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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. Occurs when a firm produces output - whatever its level - at a higher cost than is necessary to produce it
Tit-for-tat strategy
First-Degree Price Discrimination (Perfect)
Inefficiency
Merger
2. A strategy or action that always provides the best outcome no matter what decisions rivals make
Rothschild index
Dominant strategy
Payoff
Dansby-Willig performance index
3. Price of a product that enables its producer to obtain a normal profit & that is equal to the ATC of producing it
Rent-seeking behavior
Tit-for-tat strategy
Payoff
Fair return price
4. If buyers have enough bargaining power - they can insist on lower prices - higher-quality products - or additional services
Indefinitely repeated game
Network effects
Bargaining Power of Buyers
Repeated game
5. When firms limit production and raise prices in a way that raises each others' profits - even though they have not made any formal agreement
Concentration Ratio
Examples of Oligopoly
Tacit collusion
Extensive-form game
6. 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
Profit
Kinked-demand curve
Interdependence
Lerner index
7. 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.)
Prisoner's dilemma
Monopolistic Characteristics:
Dominant firm oligopoly
Competitive market
8. Rules - strategies - payoffs - outcomes
Payoff table
Normal-form game
Reservation Price
What is game?
9. An oligopoly in which the firms produce a standardized product
Fair return price
Homogenous oligopoly
Perfect Competition (characteristics)
Trigger strategy
10. A table that shows the payoffs that each firm earns from every combination of strategies by the firms
Simultaneous decision games
Payoff
Payoff matrix
Simultaneous consumption
11. A representation of a game indicating the players - their possible strategies - and the payoffs resulting from alternative strategies
Equilibrium
Limit pricing
Horizontal Merger/Integration
Normal-form game
12. Steel - autos - colas - airlines
Product Differentiation
Dominant strategy
Finding profit for oligopoly games
Examples of Oligopoly
13. An index of market concentration. Sum of squared market shares of all the firms in the industry times 10K HHI=10 - 000Σwi2
Tacit collusion
Marginal Revenue
Herfindahl-Hirschman index (HHI)
Differentiated oligopoly
14. Revenue-Costs
Stackelberg oligopoly
Tacit collusion
Profit
Strategic behavior
15. Game in which one player makes a move after observing the other player's move
Imperfect competition
Randomized pricing
Dominant strategy
Sequential-move game
16. When a manager makes a noncooperative decision
Primary Sources of Monopolistic Power
Randomized pricing
Cheating
Product differentiation
17. The actions by persons - firms - or unions to gain special benefits from government at taxpayer's or someone else's expense
Rent-seeking behavior
Examples of Monopolistic Competition
Brand Multiplication
Sweezy oligopoly
18. Demand line is above ATC curve
Perfect Competitor Making a Profit
Contestable market
Herfindahl-Hirschman index (HHI)
Extensive-form game
19. An establishment firm commits to setting price below the profit-maximizing level to prevent entry
Non-cooperative behavior
Duopoly
Contestable market
Limit pricing
20. Pricing strategy in which a firm intentionally varies its price in an attempt to "hide" price information from consumers and rivals
Non-cooperative behavior
Horizontal Merger/Integration
Randomized pricing
Commodity bundling
21. 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
Finding profit for oligopoly games
Payoff table
Rent-seeking behavior
Competitive market
22. Actions taken by a firm to achieve a goal - such as maximizing profits
Sequential game
Rent-seeking behavior
Business strategy
Oligopoly
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
Repeated game
Economies of scale
Product Differentiation
24. When firms make decisions that make every firm better off than in a noncooperative Nash equilibrium
Transfer pricing
Cooperation
Perfect Competition Long Run Supply
Double marginalization
25. Actions taken by firms to plan for and react to competition from rival firms
Network effects
Cutthroat Competition
Strategic behavior
High Price Elasticity
26. Competition based on factors that are not related to price - such as product quality - service and financing - business location - and reputation
Equilibrium
Nonprime competition
Market
Conglomerate Merger
