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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. The maximum price that a buyer is willing to pay for a good - or the minimum price that a seller will accept
The Threat from Potential Entrants Firms
Two-part pricing
Imperfect competition
Reservation Price
2. A table that shows the payoffs that each firm earns from every combination of strategies by the firms
Payoff matrix
Perfect Competitor Characteristics
Monopolistic Competition
Fair return price
3. A combination of two or more companies into one company
Merger
Covert Collusion
Kinked-demand curve
Contestable market
4. Takes Place inside the Mind of the consumer
Sequential game
Sequential-move game
Product Differentiation
Monopolistic Characteristics:
5. Steel - autos - colas - airlines
Covert Collusion
Examples of Oligopoly
Present Value (PV)
Economies of scale
6. Game in which each player makes decisions without knowledge of the other player's decisions
Dominant firm oligopoly
Ownership of a Key Input
Simultaneous-move game
Pure monopoly
7. All firms and individuals willing and able to buy or sell a particular product
Simultaneous decision games
Sequential game
Payoff matrix
Market
8. The smallest quantity at which the average cost curve reaches its minimum
Tacit collusion
Cooperation
Minimum efficient scale (full capacity)
Mutual interdependence
9. An oligopoly in which the firms produce a standardized product
Homogenous oligopoly
Payoff matrix
Equilibrium
Profit
10. A merger between two firms in the same industry. Example: 2004 K-Mart merged with Sears
Horizontal Merger/Integration
Contestable market
Two-part Tariff Method of Pricing
High Price Elasticity
11. Both players have dominant strategies and play them
Price war
Product differentiation
Dominant strategy equilibrium
Secure strategy
12. When a manager makes a noncooperative decision
One-shot game
Joint Venture
Cournot oligopoly
Cheating
13. The competition that domestic firms encounter from the products and services of foreign producers
Competitive market
Brand Multiplication
Import competition
Economies of scale
14. Keeps the price just where it is to maximize profit
Follower
Primary Sources of Monopolistic Power
Cutthroat Competition
Two-part Tariff Method of Pricing
15. Rules - strategies - payoffs - outcomes
What is game?
Monopolistic Competition
Duopoly
Undifferentiated
16. An oligopoly in which the sales of the leading (top four) firms are distributed unevenly among them
Payoff matrix
Unbalanced Oligopoly
High Price Elasticity
Pure monopoly
17. Game in which one player makes a move after observing the other player's move
Prisoners' dilemma
Stackelberg oligopoly
Sequential-move game
Kinked-demand curve
18. A product's ability to satisfy a large number of consumers at the same time
Cooperation
Kinked-demand curve
Mutual Interdependence
Simultaneous consumption
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
Non-cooperative behavior
Kinked demand curve model
Payoff matrix
Price matching
20. 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
Economies of scale
Open Collusion
Common knowledge
Rothschild index
21. A firm whose price decisions are tacitly accepted and followed by others in the industry
Contestable market
Profit
Bargaining Power of Buyers
Price Leadership
22. Actions taken by a firm to achieve a goal - such as maximizing profits
Four-firm concentration ratio
Transfer pricing
Business strategy
Present Value (PV)
23. The practice of bundling several different products together and selling them at a single "bundle" price
Collusion
Stackelberg oligopoly
Commodity bundling
Minimum efficient scale (full capacity)
24. A strategy or action that always provides the best outcome no matter what decisions rivals make
Concentration Ratio
Four-firm concentration ratio
Homogenous oligopoly
Dominant strategy
25. When no one firm has a monopoly - but producers nonetheless realize that they can affect market prices. Firms compete but possess market power
Imperfect competition
Natural Monopoly (local phone or electric company)
Two-part pricing
Merger
26. A strategy whereby a player randomizes over two or more available actions in order to keep rivals from being able to predict his action
Mixed (randomized) strategy
Commodity bundling
Dansby-Willig performance index
What is game?
