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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. A situation in which neither firm has incentive to change its output given the other firm's output
Limit pricing
Cournot equilibrium
Import competition
Limit pricing
2. A situation in which competing firms must make their individual decisions without knowing the decisions of their rivals
Examples of Monopolistic Competition
One-shot game
Simultaneous decision games
Tacit collusion
3. 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
Cooperative equilibrium
Nash equilibrium
Non-cooperative equilibrium
Stackelberg oligopoly
4. When something can be consumed without reducing the benefits available for subsequent consumption; can be consumed without supporting rivalry between consumers
Non-rivalrous consumption
Vertical Merger
Dansby-Willig performance index
Pure monopoly
5. 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
Basis for Product Differentiation
Normal-form game
Bargaining Power of Suppliers
Imperfect competition
6. 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
Monopolistic Characteristics:
Mutual interdependence
Extensive-form game
Differentiated oligopoly
7. 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
Perfect Competition Long Run Supply
Indefinitely repeated game
Rothschild index
Market
8. 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
Natural Monopoly (local phone or electric company)
Contestable market
First-Degree Price Discrimination (Perfect)
Differentiated oligopoly
9. 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.)
Lerner index
Bargaining Power of Buyers
Monopolistic Characteristics:
Limit price
10. Competition based on factors that are not related to price - such as product quality - service and financing - business location - and reputation
Cooperative equilibrium
Differentiated oligopoly
Nonprime competition
Perfect Competitor Making a Profit
11. An attempt by a firm to convince buyers that its product is different from the products of other firms in the industry
Sweezy oligopoly
Extensive-form game
Herfindahl-Hirschman index (HHI)
Product differentiation
12. In game theory - game where parties make their moves in turn - one party making the first move followed by the other
Socially optimal price
Secure strategy
One-shot game
Sequential game
13. When managers are able to charge each consumer their reservation price. Examples are car and home sales
First-Degree Price Discrimination (Perfect)
Implicit Collusion
Marginal Revenue
Collusion
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
Price discrimination
Tacit collusion
Joint Venture
Subgame perfect equilibrium
15. A situation where one firm is able to provide a service at a lower cost than could several competing firms
Simultaneous-move game
Perfect Competitor Characteristics
Payoff matrix
Natural Monopoly (local phone or electric company)
16. 2 firms - simplest case in an oligopoly. Profits higher if limiting their production
Duopoly
Herfindahl-Hirschman index (HHI)
Profit
Unbalanced Oligopoly
17. Where a firm can charge different groups of consumers different prices for the same product. Example: student or senior discounts
Third-degree price discrimination
Marginal Revenue
Finding profit for oligopoly games
Vertical Merger
18. A merger between two firms in the same industry. Example: 2004 K-Mart merged with Sears
Perfect Competition Barriers to Entry
Barrier to entry
Horizontal Merger/Integration
Mixed (randomized) strategy
19. Many buyers and sellers - product homogeneity - low cost and accurate information - free entry and exit - best regarded as a benchmark
Market
Block pricing
Perfect Competition (characteristics)
Rothschild index
20. A situation in which a change in price strategy by one firm affects sales and profits of another
Present Value (PV)
Fair return price
Mutual interdependence
Repeated game
21. Demand line is above ATC curve
Perfect Competition Short Run Supply
Perfect Competitor Making a Profit
Normal-form game
Commodity bundling
22. 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
Non-cooperative equilibrium
Joint Venture
Monopoly (characteristics)
Dansby-Willig performance index
23. 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
Covert Collusion
Non-price competition
Sweezy oligopoly
Payoff table
24. 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
Limit price
Credible threat
Finding profit for oligopoly games
High Price Elasticity
25. When a manager makes a noncooperative decision
Commodity bundling
Herfindahl-Hirschman index (HHI)
Cheating
Patent
26. Rival who sets its output after the leader (Stackelberg's model)
Herfindahl-Hirschman index (HHI)
Peak-load pricing
What is game?
