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






2. A firm whose price decisions are tacitly accepted and followed by others in the industry






3. Price Sensitive






4. The maximum price that a buyer is willing to pay for a good - or the minimum price that a seller will accept






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






6. 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






7. Where a firm can charge different groups of consumers different prices for the same product. Example: student or senior discounts






8. 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






9. 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






10. When something can be consumed without reducing the benefits available for subsequent consumption; can be consumed without supporting rivalry between consumers






11. A strategy that guarantees the highest payoff given the worst possible scenario






12. A situation where one firm is able to provide a service at a lower cost than could several competing firms






13. All firms and individuals willing and able to buy or sell a particular product






14. Revenue-Costs






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






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






17. First firm to set its output (Stackelberg's model)






18. Intense competition in which competitors cut retail prices to gain business--oligopolistic competition






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






20. 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






21. A merger between firms who have a buyer/supplier relationship. Example: BF Goodrich merging with rubber plantations






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






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






24. The price of a product that results in the most efficient allocation of an economy's resources and that is equal to the marginal cost of the product






25. One large firm that has a significant cost advantage over many other - smaller competing firms; -the large firm operates as a monopoly: setting price and output to maximize profit; -the small firms act as perfect competitors: taking as given the mar






26. (1) Economies of Scale; (2) Economies of Scope; (3) Cost Complementarity; and (4)Patents & Other Legal Barriers






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






28. Pricing strategy in which higher prices are charged during peak hours than during off-peak hours






29. 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






30. A strategy in which a firm advertises a price and a promise to match any lower prices offered by a competitor






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






32. Both players have dominant strategies and play them






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






34. The practice of bundling several different products together and selling them at a single "bundle" price






35. 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






36. A measure of market power - the percentage of all sales that is accounted for by the four or eight largest firms in the market






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






38. Ignoring the effects of their actions on each others' profits






39. Rules - strategies - payoffs - outcomes






40. Physical differences - Convenience - Ambience - Reputations - Appeals to vanity - Unconscious fears and desires - Snob appeal - Customized products






41. 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






42. 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






43. 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






44. Actions taken by firms to plan for and react to competition from rival firms






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






46. Steel - autos - colas - airlines






47. 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






48. A situation in which neither firm has incentive to change its output given the other firm's output






49. Toothpaste - shampoo - restaurants - banks






50. An equilibrium in a game in which players do not cooperate but pursue their own self-interest