Different units of a product are sold at different prices. Examples are buying in bulk - or - commodity-bundling






25. 2 firms - simplest case in an oligopoly. Profits higher if limiting their production






26. A firm whose price decisions are tacitly accepted and followed by others in the industry






27. The smallest quantity at which the average cost curve reaches its minimum






28. Intense competition in which competitors cut retail prices to gain business--oligopolistic competition






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






30. 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






31. 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






32. Identical or substitutable






33. A table that shows the payoffs that each firm earns from every combination of strategies by the firms






34. In game theory - a game that is played again sometime after the previous game ends






35. A simpler way to operationalize first-degree price discrimination






36. Steel - autos - colas - airlines






37. Physical differences - Convenience - Ambience - Reputations - Appeals to vanity - Unconscious fears and desires - Snob appeal - Customized products






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






39. 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






40. Produce identical products






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






42. 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






43. The physical characteristics of the market within which firms interact






44. 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






45. 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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46. 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






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






48. 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"






49. 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






50. Occurs when a firm produces output - whatever its level - at a higher cost than is necessary to produce it