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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. The practice of bundling several different products together and selling them at a single "bundle" price
Commodity bundling
No cooperative equilibrium
Open Collusion
Interdependence
2. Steel - autos - colas - airlines
What is game?
Joint Venture
Perfect Competition Short Run Supply
Examples of Oligopoly
3. 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
Prisoner's dilemma
Secure strategy
Monopolistic Competition
Transfer pricing
4. 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
Contestable market
Extensive-form game
Dansby-Willig performance index
Sweezy oligopoly
5. Demand line is above ATC curve
Perfect Competitor Making a Profit
Profit
Examples of Oligopoly
Ownership of a Key Input
6. Game in which one player makes a move after observing the other player's move
Mutual Interdependence
Strategy
Common knowledge
Sequential-move game
7. 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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8. The reward received by a player in a game - such as the profit earned by an oligopolist
Duopoly
Third-Degree Price Discrimination
Payoff
Tit-for-tat strategy
9. In game theory - a statement of harmful intent by one party that the other party views as believable-- "if you do this - we will do that"
Payoff matrix
Credible threat
Barrier to entry
First-mover advantage
10. Maximize economic profit by producing the quantity at which MC=MR
Maximizing profit in Oligopoly games
Payoff table
Open Collusion
Non-rivalrous consumption
11. Game in which each player makes decisions without knowledge of the other player's decisions
Interdependence
Basis for Product Differentiation
Marginal Revenue
Simultaneous-move game
12. 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
Brand Multiplication
Examples of Monopolistic Competition
Double marginalization
What is game?
13. The competition for sales between the products of one industry and the products of another industry
Inter-industry competition
Subgame perfect equilibrium
Indefinitely repeated game
Dominant strategy equilibrium
14. A firm whose price decisions are tacitly accepted and followed by others in the industry
Cournot equilibrium
Non-cooperative behavior
Examples of Monopolistic Competition
Price Leadership
15. The exclusive right to a product for a period of 20 years from the date the product is invented
Vertical Merger
Nonprime competition
Bertrand oligopoly
Patent
16. A game that is played over and over again forever and in which players receive payoffs during each play of the game
Limit price
Indefinitely repeated game
Four-firm concentration ratio
Conglomerate Merger
17. Ranks industries according to how much social welfare would improve if the output in an industry were increased by a small amount
Network effects
Patent
Dansby-Willig performance index
Conglomerate Merger
18. Single seller in an industry - Strong barriers to entry - Profit maximization - faces market demand and sets MR=MC - Unexploited gains from trade
Simultaneous consumption
Monopoly (characteristics)
Fair return price
Network effects
19. An oligopoly in which the sales of the leading (top four) firms are distributed unevenly among them
Unbalanced Oligopoly
Prisoner's dilemma
Rothschild index
Perfect Competition Short Run Supply
20. If buyers have enough bargaining power - they can insist on lower prices - higher-quality products - or additional services
Four-firm concentration ratio
Herfindahl-Hirschman index (HHI)
Network effects
Bargaining Power of Buyers
21. 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
Lerner index
Examples of Oligopoly
Non-cooperative behavior
Non-rivalrous consumption
22. 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
Market
Block pricing
Reservation Price
Covert Collusion
23. A measure of the sensitivity to price of a product group as a whole relative to the sensitivity of the quantity demanded of a single firm to a change in its price. R=Et/Ef
Secure strategy
Market Structure
Limit pricing
Rothschild index
24. An establishment firm commits to setting price below the profit-maximizing level to prevent entry
Peak-load pricing
Prisoner's dilemma
Limit pricing
Disappearing invisible hand
25. 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
What is game?
Stackelberg oligopoly
Dominant strategy equilibrium
Kinked-demand curve
26. Different units of a product are sold at different prices. Examples are buying in bulk - or - commodity-bundling
Second-Degree Price Discrimination
Joint Venture
Product differentiation
What is game?
27. A condition describing a set of strategies that constitutes a Nash equilibrium and allows no player to improve their own payoff at any stage of the game by changing strategies
Natural Monopoly (local phone or electric company)
Examples of Monopolistic Competition
Limit pricing
Subgame perfect equilibrium
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. Pricing strategy in which a firm optimally sets the internal price at which an upstream division wells an input to a downstream division
Import competition
Transfer pricing
Covert Collusion
Non-cooperative behavior
30. Price Sensitive
Finding profit for oligopoly games
Cheating
Peak-load pricing
High Price Elasticity
31. A situation where one firm is able to provide a service at a lower cost than could several competing firms
Double marginalization
Natural Monopoly (local phone or electric company)
Network effects
Leader
32. The maximum price that a buyer is willing to pay for a good - or the minimum price that a seller will accept
Reservation Price
Leader
Business strategy
Secure strategy
33. The practice of charging different prices to consumers for the same good or service
Kinked demand curve model
Repeated game
Maximizing profit in Oligopoly games
Price discrimination
34. 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
Perfect Competition (characteristics)
Economies of scale
Rent-seeking behavior
Mutual Interdependence
35. Simultaneous move game that is not repeated
Payoff matrix
One-shot game
Cross-subsidy pricing
High Price Elasticity
36. A situation in which no one wants to change his or her behavior
Equilibrium
Prisoner's dilemma
Cheating
Sequential-move game
37. When something can be consumed without reducing the benefits available for subsequent consumption; can be consumed without supporting rivalry between consumers
Tacit collusion
Non-rivalrous consumption
Herfindahl-Hirschman index (HHI)
Imperfect competition
38. 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
Secure strategy
Oligopoly
Limit pricing
First-mover advantage
39. 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
Third-Degree Price Discrimination
Sweezy oligopoly
Collusion
Double marginalization
40. In game theory - a decision rule that describes the actions a player will take at each decision point
Cournot equilibrium
Homogenous oligopoly
Strategy
Brand Multiplication
41. A merger of firms in unrelated industries. Example: If Purina Dow Chow merged with Pampers Diaper Company
Conglomerate Merger
Homogenous oligopoly
Limit price
Ownership of a Key Input
42. 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
Two-part pricing
Price Leadership
Horizontal Merger/Integration
No cooperative equilibrium
43. 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
Strategy
Finding profit for oligopoly games
Covert Collusion
Four-firm concentration ratio
44. 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
Simultaneous-move game
Limit price
Limit pricing
Competitive market
45. When no one firm has a monopoly - but producers nonetheless realize that they can affect market prices. Firms compete but possess market power
Tacit collusion
Follower
Imperfect competition
Homogenous oligopoly
46. Where a firm can charge different groups of consumers different prices for the same product. Example: student or senior discounts
Sequential-move game
Perfect Competition Barriers to Entry
Nonprime competition
Third-degree price discrimination
47. 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)
Nonprime competition
Leader
Barrier to entry
Unbalanced Oligopoly
48. When managers are able to charge each consumer their reservation price. Examples are car and home sales
Dansby-Willig performance index
Price war
One-shot game
First-Degree Price Discrimination (Perfect)
49. Increases in the value of a product to each user - including existing users - as the total number of users rises
Network effects
Payoff
Horizontal Merger/Integration
Business strategy
50. 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
Prisoners' dilemma
Cournot oligopoly
Limit pricing
Kinked-demand curve