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Business Competition

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. A merger between two firms in the same industry. Example: 2004 K-Mart merged with Sears






2. 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






3. Steel - autos - colas - airlines






4. The exclusive right to a product for a period of 20 years from the date the product is invented






5. When no one firm has a monopoly - but producers nonetheless realize that they can affect market prices. Firms compete but possess market power






6. 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






7. 2 firms - simplest case in an oligopoly. Profits higher if limiting their production






8. Simultaneous move game that is not repeated






9. 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)






10. A situation in which no one wants to change his or her behavior






11. A measure of market power - the percentage of all sales that is accounted for by the four or eight largest firms in the market






12. Single firm is sole producer of a product for which there are no close substitutes






13. 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






14. 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






15. An agreement among firms in a market about quantities to produce or prices to charge in attempts to limit competition






16. A merger between firms who have a buyer/supplier relationship. Example: BF Goodrich merging with rubber plantations






17. A strategy whereby a player randomizes over two or more available actions in order to keep rivals from being able to predict his action






18. The maximum price that a buyer is willing to pay for a good - or the minimum price that a seller will accept






19. 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






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






21. Involves price-fixing






22. 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






23. Multiple firms make the same pricing decisions even though they have not explicitly consulted with each other






24. First firm to set its output (Stackelberg's model)






25. 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)






26. Single seller in an industry - Strong barriers to entry - Profit maximization - faces market demand and sets MR=MC - Unexploited gains from trade






27. Ranks industries according to how much social welfare would improve if the output in an industry were increased by a small amount






28. 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






29. Keeps the price just where it is to maximize profit






30. 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






31. If buyers have enough bargaining power - they can insist on lower prices - higher-quality products - or additional services






32. A firm whose price decisions are tacitly accepted and followed by others in the industry






33. 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






34. 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






35. Takes Place inside the Mind of the consumer






36. Identical or substitutable






37. Competition based on factors that are not related to price - such as product quality - service and financing - business location - and reputation






38. 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






39. An index of market concentration. Sum of squared market shares of all the firms in the industry times 10K HHI=10 - 000Σwi2






40. A trigger strategy that punishes after an episode of cheating and returns to cooperation if cheating ends






41. Both players have dominant strategies and play them






42. A game that is played over and over again forever and in which players receive payoffs during each play of the game






43. Face competition from companies that currently are not in the market but might enter






44. An oligopoly in which the firms produce a differentiated product






45. Variations on one good so that a firm can increase market sharea






46. 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






47. Specific assets - Economies of scale - Excess capacity - Reputation effects






48. When the decisions of two or more firms significantly affect each others' profits






49. 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.)






50. Sellers can identify different types of customers and offer each a different price. Examples are special prices for students or the elderly







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