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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. 1/(1+i)n






2. 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






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






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






5. If buyers have enough bargaining power - they can insist on lower prices - higher-quality products - or additional services






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






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






8. Both players have dominant strategies and play them






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






10. The price that is low enough to deter entry






11. Rules - strategies - payoffs - outcomes






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






13. 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






14. 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






15. 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






16. 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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17. 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.)






18. A trigger strategy that punishes after an episode of cheating and returns to cooperation if cheating ends






19. 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






20. When each firm has an incentive to cheat - but both are worse off if both cheat -- illustrates why cooperation is difficult to maintain even when it is mutually beneficial to do so

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






22. 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






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






24. Demand line is above ATC curve






25. The derivative of total revenue






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






27. 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






28. An oligopoly in which the firms produce a standardized product






29. 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






30. 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






31. 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)






32. Occurs when a firm produces output - whatever its level - at a higher cost than is necessary to produce it






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






34. Price Sensitive






35. Involves price-fixing






36. 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






37. The competition for sales between the products of one industry and the products of another industry






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






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






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






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






42. Produce identical products






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






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






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






46. In game theory - benefit obtained by party that moves first in a sequential game






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






48. Single seller in an industry - Strong barriers to entry - Profit maximization - faces market demand and sets MR=MC - Unexploited gains from trade






49. Specific assets - Economies of scale - Excess capacity - Reputation effects






50. The competition that domestic firms encounter from the products and services of foreign producers