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Business Competition
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Subject
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business-skills
Instructions:
Answer 50 questions in 15 minutes.
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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. Pricing strategy in which a firm intentionally varies its price in an attempt to "hide" price information from consumers and rivals
No cooperative equilibrium
Randomized pricing
Commodity bundling
Perfect Competition (characteristics)
2. A game that is played over and over again forever and in which players receive payoffs during each play of the game
Indefinitely repeated game
Extensive-form game
Finding profit for oligopoly games
Interdependence
3. When something can be consumed without reducing the benefits available for subsequent consumption; can be consumed without supporting rivalry between consumers
Four-firm concentration ratio
Brand Multiplication
Non-rivalrous consumption
Limit price
4. A trigger strategy that punishes after an episode of cheating and returns to cooperation if cheating ends
Commodity bundling
Tit-for-tat strategy
Market
Market Structure
5. 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
Trigger strategy
Subgame perfect equilibrium
Randomized pricing
Non-price competition
6. 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
Horizontal Merger/Integration
Sweezy oligopoly
Tacit collusion
Price matching
7. The derivative of total revenue
Unbalanced Oligopoly
Marginal Revenue
Reservation Price
Monopolistic Competition
8. 1/(1+i)n
Cooperation
Sweezy oligopoly
Vertical Merger
Present Value (PV)
9. Each seller can sell all he wants to sell at the going price - Buyers and sellers are price takers - The goods offered by the different sellers are largely the same - The actions of any single buyer or seller will have a negligible impact on the m
Competitive market
Economies of scale
Monopolistic Competition
Herfindahl-Hirschman index (HHI)
10. Cooperation among firms that does not involve an explicit agreement
Fair return price
Rent-seeking behavior
Peak-load pricing
Tacit collusion
11. 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
Present Value (PV)
High Price Elasticity
Extensive-form game
Strategy
12. A strategy in which a firm advertises a price and a promise to match any lower prices offered by a competitor
Perfect Competitor Making a Profit
Competitive market
Price matching
Perfect Competition Short Run Supply
13. An oligopoly in which the firms produce a standardized product
Limit pricing
Sweezy oligopoly
Homogenous oligopoly
Dominant strategy
14. First firm to set its output (Stackelberg's model)
Mixed (randomized) strategy
Present Value (PV)
Strategy
Leader
15. 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
Contestable market
Perfect Competitor Making a Profit
Limit pricing
Tit-for-tat strategy
16. Long-run marginal cost curve above long-run average cost
Block pricing
Joint Venture
Secure strategy
Perfect Competition Long Run Supply
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
Two-part pricing
Block pricing
Concentration Ratio
Collusion
18. The maximum price that a buyer is willing to pay for a good - or the minimum price that a seller will accept
Perfect Competition Long Run Supply
Cross-subsidy pricing
Reservation Price
Sequential-move game
19. Single seller in an industry - Strong barriers to entry - Profit maximization - faces market demand and sets MR=MC - Unexploited gains from trade
Profit
Monopoly (characteristics)
Strategy
Maximizing profit in Oligopoly games
20. 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
Marginal Revenue
Open Collusion
Disappearing invisible hand
Transfer pricing
21. Specific assets - Economies of scale - Excess capacity - Reputation effects
Perfect Competition Barriers to Entry
Equilibrium
Transfer pricing
Mutual interdependence
22. If production of a good requires a particular input - then control of that input can be a barrier to entry
Vertical Merger
Payoff
Perfect Competitor Characteristics
Ownership of a Key Input
23. When firms limit production and raise prices in a way that raises each others' profits - even though they have not made any formal agreement
What is game?
