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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. Specific assets - Economies of scale - Excess capacity - Reputation effects
Perfect Competition Barriers to Entry
Stackelberg oligopoly
Payoff matrix
Prisoners' dilemma
2. First firm to set its output (Stackelberg's model)
Cournot oligopoly
Repeated game
Leader
Product differentiation
3. When something can be consumed without reducing the benefits available for subsequent consumption; can be consumed without supporting rivalry between consumers
Tit-for-tat strategy
Trigger strategy
Non-rivalrous consumption
Socially optimal price
4. Ignoring the effects of their actions on each others' profits
Implicit Collusion
Non-cooperative behavior
Limit pricing
Patent
5. 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
Rothschild index
Limit pricing
Lerner index
First-mover advantage
6. A situation in which neither firm has incentive to change its output given the other firm's output
Randomized pricing
Fair return price
Cournot equilibrium
Present Value (PV)
7. (1) Economies of Scale; (2) Economies of Scope; (3) Cost Complementarity; and (4)Patents & Other Legal Barriers
Basis for Product Differentiation
Competitive market
Sequential-move game
Primary Sources of Monopolistic Power
8. 2 firms - simplest case in an oligopoly. Profits higher if limiting their production
Present Value (PV)
Perfect Competition Barriers to Entry
Disappearing invisible hand
Duopoly
9. 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
High Price Elasticity
Implicit Collusion
Tacit collusion
10. A situation where one firm is able to provide a service at a lower cost than could several competing firms
Natural Monopoly (local phone or electric company)
Perfect Competition Barriers to Entry
Business strategy
Cutthroat Competition
11. Industry in which (1) few firms serving many customers; (2) firms produce identical products t constant marginal cost; (3) firms compete in price and react optimally to competitor's prices; (4) consumers have perfect information and here are no trans
Strategic behavior
Bertrand oligopoly
Perfect Competitor Making a Profit
Business strategy
12. Actions taken by firms to plan for and react to competition from rival firms
Interdependence
Strategic behavior
Examples of Monopolistic Competition
Cooperative equilibrium
13. 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
Price Leadership
Competitive market
Two-part pricing
Dominant strategy
14. 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
Cournot oligopoly
Payoff matrix
Inter-industry competition
Simultaneous-move game
15. Single firm is sole producer of a product for which there are no close substitutes
Bertrand oligopoly
Dominant firm oligopoly
Pure monopoly
Joint Venture
16. 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
Undifferentiated
Sequential-move game
Payoff matrix
Dominant firm oligopoly
17. Maximize economic profit by producing the quantity at which MC=MR
Natural Monopoly (local phone or electric company)
One-shot game
Maximizing profit in Oligopoly games
Non-cooperative equilibrium
18. Ranks industries according to how much social welfare would improve if the output in an industry were increased by a small amount
Third-degree price discrimination
Dansby-Willig performance index
Sequential-move game
Bertrand oligopoly
19. An oligopoly in which the firms produce a standardized product
Homogenous oligopoly
Reservation Price
Limit price
Perfect Competition (characteristics)
20. Pricing strategy in which a firm intentionally varies its price in an attempt to "hide" price information from consumers and rivals
Minimum efficient scale (full capacity)
Strategy
Randomized pricing
Block pricing
21. 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
Disappearing invisible hand
Four-firm concentration ratio
Dominant strategy
Bargaining Power of Suppliers
22. 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
Nash equilibrium
Payoff matrix
Profit
23. Game in which one player makes a move after observing the other player's move
Sequential-move game
Open Collusion
Mixed (randomized) strategy
Credible threat
24. Actions taken by a firm to achieve a goal - such as maximizing profits
Business strategy
Ownership of a Key Input
Profit
Strategy
25. Sellers can identify different types of customers and offer each a different price. Examples are special prices for students or the elderly
Third-Degree Price Discrimination
Sequential-move game
Four-firm concentration ratio
Undifferentiated
26. A product's ability to satisfy a large number of consumers at the same time
Profit
The Threat from Potential Entrants Firms
Simultaneous consumption
Business strategy
27. When firms make decisions that make every firm better off than in a noncooperative Nash equilibrium
Credible threat
Perfect Competition (characteristics)
Cooperation
Ownership of a Key Input
28. Toothpaste - shampoo - restaurants - banks
Open Collusion
Limit price
Examples of Monopolistic Competition
Inefficiency
29. A strategy or action that always provides the best outcome no matter what decisions rivals make
Concentration Ratio
Dominant strategy
Open Collusion
Bertrand oligopoly
30. An establishment firm commits to setting price below the profit-maximizing level to prevent entry
Profit
Limit pricing
Tacit collusion
Reservation Price
31. 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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32. A situation in which all decision makers know the payoff table - and they believe all other decision makers also know the payoff table
Common knowledge
Randomized pricing
Profit
Duopoly
33. 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
Open Collusion
Strategic behavior
Four-firm concentration ratio
34. 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
Dominant strategy equilibrium
Two-part pricing
Extensive-form game
Perfect Competitor Making a Profit
35. 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
Kinked demand curve model
Sweezy oligopoly
Open Collusion
Barrier to entry
36. 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"
Rothschild index
Non-cooperative equilibrium
Non-rivalrous consumption
Credible threat
37. Simultaneous move game that is not repeated
One-shot game
Price war
Market Structure
Inter-industry competition
38. The reward received by a player in a game - such as the profit earned by an oligopolist
Payoff
Profit
Market Structure
Normal-form game
39. In game theory - game where parties make their moves in turn - one party making the first move followed by the other
Sequential game
Two-part Tariff Method of Pricing
Perfect Competition Long Run Supply
Third-Degree Price Discrimination
40. The rules describe the setting of the game - the actions the players may take - and the consequences of those actions; -Advertising and R&D are also prisoners' dilemmas
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41. The price that is low enough to deter entry
Collusion
Cheating
Mutual interdependence
Limit price
42. When a manager makes a noncooperative decision
Monopoly (characteristics)
Secure strategy
Cheating
Prisoner's dilemma
43. A merger between firms who have a buyer/supplier relationship. Example: BF Goodrich merging with rubber plantations
One-shot game
Vertical Merger
Monopoly (characteristics)
Tacit collusion
44. Identical or substitutable
Nonprime competition
Undifferentiated
Product differentiation
Import competition
45. The competition for sales between the products of one industry and the products of another industry
Four-firm concentration ratio
Inter-industry competition
Pure monopoly
Cutthroat Competition
46. 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.)
Monopolistic Characteristics:
The Threat from Potential Entrants Firms
Product differentiation
First-Degree Price Discrimination (Perfect)
47. The situation when a firm's long-run average costs fall as it increases output
Market Structure
Economies of scale
Payoff table
Implicit Collusion
48. 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
Sweezy oligopoly
Bertrand oligopoly
Indefinitely repeated game
Limit pricing
49. Long-run marginal cost curve above long-run average cost
High Price Elasticity
Oligopoly
Product Differentiation
Perfect Competition Long Run Supply
50. The maximum price that a buyer is willing to pay for a good - or the minimum price that a seller will accept
Payoff table
Profit
Horizontal Merger/Integration
Reservation Price