27. Sellers can identify different types of customers and offer each a different price. Examples are special prices for students or the elderly
Strategic behavior
Third-Degree Price Discrimination
Second-Degree Price Discrimination
Barrier to entry
28. 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
Sweezy oligopoly
Tacit collusion
Trigger strategy
Ownership of a Key Input
29. A situation in which all decision makers know the payoff table - and they believe all other decision makers also know the payoff table
Simultaneous decision games
Two-part pricing
Disappearing invisible hand
Common knowledge
30. When the decisions of two or more firms significantly affect each others' profits
Limit pricing
Extensive-form game
Repeated game
Interdependence
31. Actions taken by firms to plan for and react to competition from rival firms
Strategic behavior
Payoff
Prisoner's dilemma
Simultaneous-move game
32. 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
Oligopoly
Inefficiency
Nash equilibrium
Competitive market
33. 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
Cooperation
Present Value (PV)
The Threat from Potential Entrants Firms
Contestable market
34. Pricing strategy in which higher prices are charged during peak hours than during off-peak hours
Third-degree price discrimination
Peak-load pricing
Horizontal Merger/Integration
The Threat from Potential Entrants Firms
35. Variations on one good so that a firm can increase market sharea
Nonprime competition
Strategic behavior
Brand Multiplication
Secure strategy
36. The competition for sales between the products of one industry and the products of another industry
Inter-industry competition
What is game?
Perfect Competitor Characteristics
Mixed (randomized) strategy
37. If buyers have enough bargaining power - they can insist on lower prices - higher-quality products - or additional services
Price war
Bargaining Power of Buyers
Payoff table
Natural Monopoly (local phone or electric company)
38. A situation in which competing firms must make their individual decisions without knowing the decisions of their rivals
First-mover advantage
Cooperative equilibrium
Barrier to entry
Simultaneous decision games
39. Many buyers and sellers - product homogeneity - low cost and accurate information - free entry and exit - best regarded as a benchmark
Cournot equilibrium
Indefinitely repeated game
Basis for Product Differentiation
Perfect Competition (characteristics)
40. First firm to set its output (Stackelberg's model)
Price discrimination
Leader
Import competition
Implicit Collusion
41. A pricing strategy in which profits gained from the sale of one product are used to subsidize sales of a related product
Inter-industry competition
Cross-subsidy pricing
Sweezy oligopoly
Non-cooperative behavior
42. 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
Examples of Monopolistic Competition
Bargaining Power of Buyers
Four-firm concentration ratio
43. A game that is played over and over again forever and in which players receive payoffs during each play of the game
Minimum efficient scale (full capacity)
Bargaining Power of Buyers
Disappearing invisible hand
Indefinitely repeated game
44. Maximize economic profit by producing the quantity at which MC=MR
Mixed (randomized) strategy
The Threat from Potential Entrants Firms
Contestable market
Maximizing profit in Oligopoly games
45. Simultaneous move game that is not repeated
No cooperative equilibrium
One-shot game
Simultaneous-move game
Economies of scale
46. A situation in which a change in price strategy by one firm affects sales and profits of another
Mutual interdependence
Perfect Competitor Making a Profit
Transfer pricing
Patent
47. The actions by persons - firms - or unions to gain special benefits from government at taxpayer's or someone else's expense
Oligopoly
Rent-seeking behavior
Cooperation
Trigger strategy
48. An attempt by a firm to convince buyers that its product is different from the products of other firms in the industry
Strategy
Product differentiation
Credible threat
Strategic behavior
49. When firms limit production and raise prices in a way that raises each others' profits - even though they have not made any formal agreement
Primary Sources of Monopolistic Power
Payoff table
Kinked-demand curve
Tacit collusion
50. When managers are able to charge each consumer their reservation price. Examples are car and home sales
First-Degree Price Discrimination (Perfect)
Barrier to entry
Inter-industry competition
Strategic behavior