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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. The competition that domestic firms encounter from the products and services of foreign producers






2. When the decisions of two or more firms significantly affect each others' profits






3. A merger of firms in unrelated industries. Example: If Purina Dow Chow merged with Pampers Diaper Company






4. A table that shows the payoffs that each firm earns from every combination of strategies by the firms






5. 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






6. 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






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






8. A trigger strategy that punishes after an episode of cheating and returns to cooperation if cheating ends






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






10. A situation in which all decision makers know the payoff table - and they believe all other decision makers also know the payoff table






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






12. 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






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






14. When a manager makes a noncooperative decision






15. 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






16. Revenue-Costs






17. Long-run marginal cost curve above long-run average cost






18. An oligopoly in which the firms produce a differentiated product






19. Operates like the alleged Mafia. Region division of the market among the firms in the industry






20. A situation in which competing firms must make their individual decisions without knowing the decisions of their rivals






21. Specific assets - Economies of scale - Excess capacity - Reputation effects






22. If buyers have enough bargaining power - they can insist on lower prices - higher-quality products - or additional services






23. 2 firms - simplest case in an oligopoly. Profits higher if limiting their production






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






25. A game that is played over and over again forever and in which players receive payoffs during each play of the game






26. 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






27. The price that is low enough to deter entry






28. Marginal cost curve above average variable cost - P* = SRMC






29. When no one firm has a monopoly - but producers nonetheless realize that they can affect market prices. Firms compete but possess market power






30. 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






31. Both players have dominant strategies and play them






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






33. Many buyers and sellers - product homogeneity - low cost and accurate information - free entry and exit - best regarded as a benchmark






34. Ranks industries according to how much social welfare would improve if the output in an industry were increased by a small amount






35. An oligopoly in which the sales of the leading (top four) firms are distributed unevenly among them






36. Industry in which (1) few firms serving many customers; (2) firms produce identical products t constant marginal cost; (3) firms compete in price and react optimally to competitor's prices; (4) consumers have perfect information and here are no trans






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






38. Competition based on factors that are not related to price - such as product quality - service and financing - business location - and reputation






39. A situation in which a change in price strategy by one firm affects sales and profits of another






40. Demand line is above ATC curve






41. An establishment firm commits to setting price below the profit-maximizing level to prevent entry






42. 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






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






44. 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






45. When managers are able to charge each consumer their reservation price. Examples are car and home sales






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






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






48. 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






49. 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.)






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