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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 charging different prices to consumers for the same good or service
First-Degree Price Discrimination (Perfect)
Second-Degree Price Discrimination
Price discrimination
The Threat from Potential Entrants Firms
2. Both players have dominant strategies and play them
Dominant strategy equilibrium
Payoff matrix
Rent-seeking behavior
Duopoly
3. An equilibrium in a game in which players cooperate to increase their mutual payoff
Empty threat
Cooperative equilibrium
Simultaneous-move game
Unbalanced Oligopoly
4. First firm to set its output (Stackelberg's model)
Limit pricing
Cheating
Oligopoly
Leader
5. 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
Limit pricing
Socially optimal price
Non-rivalrous consumption
Tit-for-tat strategy
6. 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
Profit
Double marginalization
Monopolistic Competition
Disappearing invisible hand
7. 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.)
Strategic behavior
Payoff matrix
Monopolistic Characteristics:
Nash equilibrium
8. A combination of two or more companies into one company
Kinked-demand curve
Network effects
Merger
Cooperative equilibrium
9. An establishment firm commits to setting price below the profit-maximizing level to prevent entry
First-mover advantage
Lerner index
Limit pricing
Rent-seeking behavior
10. In game theory - game where parties make their moves in turn - one party making the first move followed by the other
Inter-industry competition
Sequential game
Cooperation
Dominant firm oligopoly
11. The competition for sales between the products of one industry and the products of another industry
Finding profit for oligopoly games
Inter-industry competition
Monopolistic Competition
Basis for Product Differentiation
12. 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
Business strategy
Credible threat
Oligopoly
Nash equilibrium
13. 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
Finding profit for oligopoly games
Open Collusion
Normal-form game
Block pricing
14. 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
Import competition
Extensive-form game
Subgame perfect equilibrium
Perfect Competition Barriers to Entry
15. A trigger strategy that punishes after an episode of cheating and returns to cooperation if cheating ends
Merger
Present Value (PV)
Tit-for-tat strategy
Simultaneous consumption
16. A merger between firms who have a buyer/supplier relationship. Example: BF Goodrich merging with rubber plantations
Prisoners' dilemma
Limit pricing
Vertical Merger
No cooperative equilibrium
17. 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
Non-rivalrous consumption
Equilibrium
Monopolistic Characteristics:
Kinked-demand curve
18. A game that is played over and over again forever and in which players receive payoffs during each play of the game
Mutual Interdependence
Open Collusion
Transfer pricing
Indefinitely repeated game
19. The actions by persons - firms - or unions to gain special benefits from government at taxpayer's or someone else's expense
Kinked-demand curve
Rent-seeking behavior
Third-degree price discrimination
Marginal Revenue
20. 2 firms - simplest case in an oligopoly. Profits higher if limiting their production
Open Collusion
Repeated game
Barrier to entry
Duopoly
21. A situation in which no one wants to change his or her behavior
Basis for Product Differentiation
Oligopoly
Equilibrium
Conglomerate Merger
22. In game theory - benefit obtained by party that moves first in a sequential game
Cutthroat Competition
First-mover advantage
Extensive-form game
Price Leadership
23. A product's ability to satisfy a large number of consumers at the same time
Cournot oligopoly
Simultaneous consumption
Cooperation
Market Structure
24. A merger between two firms in the same industry. Example: 2004 K-Mart merged with Sears
Monopolistic Competition
Dansby-Willig performance index
Randomized pricing
Horizontal Merger/Integration
25. An oligopoly in which the firms produce a standardized product
Extensive-form game
Homogenous oligopoly
Block pricing
Transfer pricing
26. Keeps the price just where it is to maximize profit
Cutthroat Competition
Price discrimination
One-shot game
Market Structure
27. Produce identical products
Examples of Oligopoly
Perfect Competitor Characteristics
Kinked demand curve model
Stackelberg oligopoly