27. A strategy in which a firm advertises a price and a promise to match any lower prices offered by a competitor
Lerner index
Non-cooperative behavior
Payoff table
Price matching
28. An agreement among firms in a market about quantities to produce or prices to charge in attempts to limit competition
Sequential game
Collusion
Minimum efficient scale (full capacity)
First-mover advantage
29. In game theory - a game that is played again sometime after the previous game ends
Contestable market
Repeated game
Maximizing profit in Oligopoly games
Second-Degree Price Discrimination
30. Toothpaste - shampoo - restaurants - banks
Two-part Tariff Method of Pricing
Examples of Monopolistic Competition
Cournot oligopoly
Concentration Ratio
31. A measure of the sensitivity to price of a product group as a whole relative to the sensitivity of the quantity demanded of a single firm to a change in its price. R=Et/Ef
Rothschild index
Patent
Import competition
Indefinitely repeated game
32. When something can be consumed without reducing the benefits available for subsequent consumption; can be consumed without supporting rivalry between consumers
Examples of Oligopoly
Disappearing invisible hand
Equilibrium
Non-rivalrous consumption
33. 2 firms - simplest case in an oligopoly. Profits higher if limiting their production
The Threat from Potential Entrants Firms
Oligopoly
Sequential-move game
Duopoly
34. When managers are able to charge each consumer their reservation price. Examples are car and home sales
Sweezy oligopoly
First-Degree Price Discrimination (Perfect)
Secure strategy
Prisoners' dilemma
35. Single seller in an industry - Strong barriers to entry - Profit maximization - faces market demand and sets MR=MC - Unexploited gains from trade
Rent-seeking behavior
Herfindahl-Hirschman index (HHI)
Monopoly (characteristics)
Basis for Product Differentiation
36. If production of a good requires a particular input - then control of that input can be a barrier to entry
Trigger strategy
Prisoners' dilemma
Ownership of a Key Input
Transfer pricing
37. Produce identical products
Perfect Competitor Characteristics
Perfect Competition Short Run Supply
Lerner index
Import competition
38. Operates like the alleged Mafia. Region division of the market among the firms in the industry
Finding profit for oligopoly games
Perfect Competitor Characteristics
What is game?
Open Collusion
39. A situation in which competing firms must make their individual decisions without knowing the decisions of their rivals
Perfect Competition Long Run Supply
First-Degree Price Discrimination (Perfect)
Simultaneous decision games
Bargaining Power of Buyers
40. A strategy that is contingent on the past play of a game and ion which some particular past action "triggers" a different action by a player
Primary Sources of Monopolistic Power
Perfect Competition Short Run Supply
Herfindahl-Hirschman index (HHI)
Trigger strategy
41. Different units of a product are sold at different prices. Examples are buying in bulk - or - commodity-bundling
Prisoners' dilemma
Herfindahl-Hirschman index (HHI)
Second-Degree Price Discrimination
Brand Multiplication
42. Rival who sets its output after the leader (Stackelberg's model)
Follower
Product differentiation
Profit
Strategy
43. Price Sensitive
High Price Elasticity
Product Differentiation
Nonprime competition
Randomized pricing
44. When the decisions of two or more firms significantly affect each others' profits
Equilibrium
Rothschild index
Interdependence
Reservation Price
45. In game theory - a statement of harmful intent easily dismissed by recipient because threat not considered believable
Pure monopoly
Third-Degree Price Discrimination
Empty threat
Double marginalization
46. Increases in the value of a product to each user - including existing users - as the total number of users rises
Unbalanced Oligopoly
Network effects
Bertrand oligopoly
Oligopoly
47. Using advertising and other means to try to increase a firm's sales
Stackelberg oligopoly
Non-price competition
Cross-subsidy pricing
Third-degree price discrimination
48. 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
Implicit Collusion
Common knowledge
Mutual Interdependence
Payoff
49. The reward received by a player in a game - such as the profit earned by an oligopolist
Maximizing profit in Oligopoly games
Payoff
Double marginalization
First-mover advantage
50. 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
Socially optimal price
Undifferentiated
Minimum efficient scale (full capacity)
Limit pricing