Tacit collusion
Limit pricing
Dominant firm oligopoly
24. Toothpaste - shampoo - restaurants - banks
Bargaining Power of Suppliers
Examples of Monopolistic Competition
Fair return price
Peak-load pricing
25. When firms make decisions that make every firm better off than in a noncooperative Nash equilibrium
Sequential-move game
Cooperation
Monopolistic Competition
Follower
26. When the decisions of two or more firms significantly affect each others' profits
Maximizing profit in Oligopoly games
Third-Degree Price Discrimination
Perfect Competition Long Run Supply
Interdependence
27. A measure of market power - the percentage of all sales that is accounted for by the four or eight largest firms in the market
Concentration Ratio
Vertical Merger
Leader
Market
28. Many buyers and sellers - product homogeneity - low cost and accurate information - free entry and exit - best regarded as a benchmark
Bertrand oligopoly
Kinked demand curve model
Perfect Competition (characteristics)
Cutthroat Competition
29. A strategy or action that always provides the best outcome no matter what decisions rivals make
Second-Degree Price Discrimination
Duopoly
Import competition
Dominant strategy
30. Demand line is above ATC curve
Perfect Competition (characteristics)
Dansby-Willig performance index
Non-rivalrous consumption
Perfect Competitor Making a Profit
31. If buyers have enough bargaining power - they can insist on lower prices - higher-quality products - or additional services
Leader
Tacit collusion
Commodity bundling
Bargaining Power of Buyers
32. Ranks industries according to how much social welfare would improve if the output in an industry were increased by a small amount
Conglomerate Merger
Monopolistic Competition
Dansby-Willig performance index
Nonprime competition
33. A combination of two or more companies into one company
Differentiated oligopoly
Merger
Business strategy
Four-firm concentration ratio
34. Where a firm can charge different groups of consumers different prices for the same product. Example: student or senior discounts
Perfect Competition Short Run Supply
Third-degree price discrimination
No cooperative equilibrium
Marginal Revenue
35. Game in which one player makes a move after observing the other player's move
Mixed (randomized) strategy
Indefinitely repeated game
Sequential-move game
Product Differentiation
36. A pricing strategy in which profits gained from the sale of one product are used to subsidize sales of a related product
Cutthroat Competition
Cross-subsidy pricing
Two-part Tariff Method of Pricing
Fair return price
37. The competition that domestic firms encounter from the products and services of foreign producers
Dominant strategy
Nash equilibrium
Import competition
Simultaneous decision games
38. Intense competition in which competitors cut retail prices to gain business--oligopolistic competition
Normal-form game
Price war
Lerner index
Extensive-form game
39. 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
The Threat from Potential Entrants Firms
Dominant firm oligopoly
Horizontal Merger/Integration
Natural Monopoly (local phone or electric company)
40. 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
Normal-form game
Double marginalization
Monopolistic Characteristics:
Lerner index
41. A situation in which neither firm has incentive to change its output given the other firm's output
Payoff table
Cooperation
Cournot equilibrium
Joint Venture
42. 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
Joint Venture
Ownership of a Key Input
Prisoners' dilemma
Cross-subsidy pricing
43. Actions taken by a firm to achieve a goal - such as maximizing profits
Payoff
Conglomerate Merger
Finding profit for oligopoly games
Business strategy
44. 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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45. Using advertising and other means to try to increase a firm's sales
Stackelberg oligopoly
Non-price competition
Examples of Oligopoly
Mutual interdependence
46. 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
Kinked demand curve model
Peak-load pricing
Perfect Competition (characteristics)
Sweezy oligopoly
47. The physical characteristics of the market within which firms interact
Simultaneous consumption
Market Structure
Limit pricing
Randomized pricing
48. The situation when a firm's long-run average costs fall as it increases output
Rent-seeking behavior
Economies of scale
Two-part Tariff Method of Pricing
Simultaneous-move game
49. A table that shows the payoffs for every possible action by each player for every possible action by the other player
Payoff matrix
Fair return price
Third-Degree Price Discrimination
Competitive market
50. A situation where one firm is able to provide a service at a lower cost than could several competing firms
Prisoner's dilemma
Socially optimal price
Contestable market
Natural Monopoly (local phone or electric company)
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