Follower
27. Identical or substitutable
Perfect Competition Long Run Supply
Kinked-demand curve
Randomized pricing
Undifferentiated
28. A strategy that is contingent on the past play of a game and ion which some particular past action "triggers" a different action by a player
Pure monopoly
Block pricing
Second-Degree Price Discrimination
Trigger strategy
29. An oligopoly in which the sales of the leading (top four) firms are distributed unevenly among them
Examples of Monopolistic Competition
Empty threat
Oligopoly
Unbalanced Oligopoly
30. A representation of a game indicating the players - their possible strategies - and the payoffs resulting from alternative strategies
Contestable market
Kinked demand curve model
Cutthroat Competition
Normal-form game
31. A strategy that guarantees the highest payoff given the worst possible scenario
Limit pricing
Secure strategy
Minimum efficient scale (full capacity)
Subgame perfect equilibrium
32. 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
Four-firm concentration ratio
Horizontal Merger/Integration
Bertrand oligopoly
Payoff table
33. Revenue-Costs
First-mover advantage
Collusion
Cross-subsidy pricing
Profit
34. Keeps the price just where it is to maximize profit
Socially optimal price
Cournot oligopoly
Dominant strategy
Cutthroat Competition
35. Price Sensitive
High Price Elasticity
Block pricing
Limit price
Oligopoly
36. A strategy in which a firm advertises a price and a promise to match any lower prices offered by a competitor
Cross-subsidy pricing
Extensive-form game
Price matching
Two-part pricing
37. First firm to set its output (Stackelberg's model)
Sequential-move game
Inter-industry competition
Leader
Dominant firm oligopoly
38. Multiple firms make the same pricing decisions even though they have not explicitly consulted with each other
Implicit Collusion
Product differentiation
Cournot equilibrium
Economies of scale
39. The competition that domestic firms encounter from the products and services of foreign producers
Import competition
Dominant firm oligopoly
Concentration Ratio
Finding profit for oligopoly games
40. A table that shows the payoffs for every possible action by each player for every possible action by the other player
Bertrand oligopoly
Simultaneous decision games
Business strategy
Payoff matrix
41. An establishment firm commits to setting price below the profit-maximizing level to prevent entry
Network effects
First-Degree Price Discrimination (Perfect)
Limit pricing
First-mover advantage
42. Price of a product that enables its producer to obtain a normal profit & that is equal to the ATC of producing it
Implicit Collusion
Cheating
Fair return price
Product differentiation
43. A strategy whereby a player randomizes over two or more available actions in order to keep rivals from being able to predict his action
Price Leadership
Mixed (randomized) strategy
Payoff table
The Threat from Potential Entrants Firms
44. The percentage of the total industry sales accounted for by the four largest firms in the industry. OUTPUT of 4 largest firms over TOTAL output in industry. C4=(S1+...+S4)/St or (w1+...+w4)
Minimum efficient scale (full capacity)
Cournot oligopoly
Four-firm concentration ratio
First-mover advantage
45. Intense competition in which competitors cut retail prices to gain business--oligopolistic competition
Price war
Bargaining Power of Buyers
Present Value (PV)
Two-part Tariff Method of Pricing
46. The exclusive right to a product for a period of 20 years from the date the product is invented
Common knowledge
Cheating
Patent
Primary Sources of Monopolistic Power
47. A merger between firms who have a buyer/supplier relationship. Example: BF Goodrich merging with rubber plantations
Tacit collusion
Normal-form game
Socially optimal price
Vertical Merger
48. 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
Price Leadership
Tit-for-tat strategy
Double marginalization
Pure monopoly
49. 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
Merger
Price matching
Second-Degree Price Discrimination
Kinked demand curve model
50. When no one firm has a monopoly - but producers nonetheless realize that they can affect market prices. Firms compete but possess market power
Perfect Competitor Making a Profit
Bargaining Power of Suppliers
Lerner index
Imperfect competition