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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. Operates like the alleged Mafia. Region division of the market among the firms in the industry
Kinked demand curve model
Subgame perfect equilibrium
Open Collusion
Socially optimal price
2. When managers are able to charge each consumer their reservation price. Examples are car and home sales
Import competition
Empty threat
Dansby-Willig performance index
First-Degree Price Discrimination (Perfect)
3. A strategy whereby a player randomizes over two or more available actions in order to keep rivals from being able to predict his action
Unbalanced Oligopoly
Mixed (randomized) strategy
Primary Sources of Monopolistic Power
Dominant strategy equilibrium
4. When the decisions of two or more firms significantly affect each others' profits
Mixed (randomized) strategy
Interdependence
Fair return price
Barrier to entry
5. An oligopoly in which the firms produce a differentiated product
Network effects
Differentiated oligopoly
Joint Venture
What is game?
6. Specific assets - Economies of scale - Excess capacity - Reputation effects
Secure strategy
Prisoner's dilemma
Interdependence
Perfect Competition Barriers to Entry
7. 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
Sweezy oligopoly
Two-part pricing
Cheating
Leader
8. A condition describing a set of strategies that constitutes a Nash equilibrium and allows no player to improve their own payoff at any stage of the game by changing strategies
Disappearing invisible hand
Business strategy
Subgame perfect equilibrium
Undifferentiated
9. Occurs when a firm produces output - whatever its level - at a higher cost than is necessary to produce it
Inefficiency
Barrier to entry
Concentration Ratio
Dominant strategy
10. 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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11. In game theory - a decision rule that describes the actions a player will take at each decision point
Strategy
Mutual interdependence
Lerner index
Reservation Price
12. Cooperation among firms that does not involve an explicit agreement
Natural Monopoly (local phone or electric company)
Trigger strategy
Duopoly
Tacit collusion
13. The smallest quantity at which the average cost curve reaches its minimum
Non-cooperative behavior
Minimum efficient scale (full capacity)
Second-Degree Price Discrimination
Brand Multiplication
14. Long-run marginal cost curve above long-run average cost
Perfect Competition Long Run Supply
Monopolistic Competition
Follower
Rothschild index
15. In game theory - benefit obtained by party that moves first in a sequential game
Cutthroat Competition
Mutual interdependence
Collusion
First-mover advantage
16. The situation that exists when two or more groups need each other and must depend on each other to accomplish a goal that is important to each of them
Mutual Interdependence
Kinked demand curve model
Third-degree price discrimination
Conglomerate Merger
17. Using advertising and other means to try to increase a firm's sales
Disappearing invisible hand
Perfect Competition Long Run Supply
Non-price competition
High Price Elasticity
18. A table that shows the payoffs for every possible action by each player for every possible action by the other player
Prisoners' dilemma
Payoff matrix
Bargaining Power of Suppliers
Undifferentiated
19. Single firm is sole producer of a product for which there are no close substitutes
Fair return price
Tacit collusion
Undifferentiated
Pure monopoly
20. 2 firms - simplest case in an oligopoly. Profits higher if limiting their production
Empty threat
Payoff matrix
Imperfect competition
Duopoly
21. If buyers have enough bargaining power - they can insist on lower prices - higher-quality products - or additional services
Bargaining Power of Buyers
Perfect Competitor Making a Profit
Product differentiation
Disappearing invisible hand
22. A combination of two or more companies into one company
Payoff
Present Value (PV)
Merger
Strategic behavior
23. The competition that domestic firms encounter from the products and services of foreign producers
Product Differentiation
Limit pricing
Import competition
The Threat from Potential Entrants Firms
24. A pricing strategy in which profits gained from the sale of one product are used to subsidize sales of a related product
Cooperative equilibrium
Cross-subsidy pricing
Fair return price
Perfect Competitor Making a Profit
25. Demand line is above ATC curve
Dominant firm oligopoly
Perfect Competitor Making a Profit
Bertrand oligopoly
Product differentiation
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)
Present Value (PV)
Imperfect competition
Barrier to entry
Transfer pricing
27. The practice of charging different prices to consumers for the same good or service
Monopolistic Competition
Price discrimination
Oligopoly
Basis for Product Differentiation
28. When firms limit production and raise prices in a way that raises each others' profits - even though they have not made any formal agreement
Tacit collusion
Cross-subsidy pricing
Bertrand oligopoly
Cournot equilibrium
29. An oligopoly in which the sales of the leading (top four) firms are distributed unevenly among them
Equilibrium
Unbalanced Oligopoly
Two-part Tariff Method of Pricing
Disappearing invisible hand
30. The exclusive right to a product for a period of 20 years from the date the product is invented
Dominant firm oligopoly
Patent
Duopoly
Monopolistic Characteristics:
31. Price Sensitive
High Price Elasticity
Cournot equilibrium
Dominant strategy equilibrium
Ownership of a Key Input
32. Game in which each player makes decisions without knowledge of the other player's decisions
Empty threat
Simultaneous-move game
Prisoner's dilemma
Primary Sources of Monopolistic Power
33. An attempt by a firm to convince buyers that its product is different from the products of other firms in the industry
Product differentiation
What is game?
Two-part Tariff Method of Pricing
Empty threat
34. All firms and individuals willing and able to buy or sell a particular product
Market
Lerner index
Commodity bundling
Prisoners' dilemma
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)
Patent
High Price Elasticity
The Threat from Potential Entrants Firms
Stackelberg oligopoly
36. 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
Brand Multiplication
Third-Degree Price Discrimination
Undifferentiated
Dominant firm oligopoly
37. The practice of bundling several different products together and selling them at a single "bundle" price
Ownership of a Key Input
Two-part pricing
Mutual interdependence
Commodity bundling
38. A product's ability to satisfy a large number of consumers at the same time
Contestable market
Basis for Product Differentiation
Open Collusion
Simultaneous consumption
39. Marginal cost curve above average variable cost - P* = SRMC
Cournot oligopoly
Price war
Examples of Monopolistic Competition
Perfect Competition Short Run Supply
40. Variations on one good so that a firm can increase market sharea
Mutual Interdependence
Cooperative equilibrium
Brand Multiplication
Strategy
41. 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)
Four-firm concentration ratio
Follower
Disappearing invisible hand
Sequential-move game
42. 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
Ownership of a Key Input
Mutual Interdependence
Perfect Competition Short Run Supply
Cournot oligopoly
43. A situation in which a change in price strategy by one firm affects sales and profits of another
Limit price
Perfect Competitor Characteristics
Stackelberg oligopoly
Mutual interdependence
44. A strategy in which a firm advertises a price and a promise to match any lower prices offered by a competitor
Bertrand oligopoly
Price matching
Payoff
Market Structure
45. Rival who sets its output after the leader (Stackelberg's model)
Nonprime competition
Randomized pricing
Follower
Homogenous oligopoly
46. Actions taken by a firm to achieve a goal - such as maximizing profits
Business strategy
Normal-form game
Simultaneous consumption
Imperfect competition
47. Takes Place inside the Mind of the consumer
Two-part Tariff Method of Pricing
Third-Degree Price Discrimination
Product Differentiation
Inter-industry competition
48. 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
Non-rivalrous consumption
Block pricing
What is game?
Third-Degree Price Discrimination
49. 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
Market Structure
Dominant firm oligopoly
Finding profit for oligopoly games
Nash equilibrium
50. 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
Present Value (PV)
First-Degree Price Discrimination (Perfect)
Payoff matrix
Oligopoly