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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. Actions taken by a firm to achieve a goal - such as maximizing profits
Mutual interdependence
Subgame perfect equilibrium
Business strategy
Rent-seeking behavior
2. If production of a good requires a particular input - then control of that input can be a barrier to entry
Price matching
Ownership of a Key Input
Reservation Price
Inefficiency
3. A trigger strategy that punishes after an episode of cheating and returns to cooperation if cheating ends
Prisoners' dilemma
Tit-for-tat strategy
Follower
Monopolistic Competition
4. 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
Trigger strategy
Two-part Tariff Method of Pricing
Prisoner's dilemma
Block pricing
5. Pricing strategy in which a firm intentionally varies its price in an attempt to "hide" price information from consumers and rivals
Network effects
Payoff matrix
Transfer pricing
Randomized pricing
6. Toothpaste - shampoo - restaurants - banks
Perfect Competition Short Run Supply
Prisoners' dilemma
Third-Degree Price Discrimination
Examples of Monopolistic Competition
7. The practice of charging different prices to consumers for the same good or service
Non-price competition
Dominant strategy equilibrium
Price discrimination
Vertical Merger
8. All firms and individuals willing and able to buy or sell a particular product
Trigger strategy
Market
Inefficiency
Nonprime competition
9. A situation in which all decision makers know the payoff table - and they believe all other decision makers also know the payoff table
Perfect Competition Long Run Supply
Non-cooperative behavior
Common knowledge
Mixed (randomized) strategy
10. 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
Monopolistic Competition
Market
Leader
Lerner index
11. Occurs when a firm produces output - whatever its level - at a higher cost than is necessary to produce it
Collusion
Inefficiency
High Price Elasticity
Payoff
12. A simpler way to operationalize first-degree price discrimination
Two-part Tariff Method of Pricing
Open Collusion
Bargaining Power of Buyers
Limit pricing
13. Operates like the alleged Mafia. Region division of the market among the firms in the industry
Simultaneous consumption
Dominant strategy
Open Collusion
Limit price
14. 2 firms - simplest case in an oligopoly. Profits higher if limiting their production
Duopoly
Open Collusion
Competitive market
Minimum efficient scale (full capacity)
15. 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.)
Limit price
Stackelberg oligopoly
Four-firm concentration ratio
Monopolistic Characteristics:
16. 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
Extensive-form game
Product differentiation
Inter-industry competition
Competitive market
17. Industry in which (1) few firms serving many customers; (2) firms produce identical products t constant marginal cost; (3) firms compete in price and react optimally to competitor's prices; (4) consumers have perfect information and here are no trans
Tacit collusion
Bertrand oligopoly
Perfect Competitor Making a Profit
Sweezy oligopoly
18. Single seller in an industry - Strong barriers to entry - Profit maximization - faces market demand and sets MR=MC - Unexploited gains from trade
Monopoly (characteristics)
Block pricing
Non-cooperative equilibrium
Subgame perfect equilibrium
19. Rival who sets its output after the leader (Stackelberg's model)
Cross-subsidy pricing
Follower
Barrier to entry
Bargaining Power of Suppliers
20. When no one firm has a monopoly - but producers nonetheless realize that they can affect market prices. Firms compete but possess market power
Duopoly
Collusion
What is game?
Imperfect competition
21. Simultaneous move game that is not repeated
Natural Monopoly (local phone or electric company)
One-shot game
Patent
Simultaneous consumption
22. 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
Basis for Product Differentiation
Herfindahl-Hirschman index (HHI)
Network effects
Nash equilibrium
23. 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
Lerner index
High Price Elasticity
Monopolistic Competition
24. A situation in which competing firms must make their individual decisions without knowing the decisions of their rivals
Non-price competition
Simultaneous decision games
Common knowledge
Herfindahl-Hirschman index (HHI)
25. Both players have dominant strategies and play them
Peak-load pricing
Rothschild index
Repeated game
Dominant strategy equilibrium
26. A table that shows the payoffs for every possible action by each player for every possible action by the other player
Cournot equilibrium
Collusion
Prisoners' dilemma
Payoff matrix
27. Intense competition in which competitors cut retail prices to gain business--oligopolistic competition
Merger
Price war
Peak-load pricing
Finding profit for oligopoly games
28. A table that shows the payoffs that each firm earns from every combination of strategies by the firms
Payoff matrix
Network effects
Interdependence
Collusion
29. Rules - strategies - payoffs - outcomes
Cross-subsidy pricing
What is game?
Horizontal Merger/Integration
Kinked-demand curve
30. Steel - autos - colas - airlines
Examples of Oligopoly
Brand Multiplication
Strategic behavior
Implicit Collusion
31. The situation when a firm's long-run average costs fall as it increases output
Normal-form game
Price war
Economies of scale
Price discrimination
32. The competition for sales between the products of one industry and the products of another industry
Inter-industry competition
Double marginalization
Cutthroat Competition
Cheating
33. 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
Merger
Homogenous oligopoly
Perfect Competition Long Run Supply
Cournot oligopoly
34. 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
Barrier to entry
Differentiated oligopoly
Natural Monopoly (local phone or electric company)
Contestable market
35. A strategy in which a firm advertises a price and a promise to match any lower prices offered by a competitor
Rent-seeking behavior
Price matching
Implicit Collusion
Sweezy oligopoly
36. A pricing strategy in which profits gained from the sale of one product are used to subsidize sales of a related product
Mutual Interdependence
Cross-subsidy pricing
Tacit collusion
Rent-seeking behavior
37. 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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38. An establishment firm commits to setting price below the profit-maximizing level to prevent entry
First-Degree Price Discrimination (Perfect)
Minimum efficient scale (full capacity)
Nash equilibrium
Limit pricing
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
Peak-load pricing
Unbalanced Oligopoly
Empty threat
Two-part pricing
40. A merger of firms in unrelated industries. Example: If Purina Dow Chow merged with Pampers Diaper Company
First-Degree Price Discrimination (Perfect)
Equilibrium
Conglomerate Merger
Extensive-form game
41. 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
Concentration Ratio
Dominant firm oligopoly
Strategic behavior
Two-part Tariff Method of Pricing
42. 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
Competitive market
Tit-for-tat strategy
Mutual interdependence
Sweezy oligopoly
43. The practice of bundling several different products together and selling them at a single "bundle" price
Brand Multiplication
Strategy
Commodity bundling
Subgame perfect equilibrium
44. Price Sensitive
Simultaneous-move game
High Price Elasticity
Business strategy
Rent-seeking behavior
45. 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
Minimum efficient scale (full capacity)
Bargaining Power of Suppliers
Payoff table
Tacit collusion
46. 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
Basis for Product Differentiation
Price war
Limit pricing
Collusion
47. The competition that domestic firms encounter from the products and services of foreign producers
Import competition
Inefficiency
Follower
Ownership of a Key Input
48. An oligopoly in which the firms produce a differentiated product
Transfer pricing
Cournot equilibrium
Perfect Competition (characteristics)
Differentiated oligopoly
49. 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
Barrier to entry
Non-cooperative equilibrium
Socially optimal price
Stackelberg oligopoly
50. An equilibrium in a game in which players cooperate to increase their mutual payoff
High Price Elasticity
Cooperative equilibrium
Dominant firm oligopoly
Non-rivalrous consumption