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Business Competition
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Subject
:
business-skills
Instructions:
Answer 50 questions in 15 minutes.
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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 product's ability to satisfy a large number of consumers at the same time
Kinked-demand curve
One-shot game
Non-rivalrous consumption
Simultaneous consumption
2. Identical or substitutable
Limit pricing
Secure strategy
Contestable market
Undifferentiated
3. The exclusive right to a product for a period of 20 years from the date the product is invented
Patent
Nonprime competition
Non-cooperative behavior
Competitive market
4. A pricing strategy in which profits gained from the sale of one product are used to subsidize sales of a related product
Monopolistic Characteristics:
Cross-subsidy pricing
High Price Elasticity
Product differentiation
5. When the decisions of two or more firms significantly affect each others' profits
Strategic behavior
Horizontal Merger/Integration
Interdependence
Simultaneous consumption
6. 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
Third-degree price discrimination
Pure monopoly
Extensive-form game
Perfect Competition Barriers to Entry
7. A strategy whereby a player randomizes over two or more available actions in order to keep rivals from being able to predict his action
Socially optimal price
Monopolistic Characteristics:
Subgame perfect equilibrium
Mixed (randomized) strategy
8. The reward received by a player in a game - such as the profit earned by an oligopolist
Payoff
Normal-form game
Four-firm concentration ratio
Perfect Competition Barriers to Entry
9. A strategy that guarantees the highest payoff given the worst possible scenario
Equilibrium
Payoff matrix
Secure strategy
Perfect Competitor Making a Profit
10. 1/(1+i)n
Perfect Competitor Characteristics
Dominant firm oligopoly
Strategic behavior
Present Value (PV)
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
Disappearing invisible hand
Contestable market
First-Degree Price Discrimination (Perfect)
Lerner index
12. An agreement among firms in a market about quantities to produce or prices to charge in attempts to limit competition
Nash equilibrium
Collusion
Payoff matrix
Minimum efficient scale (full capacity)
13. Specific assets - Economies of scale - Excess capacity - Reputation effects
What is game?
Second-Degree Price Discrimination
Cheating
Perfect Competition Barriers to Entry
14. In game theory - a game that is played again sometime after the previous game ends
Barrier to entry
Second-Degree Price Discrimination
Open Collusion
Repeated game
15. 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
Primary Sources of Monopolistic Power
Examples of Oligopoly
Two-part pricing
Rent-seeking behavior
16. A combination of two or more companies into one company
Mutual Interdependence
Cheating
Merger
Price matching
17. A table that shows the payoffs that each firm earns from every combination of strategies by the firms
Interdependence
Payoff matrix
Second-Degree Price Discrimination
Price matching
18. An establishment firm commits to setting price below the profit-maximizing level to prevent entry
Simultaneous decision games
Limit pricing
Secure strategy
Concentration Ratio
19. 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
Minimum efficient scale (full capacity)
Cournot oligopoly
Collusion
Non-cooperative equilibrium
20. A simpler way to operationalize first-degree price discrimination
Prisoner's dilemma
Fair return price
Sequential game
Two-part Tariff Method of Pricing
21. 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
Trigger strategy
Undifferentiated
Two-part Tariff Method of Pricing
Repeated game
22. A situation in which all decision makers know the payoff table - and they believe all other decision makers also know the payoff table
Bargaining Power of Buyers
Third-Degree Price Discrimination
Sequential-move game
Common knowledge
23. Sellers can identify different types of customers and offer each a different price. Examples are special prices for students or the elderly
Payoff matrix
Strategic behavior
Third-Degree Price Discrimination
Randomized pricing
24. All firms and individuals willing and able to buy or sell a particular product
Monopolistic Competition
Profit
Market
Disappearing invisible hand
25. 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
Finding profit for oligopoly games
Secure strategy
Duopoly