28. When firms make decisions that make every firm better off than in a noncooperative Nash equilibrium
Cooperation
Pure monopoly
Duopoly
Homogenous oligopoly
29. A table showing - for every possible combination of decisions players can make - the outcomes or "payoffs" for each of the players in each decision combination
Product differentiation
Network effects
Non-cooperative behavior
Payoff table
30. 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
Covert Collusion
Dominant strategy
Limit pricing
Kinked demand curve model
31. If production of a good requires a particular input - then control of that input can be a barrier to entry
Implicit Collusion
Homogenous oligopoly
Ownership of a Key Input
Undifferentiated
32. Actions taken by a firm to achieve a goal - such as maximizing profits
Indefinitely repeated game
Business strategy
Oligopoly
Kinked-demand curve
33. Competition based on factors that are not related to price - such as product quality - service and financing - business location - and reputation
Limit pricing
Extensive-form game
Nonprime competition
Indefinitely repeated game
34. An index of market concentration. Sum of squared market shares of all the firms in the industry times 10K HHI=10 - 000Σwi2
Simultaneous decision games
Rent-seeking behavior
Horizontal Merger/Integration
Herfindahl-Hirschman index (HHI)
35. The smallest quantity at which the average cost curve reaches its minimum
Double marginalization
Credible threat
Third-degree price discrimination
Minimum efficient scale (full capacity)
36. Different units of a product are sold at different prices. Examples are buying in bulk - or - commodity-bundling
Bertrand oligopoly
Cooperation
Four-firm concentration ratio
Second-Degree Price Discrimination
37. Face competition from companies that currently are not in the market but might enter
Mutual interdependence
Tacit collusion
Non-price competition
The Threat from Potential Entrants Firms
38. A table that shows the payoffs for every possible action by each player for every possible action by the other player
Non-cooperative equilibrium
Payoff matrix
Merger
Implicit Collusion
39. In game theory - a decision rule that describes the actions a player will take at each decision point
Brand Multiplication
Finding profit for oligopoly games
Perfect Competition Short Run Supply
Strategy
40. When no one firm has a monopoly - but producers nonetheless realize that they can affect market prices. Firms compete but possess market power
Primary Sources of Monopolistic Power
Market Structure
Imperfect competition
Cournot equilibrium
41. Demand line is above ATC curve
Primary Sources of Monopolistic Power
Perfect Competitor Making a Profit
Common knowledge
The Threat from Potential Entrants Firms
42. Game in which each player makes decisions without knowledge of the other player's decisions
Marginal Revenue
Economies of scale
Simultaneous-move game
Cheating
43. Game in which one player makes a move after observing the other player's move
Cutthroat Competition
Monopoly (characteristics)
Sequential-move game
Fair return price
44. If buyers have enough bargaining power - they can insist on lower prices - higher-quality products - or additional services
Natural Monopoly (local phone or electric company)
Bargaining Power of Buyers
Four-firm concentration ratio
Price matching
45. Many buyers and sellers - product homogeneity - low cost and accurate information - free entry and exit - best regarded as a benchmark
Trigger strategy
Perfect Competition (characteristics)
Mutual Interdependence
Primary Sources of Monopolistic Power
46. 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
Product Differentiation
No cooperative equilibrium
Joint Venture
Homogenous oligopoly
47. The exclusive right to a product for a period of 20 years from the date the product is invented
Price discrimination
Vertical Merger
Sequential game
Patent
48. 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
Examples of Monopolistic Competition
Cross-subsidy pricing
Non-cooperative equilibrium
Contestable market
49. Steel - autos - colas - airlines
Unbalanced Oligopoly
Examples of Oligopoly
First-Degree Price Discrimination (Perfect)
Socially optimal price
50. If many firms can supply an input and the input is not specialized - the suppliers are unlikely to have the bargaining power to limit a firm's profits
Repeated game
Bargaining Power of Suppliers
Disappearing invisible hand
Payoff matrix