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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. When managers are able to charge each consumer their reservation price. Examples are car and home sales
Stackelberg oligopoly
Common knowledge
Monopolistic Characteristics:
First-Degree Price Discrimination (Perfect)
2. An attempt by a firm to convince buyers that its product is different from the products of other firms in the industry
Bertrand oligopoly
Product differentiation
Payoff table
Marginal Revenue
3. 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
Cournot equilibrium
Kinked demand curve model
Maximizing profit in Oligopoly games
Normal-form game
4. Pricing strategy in which higher prices are charged during peak hours than during off-peak hours
Peak-load pricing
Kinked-demand curve
Mutual interdependence
Homogenous oligopoly
5. Actions taken by a firm to achieve a goal - such as maximizing profits
Non-cooperative behavior
Perfect Competition Long Run Supply
Socially optimal price
Business strategy
6. If buyers have enough bargaining power - they can insist on lower prices - higher-quality products - or additional services
Bargaining Power of Buyers
Cournot oligopoly
Two-part Tariff Method of Pricing
Cooperation
7. First firm to set its output (Stackelberg's model)
Double marginalization
Leader
Sequential-move game
Profit
8. Multiple firms make the same pricing decisions even though they have not explicitly consulted with each other
Import competition
Market Structure
Implicit Collusion
Non-price competition
9. A situation where one firm is able to provide a service at a lower cost than could several competing firms
Dominant strategy
Tit-for-tat strategy
Natural Monopoly (local phone or electric company)
Non-rivalrous consumption
10. When firms limit production and raise prices in a way that raises each others' profits - even though they have not made any formal agreement
Payoff
Subgame perfect equilibrium
Reservation Price
Tacit collusion
11. Long-run marginal cost curve above long-run average cost
Perfect Competition Long Run Supply
Merger
Cournot oligopoly
Rent-seeking behavior
12. The practice of charging different prices to consumers for the same good or service
Stackelberg oligopoly
Subgame perfect equilibrium
Price discrimination
Perfect Competition (characteristics)
13. 2 firms - simplest case in an oligopoly. Profits higher if limiting their production
Pure monopoly
Duopoly
Simultaneous-move game
Simultaneous decision games
14. When something can be consumed without reducing the benefits available for subsequent consumption; can be consumed without supporting rivalry between consumers
Natural Monopoly (local phone or electric company)
Kinked-demand curve
Four-firm concentration ratio
Non-rivalrous consumption
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
Barrier to entry
Block pricing
Cheating
Finding profit for oligopoly games
16. (1) Economies of Scale; (2) Economies of Scope; (3) Cost Complementarity; and (4)Patents & Other Legal Barriers
Strategic behavior
Competitive market
Primary Sources of Monopolistic Power
Price Leadership
17. 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
Perfect Competition (characteristics)
Nash equilibrium
Socially optimal price
Interdependence
18. Variations on one good so that a firm can increase market sharea
Secure strategy
Oligopoly
Extensive-form game
Brand Multiplication
19. A merger of firms in unrelated industries. Example: If Purina Dow Chow merged with Pampers Diaper Company
Horizontal Merger/Integration
Conglomerate Merger
Kinked demand curve model
Mutual Interdependence
20. When the decisions of two or more firms significantly affect each others' profits
Implicit Collusion
Simultaneous-move game
Empty threat
Interdependence
21. The reward received by a player in a game - such as the profit earned by an oligopolist
Payoff
Transfer pricing
Brand Multiplication
Finding profit for oligopoly games
22. Where a firm can charge different groups of consumers different prices for the same product. Example: student or senior discounts
Randomized pricing
Third-degree price discrimination
Lerner index
Primary Sources of Monopolistic Power
23. A product's ability to satisfy a large number of consumers at the same time
The Threat from Potential Entrants Firms
Marginal Revenue
Simultaneous consumption
Undifferentiated
24. Physical differences - Convenience - Ambience - Reputations - Appeals to vanity - Unconscious fears and desires - Snob appeal - Customized products
