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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. In game theory - benefit obtained by party that moves first in a sequential game
Limit price
Bargaining Power of Buyers
First-mover advantage
Patent
2. 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
Cooperation
Perfect Competition Long Run Supply
Implicit Collusion
3. The competition that domestic firms encounter from the products and services of foreign producers
Payoff
Import competition
Disappearing invisible hand
The Threat from Potential Entrants Firms
4. Operates like the alleged Mafia. Region division of the market among the firms in the industry
Open Collusion
Collusion
Two-part pricing
Product Differentiation
5. A representation of a game indicating the players - their possible strategies - and the payoffs resulting from alternative strategies
Normal-form game
Monopolistic Competition
Sequential game
Marginal Revenue
6. In game theory - a decision rule that describes the actions a player will take at each decision point
Stackelberg oligopoly
Strategy
Dominant strategy
What is game?
7. A measure of market power - the percentage of all sales that is accounted for by the four or eight largest firms in the market
Undifferentiated
Herfindahl-Hirschman index (HHI)
Concentration Ratio
First-mover advantage
8. In game theory - a game that is played again sometime after the previous game ends
Repeated game
Primary Sources of Monopolistic Power
Barrier to entry
Joint Venture
9. Cooperation among firms that does not involve an explicit agreement
Dansby-Willig performance index
Joint Venture
Tacit collusion
Nonprime competition
10. Simultaneous move game that is not repeated
First-mover advantage
Disappearing invisible hand
Kinked-demand curve
One-shot game
11. Intense competition in which competitors cut retail prices to gain business--oligopolistic competition
Price war
Sweezy oligopoly
Merger
Present Value (PV)
12. 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
Barrier to entry
13. A merger of firms in unrelated industries. Example: If Purina Dow Chow merged with Pampers Diaper Company
Conglomerate Merger
Covert Collusion
Barrier to entry
Payoff matrix
14. A strategy whereby a player randomizes over two or more available actions in order to keep rivals from being able to predict his action
Credible threat
Price discrimination
Mixed (randomized) strategy
Cooperative equilibrium
15. A strategy or action that always provides the best outcome no matter what decisions rivals make
Dominant firm oligopoly
Dominant strategy
Price Leadership
Peak-load pricing
16. 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
Market Structure
Trigger strategy
Inefficiency
First-mover advantage
17. A situation in which neither firm has incentive to change its output given the other firm's output
Cournot equilibrium
Simultaneous decision games
Maximizing profit in Oligopoly games
Payoff table
18. 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)
Barrier to entry
Examples of Monopolistic Competition
Product Differentiation
The Threat from Potential Entrants Firms
19. Identical or substitutable
Present Value (PV)
Undifferentiated
Tit-for-tat strategy
Merger
20. Takes Place inside the Mind of the consumer
Product Differentiation
Profit
Credible threat
Sequential game
21. A combination of two or more companies into one company
Payoff matrix
Price discrimination
Merger
Product differentiation
22. Revenue-Costs
Strategic behavior
Profit
First-Degree Price Discrimination (Perfect)
Kinked-demand curve
23. A condition describing a set of strategies in which no player can improve their payoff by unilaterally changing their own strategy given the other player's strategy
Repeated game
Bargaining Power of Suppliers
Equilibrium
Nash equilibrium
24. Face competition from companies that currently are not in the market but might enter
The Threat from Potential Entrants Firms
Inter-industry competition
Perfect Competition (characteristics)
Common knowledge
25. Where a firm can charge different groups of consumers different prices for the same product. Example: student or senior discounts
Nash equilibrium
Third-degree price discrimination
Cournot equilibrium
Price war
26. When firms limit production and raise prices in a way that raises each others' profits - even though they have not made any formal agreement
Tacit collusion
Third-degree price discrimination
Price war
Barrier to entry
27. 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
Barrier to entry
Cournot oligopoly
Cutthroat Competition
Imperfect competition
28. Produce identical products
Strategic behavior
Perfect Competitor Characteristics
Cooperative equilibrium
Sweezy oligopoly
29. 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
Strategic behavior
Monopoly (characteristics)
Perfect Competition Long Run Supply
Contestable market
30. Demand line is above ATC curve
Third-degree price discrimination
Interdependence
Profit
Perfect Competitor Making a Profit
31. Price Sensitive
Payoff matrix
Profit
Perfect Competitor Characteristics
High Price Elasticity
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
Inter-industry competition
Sweezy oligopoly
Tit-for-tat strategy
Normal-form game
33. Rules - strategies - payoffs - outcomes
What is game?
Non-price competition
Fair return price
Implicit Collusion
34. Increases in the value of a product to each user - including existing users - as the total number of users rises
Cooperation
Block pricing
Network effects
Covert Collusion
35. When the decisions of two or more firms significantly affect each others' profits
What is game?
Interdependence
Cross-subsidy pricing
Reservation Price
36. The competition for sales between the products of one industry and the products of another industry
Price Leadership
The Threat from Potential Entrants Firms
Inter-industry competition
Sweezy oligopoly
37. When firms make decisions that make every firm better off than in a noncooperative Nash equilibrium
Subgame perfect equilibrium
Collusion
Cooperation
Repeated game
38. An establishment firm commits to setting price below the profit-maximizing level to prevent entry
Mutual Interdependence
Prisoner's dilemma
Simultaneous consumption
Limit pricing
39. A merger between firms who have a buyer/supplier relationship. Example: BF Goodrich merging with rubber plantations
Vertical Merger
Third-Degree Price Discrimination
Nash equilibrium
Bargaining Power of Buyers
40. 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
Dansby-Willig performance index
Second-Degree Price Discrimination
Limit pricing
Differentiated oligopoly
41. A situation in which competing firms must make their individual decisions without knowing the decisions of their rivals
Dominant strategy
Contestable market
Herfindahl-Hirschman index (HHI)
Simultaneous decision games
42. Both players have dominant strategies and play them
Commodity bundling
Implicit Collusion
Dominant strategy equilibrium
Mutual Interdependence
43. A table that shows the payoffs for every possible action by each player for every possible action by the other player
Perfect Competitor Making a Profit
Monopolistic Characteristics:
Dansby-Willig performance index
Payoff matrix
44. Marginal cost curve above average variable cost - P* = SRMC
Dansby-Willig performance index
Perfect Competition Short Run Supply
Limit pricing
First-mover advantage
45. 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
Indefinitely repeated game
Basis for Product Differentiation
Extensive-form game
Price matching
46. Actions taken by firms to plan for and react to competition from rival firms
Cheating
Nonprime competition
Disappearing invisible hand
Strategic behavior
47. 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
Natural Monopoly (local phone or electric company)
Undifferentiated
Non-rivalrous consumption
48. 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
Simultaneous consumption
Dominant firm oligopoly
Product differentiation
Implicit Collusion
49. Pricing strategy in which identical products are packaged together in order to enhance profits by forcing customers to make an all-or-none decision to purchase
Block pricing
Ownership of a Key Input
Implicit Collusion
Perfect Competition (characteristics)
50. A pricing strategy in which profits gained from the sale of one product are used to subsidize sales of a related product
Strategic behavior
Profit
Mutual Interdependence
Cross-subsidy pricing