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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. Occurs when a firm produces output - whatever its level - at a higher cost than is necessary to produce it
Limit pricing
Inefficiency
Commodity bundling
Herfindahl-Hirschman index (HHI)
2. A firm whose price decisions are tacitly accepted and followed by others in the industry
Price Leadership
Conglomerate Merger
Payoff matrix
One-shot game
3. Price Sensitive
Profit
Subgame perfect equilibrium
High Price Elasticity
Limit price
4. The maximum price that a buyer is willing to pay for a good - or the minimum price that a seller will accept
Reservation Price
Product differentiation
Collusion
Limit price
5. Cooperation among firms that does not involve an explicit agreement
Cooperation
Conglomerate Merger
Marginal Revenue
Tacit collusion
6. 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
Non-price competition
Four-firm concentration ratio
Trigger strategy
Monopolistic Competition
7. Where a firm can charge different groups of consumers different prices for the same product. Example: student or senior discounts
First-Degree Price Discrimination (Perfect)
Third-degree price discrimination
Cooperation
Monopolistic Competition
8. 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
Nonprime competition
Kinked demand curve model
Monopolistic Competition
Dominant strategy equilibrium
9. 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
Third-Degree Price Discrimination
Oligopoly
Dominant strategy equilibrium
Limit pricing
10. When something can be consumed without reducing the benefits available for subsequent consumption; can be consumed without supporting rivalry between consumers
Dominant firm oligopoly
Non-rivalrous consumption
Concentration Ratio
First-mover advantage
11. A strategy that guarantees the highest payoff given the worst possible scenario
Secure strategy
Four-firm concentration ratio
Imperfect competition
Simultaneous-move game
12. A situation where one firm is able to provide a service at a lower cost than could several competing firms
Non-price competition
What is game?
Natural Monopoly (local phone or electric company)
Mixed (randomized) strategy
13. All firms and individuals willing and able to buy or sell a particular product
Market
Tit-for-tat strategy
Prisoner's dilemma
Non-cooperative behavior
14. Revenue-Costs
Profit
Homogenous oligopoly
Marginal Revenue
Double marginalization
15. A merger between two firms in the same industry. Example: 2004 K-Mart merged with Sears
Mutual interdependence
Horizontal Merger/Integration
Differentiated oligopoly
Unbalanced Oligopoly
16. A strategy whereby a player randomizes over two or more available actions in order to keep rivals from being able to predict his action
Implicit Collusion
Non-cooperative behavior
Mixed (randomized) strategy
Price Leadership
17. First firm to set its output (Stackelberg's model)
Network effects
Payoff matrix
Leader
Monopolistic Competition
18. Intense competition in which competitors cut retail prices to gain business--oligopolistic competition
Normal-form game
The Threat from Potential Entrants Firms
Four-firm concentration ratio
Price war
19. In game theory - benefit obtained by party that moves first in a sequential game
Economies of scale
Perfect Competitor Characteristics
Price war
First-mover advantage
20. 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
Finding profit for oligopoly games
Concentration Ratio
Prisoners' dilemma
Rent-seeking behavior
21. A merger between firms who have a buyer/supplier relationship. Example: BF Goodrich merging with rubber plantations
Import competition
Vertical Merger
Present Value (PV)
Limit pricing
22. Keeps the price just where it is to maximize profit
Strategic behavior
Cutthroat Competition
Four-firm concentration ratio
Cooperation
23. An index of market concentration. Sum of squared market shares of all the firms in the industry times 10K HHI=10 - 000Σwi2
Payoff table
Herfindahl-Hirschman index (HHI)
The Threat from Potential Entrants Firms
Basis for Product Differentiation
24. 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
Fair return price
Reservation Price
Strategic behavior
25. 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
Kinked-demand curve
Barrier to entry
What is game?
Dominant firm oligopoly
26. (1) Economies of Scale; (2) Economies of Scope; (3) Cost Complementarity; and (4)Patents & Other Legal Barriers
Two-part pricing
Product Differentiation
Primary Sources of Monopolistic Power
Peak-load pricing
27. Multiple firms make the same pricing decisions even though they have not explicitly consulted with each other
Marginal Revenue
Rothschild index
No cooperative equilibrium
Implicit Collusion
28. Pricing strategy in which higher prices are charged during peak hours than during off-peak hours
Cross-subsidy pricing
Peak-load pricing
Second-Degree Price Discrimination
Indefinitely repeated game
29. 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
Repeated game
Horizontal Merger/Integration
Cooperation
30. A strategy in which a firm advertises a price and a promise to match any lower prices offered by a competitor
Prisoner's dilemma
Cooperation
Price matching
Secure strategy
31. The exclusive right to a product for a period of 20 years from the date the product is invented
Ownership of a Key Input
Rent-seeking behavior
Cheating
Patent
32. Both players have dominant strategies and play them
Price matching
Dominant strategy equilibrium
Implicit Collusion
Equilibrium
33. An attempt by a firm to convince buyers that its product is different from the products of other firms in the industry
Profit
Horizontal Merger/Integration
Product differentiation
Business strategy
34. The practice of bundling several different products together and selling them at a single "bundle" price
Commodity bundling
Equilibrium
Rent-seeking behavior
Non-price competition
35. The demand curve for a non-collusive oligopolist - which is based on the assumption that rivals will match a price decrease and will ignore a price increase
The Threat from Potential Entrants Firms
Joint Venture
Imperfect competition
Kinked-demand curve
36. A measure of market power - the percentage of all sales that is accounted for by the four or eight largest firms in the market
Cooperative equilibrium
Concentration Ratio
Monopoly (characteristics)
Monopolistic Competition
37. Game in which each player makes decisions without knowledge of the other player's decisions
Simultaneous-move game
Repeated game
Interdependence
No cooperative equilibrium
38. Ignoring the effects of their actions on each others' profits
Indefinitely repeated game
Imperfect competition
Bargaining Power of Buyers
Non-cooperative behavior
39. Rules - strategies - payoffs - outcomes
Commodity bundling
Leader
Prisoner's dilemma
What is game?
40. Physical differences - Convenience - Ambience - Reputations - Appeals to vanity - Unconscious fears and desires - Snob appeal - Customized products
Basis for Product Differentiation
Patent
Mixed (randomized) strategy
Payoff
41. 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
Double marginalization
Kinked-demand curve
Leader
Reservation Price
42. 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
Cross-subsidy pricing
Strategy
Disappearing invisible hand
Competitive market
43. 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
Payoff
Two-part Tariff Method of Pricing
Joint Venture
One-shot game
44. Actions taken by firms to plan for and react to competition from rival firms
Collusion
Normal-form game
Strategic behavior
Imperfect competition
45. In game theory - game where parties make their moves in turn - one party making the first move followed by the other
Follower
Trigger strategy
Tit-for-tat strategy
Sequential game
46. Steel - autos - colas - airlines
Examples of Oligopoly
Rothschild index
Mutual Interdependence
Product differentiation
47. 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
Rent-seeking behavior
Non-cooperative equilibrium
Normal-form game
The Threat from Potential Entrants Firms
48. A situation in which neither firm has incentive to change its output given the other firm's output
Stackelberg oligopoly
Sweezy oligopoly
Strategy
Cournot equilibrium
49. Toothpaste - shampoo - restaurants - banks
Common knowledge
Examples of Monopolistic Competition
Empty threat
Dansby-Willig performance index
50. An equilibrium in a game in which players do not cooperate but pursue their own self-interest
Trigger strategy
Tacit collusion
No cooperative equilibrium
Price war