Cheating
Basis for Product Differentiation
Minimum efficient scale (full capacity)
Unbalanced Oligopoly
25. A simpler way to operationalize first-degree price discrimination
Two-part Tariff Method of Pricing
Sweezy oligopoly
Nash equilibrium
Differentiated oligopoly
26. An oligopoly in which the firms produce a standardized product
Homogenous oligopoly
Commodity bundling
Non-price competition
Peak-load pricing
27. A merger between two firms in the same industry. Example: 2004 K-Mart merged with Sears
Horizontal Merger/Integration
Price Leadership
Kinked demand curve model
Cheating
28. Pricing strategy in which a firm optimally sets the internal price at which an upstream division wells an input to a downstream division
Transfer pricing
Network effects
Limit pricing
Barrier to entry
29. 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
High Price Elasticity
Mutual Interdependence
Price discrimination
Examples of Monopolistic Competition
30. 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
Kinked-demand curve
Product Differentiation
Mutual interdependence
Subgame perfect equilibrium
31. Price of a product that enables its producer to obtain a normal profit & that is equal to the ATC of producing it
Pure monopoly
Fair return price
Trigger strategy
Sweezy oligopoly
32. 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
Mixed (randomized) strategy
Perfect Competition Short Run Supply
Price war
Block pricing
33. 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
Credible threat
Primary Sources of Monopolistic Power
Double marginalization
Perfect Competitor Characteristics
34. Price Sensitive
High Price Elasticity
Differentiated oligopoly
Simultaneous consumption
Brand Multiplication
35. In game theory - a statement of harmful intent easily dismissed by recipient because threat not considered believable
Price war
Interdependence
Empty threat
Equilibrium
36. When firms make decisions that make every firm better off than in a noncooperative Nash equilibrium
Perfect Competition Long Run Supply
Cooperation
Simultaneous consumption
Conglomerate Merger
37. Intense competition in which competitors cut retail prices to gain business--oligopolistic competition
Randomized pricing
Price war
Market
Kinked demand curve model
38. A representation of a game indicating the players - their possible strategies - and the payoffs resulting from alternative strategies
Repeated game
Primary Sources of Monopolistic Power
Normal-form game
High Price Elasticity
39. Sellers can identify different types of customers and offer each a different price. Examples are special prices for students or the elderly
Third-Degree Price Discrimination
Implicit Collusion
Mutual interdependence
Second-Degree Price Discrimination
40. A situation in which a change in price strategy by one firm affects sales and profits of another
Simultaneous-move game
Mutual interdependence
Perfect Competitor Making a Profit
Inefficiency
41. Maximize economic profit by producing the quantity at which MC=MR
Maximizing profit in Oligopoly games
Price discrimination
Prisoners' dilemma
Undifferentiated
42. Involves price-fixing
Price matching
Reservation Price
Covert Collusion
Equilibrium
43. 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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44. 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
Transfer pricing
Peak-load pricing
No cooperative equilibrium
45. The practice of bundling several different products together and selling them at a single "bundle" price
Commodity bundling
Non-price competition
Oligopoly
Collusion
46. 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
Extensive-form game
Primary Sources of Monopolistic Power
Nash equilibrium
Monopolistic Characteristics:
47. An equilibrium in a game in which players cooperate to increase their mutual payoff
Examples of Oligopoly
Finding profit for oligopoly games
Cooperative equilibrium
Tacit collusion
48. A situation in which no one wants to change his or her behavior
Dominant strategy
Equilibrium
Simultaneous consumption
Four-firm concentration ratio
49. 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)
Barrier to entry
Stackelberg oligopoly
Lerner index
Mutual interdependence
50. Ranks industries according to how much social welfare would improve if the output in an industry were increased by a small amount
Stackelberg oligopoly
Pure monopoly
Dansby-Willig performance index
Tacit collusion