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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. Many buyers and sellers - product homogeneity - low cost and accurate information - free entry and exit - best regarded as a benchmark
Stackelberg oligopoly
Perfect Competition (characteristics)
High Price Elasticity
Undifferentiated
2. Involves price-fixing
Import competition
Network effects
Cutthroat Competition
Covert Collusion
3. The situation when a firm's long-run average costs fall as it increases output
Examples of Monopolistic Competition
Natural Monopoly (local phone or electric company)
Economies of scale
Mixed (randomized) strategy
4. A representation of a game indicating the players - their possible strategies - and the payoffs resulting from alternative strategies
Limit pricing
Economies of scale
Normal-form game
Monopolistic Competition
5. The derivative of total revenue
First-Degree Price Discrimination (Perfect)
Concentration Ratio
Marginal Revenue
Cournot equilibrium
6. 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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7. Actions taken by a firm to achieve a goal - such as maximizing profits
Monopoly (characteristics)
Kinked demand curve model
Rent-seeking behavior
Business strategy
8. A measure of market power - the percentage of all sales that is accounted for by the four or eight largest firms in the market
Bargaining Power of Buyers
One-shot game
Kinked-demand curve
Concentration Ratio
9. In game theory - a decision rule that describes the actions a player will take at each decision point
Leader
Strategy
Implicit Collusion
Nonprime competition
10. 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
Present Value (PV)
Dominant strategy equilibrium
Competitive market
Non-cooperative equilibrium
11. 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
Follower
Price discrimination
Disappearing invisible hand
12. A situation in which a change in price strategy by one firm affects sales and profits of another
One-shot game
Inter-industry competition
Perfect Competition Long Run Supply
Mutual interdependence
13. Toothpaste - shampoo - restaurants - banks
Patent
Examples of Monopolistic Competition
Nonprime competition
Strategy
14. An equilibrium in a game in which players do not cooperate but pursue their own self-interest
No cooperative equilibrium
Open Collusion
Two-part Tariff Method of Pricing
Empty threat
15. First firm to set its output (Stackelberg's model)
Product differentiation
Oligopoly
Leader
Interdependence
16. An oligopoly in which the sales of the leading (top four) firms are distributed unevenly among them
Open Collusion
Limit pricing
Unbalanced Oligopoly
Subgame perfect equilibrium
17. 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
Block pricing
Reservation Price
Vertical Merger
Contestable market
18. A situation in which neither firm has incentive to change its output given the other firm's output
Prisoner's dilemma
Monopolistic Characteristics:
Business strategy
Cournot equilibrium
19. Specific assets - Economies of scale - Excess capacity - Reputation effects
Perfect Competition Barriers to Entry
Dominant firm oligopoly
Merger
Economies of scale
20. 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
Tacit collusion
Sequential-move game
Herfindahl-Hirschman index (HHI)
21. Intense competition in which competitors cut retail prices to gain business--oligopolistic competition
Network effects
Price war
Inter-industry competition
Imperfect competition
22. The price that is low enough to deter entry
Monopolistic Competition
Marginal Revenue
Examples of Oligopoly
Limit price
23. An index of market concentration. Sum of squared market shares of all the firms in the industry times 10K HHI=10 - 000Σwi2
Nash equilibrium
Perfect Competition Short Run Supply
Herfindahl-Hirschman index (HHI)
Trigger strategy
24. Competition based on factors that are not related to price - such as product quality - service and financing - business location - and reputation
What is game?
Nonprime competition
Cooperation
Lerner index
25. The players end up worse off than they would if they were able to cooperate; -the pursuit of self-interest does not promote the social interest in these games
Non-cooperative behavior
Disappearing invisible hand
The Threat from Potential Entrants Firms
Undifferentiated
26. 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
Oligopoly
Socially optimal price
Limit price
Market Structure
27. Each firm believes that if it raises its price - its competitors will not follow - but if it lowers its price all of its competitors will follow; -a model in which firms in an oligopoly match price cuts by other firms - but do not match price hike
Strategy
Socially optimal price
Kinked demand curve model
The Threat from Potential Entrants Firms
28. A table that shows the payoffs for every possible action by each player for every possible action by the other player
Perfect Competition (characteristics)
Double marginalization
Payoff matrix
Brand Multiplication
29. A strategy in which a firm advertises a price and a promise to match any lower prices offered by a competitor
Price matching
Peak-load pricing
Monopoly (characteristics)
Mutual Interdependence
30. 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"
Credible threat
Bargaining Power of Buyers
Leader
Dansby-Willig performance index
31. 2 firms - simplest case in an oligopoly. Profits higher if limiting their production
Duopoly
Mutual Interdependence
Payoff matrix
Cournot oligopoly
32. If buyers have enough bargaining power - they can insist on lower prices - higher-quality products - or additional services
Bargaining Power of Buyers
Stackelberg oligopoly
Tacit collusion
Perfect Competition Short Run Supply
33. A strategy whereby a player randomizes over two or more available actions in order to keep rivals from being able to predict his action
Price Leadership
Business strategy
Secure strategy
Mixed (randomized) strategy
34. A trigger strategy that punishes after an episode of cheating and returns to cooperation if cheating ends
Bargaining Power of Suppliers
Repeated game
Tit-for-tat strategy
Marginal Revenue
35. When something can be consumed without reducing the benefits available for subsequent consumption; can be consumed without supporting rivalry between consumers
Duopoly
Normal-form game
Non-rivalrous consumption
Business strategy
36. 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
Competitive market
Nonprime competition
Two-part pricing
37. The physical characteristics of the market within which firms interact
Oligopoly
Two-part pricing
Concentration Ratio
Market Structure
38. Different units of a product are sold at different prices. Examples are buying in bulk - or - commodity-bundling
Common knowledge
Patent
Second-Degree Price Discrimination
Dansby-Willig performance index
39. A situation in which no one wants to change his or her behavior
Double marginalization
Price war
Horizontal Merger/Integration
Equilibrium
40. When a manager makes a noncooperative decision
Cheating
Market Structure
Empty threat
Price matching
41. 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
Limit pricing
The Threat from Potential Entrants Firms
Lerner index
Open Collusion
42. 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
Monopolistic Characteristics:
Lerner index
Dansby-Willig performance index
Empty threat
43. Using advertising and other means to try to increase a firm's sales
Import competition
Second-Degree Price Discrimination
Non-price competition
Open Collusion
44. 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
Bertrand oligopoly
Joint Venture
Two-part Tariff Method of Pricing
45. 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
No cooperative equilibrium
Extensive-form game
Competitive market
Disappearing invisible hand
46. An attempt by a firm to convince buyers that its product is different from the products of other firms in the industry
Product differentiation
Sweezy oligopoly
Perfect Competition Barriers to Entry
Equilibrium
47. 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
Prisoners' dilemma
Payoff matrix
Nash equilibrium
Joint Venture
48. 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
Non-price competition
Fair return price
Nash equilibrium
Payoff matrix
49. Price of a product that enables its producer to obtain a normal profit & that is equal to the ATC of producing it
Fair return price
Patent
Price matching
Perfect Competition Barriers to Entry
50. 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.)
Rent-seeking behavior
Interdependence
Cross-subsidy pricing
Monopolistic Characteristics: