Test your basic knowledge |

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 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






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






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






4. When firms make decisions that make every firm better off than in a noncooperative Nash equilibrium






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






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






7. 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






8. 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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9. 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






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






11. 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






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






13. Operates like the alleged Mafia. Region division of the market among the firms in the industry






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






15. In game theory - a game that is played again sometime after the previous game ends






16. A representation of a game indicating the players - their possible strategies - and the payoffs resulting from alternative strategies






17. A situation in which all decision makers know the payoff table - and they believe all other decision makers also know the payoff table






18. 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






19. A strategy that guarantees the highest payoff given the worst possible scenario






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






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






22. Both players have dominant strategies and play them






23. Pricing strategy in which a firm optimally sets the internal price at which an upstream division wells an input to a downstream division






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






25. Toothpaste - shampoo - restaurants - banks






26. 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






27. A situation in which a change in price strategy by one firm affects sales and profits of another






28. All firms and individuals willing and able to buy or sell a particular product






29. 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






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






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






32. 2 firms - simplest case in an oligopoly. Profits higher if limiting their production






33. 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






34. The physical characteristics of the market within which firms interact






35. A table that shows the payoffs that each firm earns from every combination of strategies by the firms






36. A pricing strategy in which profits gained from the sale of one product are used to subsidize sales of a related product






37. Intense competition in which competitors cut retail prices to gain business--oligopolistic competition






38. The situation when a firm's long-run average costs fall as it increases output






39. An oligopoly in which the sales of the leading (top four) firms are distributed unevenly among them






40. 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






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






42. Rules - strategies - payoffs - outcomes






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






44. Ignoring the effects of their actions on each others' profits






45. An attempt by a firm to convince buyers that its product is different from the products of other firms in the industry






46. 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






47. 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






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






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






50. 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