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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. 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






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






3. Different units of a product are sold at different prices. Examples are buying in bulk - or - commodity-bundling






4. A combination of two or more companies into one company






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






6. In game theory - a statement of harmful intent easily dismissed by recipient because threat not considered believable






7. If many firms can supply an input and the input is not specialized - the suppliers are unlikely to have the bargaining power to limit a firm's profits






8. Using advertising and other means to try to increase a firm's sales






9. 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"






10. A strategy in which a firm advertises a price and a promise to match any lower prices offered by a competitor






11. Produce identical products






12. A situation in which competing firms must make their individual decisions without knowing the decisions of their rivals






13. Simultaneous move game that is not repeated






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






15. Long-run marginal cost curve above long-run average cost






16. 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






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






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






19. 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






20. Price Sensitive






21. 2 firms - simplest case in an oligopoly. Profits higher if limiting their production






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






23. In game theory - game where parties make their moves in turn - one party making the first move followed by the other






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






25. 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






26. 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)






27. 1/(1+i)n






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






29. When a manager makes a noncooperative decision






30. Maximize economic profit by producing the quantity at which MC=MR






31. The price that is low enough to deter entry






32. 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






33. Steel - autos - colas - airlines






34. The practice of charging different prices to consumers for the same good or service






35. Industry in which (1) there are few firms serving many customers; (2) firms produce either differentiated or homogenous products; (3) a single (leader) firm chooses an output quantity before their rivals select their outputs; (4) all other (follower)






36. Game in which one player makes a move after observing the other player's move






37. Actions taken by firms to plan for and react to competition from rival firms






38. 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






39. Set marginal cost for the cartel equal to marginal revenue for the cartel; -cartel's marginal cost curve is the horizontal sum of the MC curves of the two firms; -Marginal revenue curve is like that of a monopoly






40. A situation where one firm is able to provide a service at a lower cost than could several competing firms






41. Cooperation among firms that does not involve an explicit agreement






42. 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.)






43. Many buyers and sellers - product homogeneity - low cost and accurate information - free entry and exit - best regarded as a benchmark






44. A strategy or action that always provides the best outcome no matter what decisions rivals make






45. Rival who sets its output after the leader (Stackelberg's model)






46. When managers are able to charge each consumer their reservation price. Examples are car and home sales






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






48. Price of a product that enables its producer to obtain a normal profit & that is equal to the ATC of producing it






49. A situation in which neither firm has incentive to change its output given the other firm's output






50. Game in which each player makes decisions without knowledge of the other player's decisions







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