Bertrand oligopoly
26. An equilibrium in a game in which players do not cooperate but pursue their own self-interest
No cooperative equilibrium
Maximizing profit in Oligopoly games
Price matching
Present Value (PV)
27. Increases in the value of a product to each user - including existing users - as the total number of users rises
Finding profit for oligopoly games
Examples of Oligopoly
Nash equilibrium
Network effects
28. 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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29. When firms make decisions that make every firm better off than in a noncooperative Nash equilibrium
Credible threat
Market
Sequential game
Cooperation
30. 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
First-mover advantage
Conglomerate Merger
Economies of scale
31. Pricing strategy in which a firm optimally sets the internal price at which an upstream division wells an input to a downstream division
Rothschild index
Transfer pricing
Disappearing invisible hand
Limit pricing
32. A strategy in which a firm advertises a price and a promise to match any lower prices offered by a competitor
Tacit collusion
Price matching
Common knowledge
Duopoly
33. A situation where one firm is able to provide a service at a lower cost than could several competing firms
One-shot game
Perfect Competition Barriers to Entry
Natural Monopoly (local phone or electric company)
Perfect Competitor Making a Profit
34. A representation of a game indicating the players - their possible strategies - and the payoffs resulting from alternative strategies
Oligopoly
Economies of scale
Interdependence
Normal-form game
35. 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.)
Trigger strategy
Monopolistic Characteristics:
Duopoly
Perfect Competition Barriers to Entry
36. Pricing strategy in which a firm intentionally varies its price in an attempt to "hide" price information from consumers and rivals
Second-Degree Price Discrimination
First-Degree Price Discrimination (Perfect)
Randomized pricing
Bargaining Power of Suppliers
37. Game in which one player makes a move after observing the other player's move
Cournot oligopoly
Sequential-move game
Product Differentiation
Tacit collusion
38. A merger between two firms in the same industry. Example: 2004 K-Mart merged with Sears
Block pricing
Horizontal Merger/Integration
Prisoners' dilemma
Mutual interdependence
39. A strategy or action that always provides the best outcome no matter what decisions rivals make
Payoff matrix
Dominant strategy
Herfindahl-Hirschman index (HHI)
Block pricing
40. Operates like the alleged Mafia. Region division of the market among the firms in the industry
Present Value (PV)
Open Collusion
Mixed (randomized) strategy
Non-rivalrous consumption
41. Multiple firms make the same pricing decisions even though they have not explicitly consulted with each other
Sequential game
Two-part Tariff Method of Pricing
Implicit Collusion
Conglomerate Merger
42. 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
First-Degree Price Discrimination (Perfect)
Joint Venture
Monopolistic Competition
Minimum efficient scale (full capacity)
43. The competition that domestic firms encounter from the products and services of foreign producers
Import competition
One-shot game
Undifferentiated
Normal-form game
44. A table that shows the payoffs for every possible action by each player for every possible action by the other player
Stackelberg oligopoly
Monopolistic Characteristics:
Nash equilibrium
Payoff matrix
45. Variations on one good so that a firm can increase market sharea
Sequential game
Disappearing invisible hand
Nonprime competition
Brand Multiplication
46. Simultaneous move game that is not repeated
Homogenous oligopoly
Equilibrium
One-shot game
Common knowledge
47. Cooperation among firms that does not involve an explicit agreement
Repeated game
Tacit collusion
Monopolistic Characteristics:
Prisoner's dilemma
48. An oligopoly in which the sales of the leading (top four) firms are distributed unevenly among them
Unbalanced Oligopoly
First-mover advantage
Marginal Revenue
Payoff matrix
49. A merger between firms who have a buyer/supplier relationship. Example: BF Goodrich merging with rubber plantations
Vertical Merger
Pure monopoly
Inefficiency
Product differentiation
50. Ignoring the effects of their actions on each others' profits
Equilibrium
Perfect Competition Barriers to Entry
Basis for Product Differentiation
Non-cooperative behavior
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