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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 merger of firms in unrelated industries. Example: If Purina Dow Chow merged with Pampers Diaper Company
Herfindahl-Hirschman index (HHI)
Common knowledge
Conglomerate Merger
Kinked-demand curve
2. 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
Reservation Price
Dansby-Willig performance index
Leader
Nash equilibrium
3. An oligopoly in which the sales of the leading (top four) firms are distributed unevenly among them
Unbalanced Oligopoly
Rent-seeking behavior
Maximizing profit in Oligopoly games
Dominant strategy equilibrium
4. The competition that domestic firms encounter from the products and services of foreign producers
Import competition
Price war
Perfect Competition (characteristics)
Herfindahl-Hirschman index (HHI)
5. Ignoring the effects of their actions on each others' profits
Non-cooperative behavior
Strategy
First-Degree Price Discrimination (Perfect)
Concentration Ratio
6. A product's ability to satisfy a large number of consumers at the same time
Monopoly (characteristics)
Vertical Merger
Two-part pricing
Simultaneous consumption
7. 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)
Non-price competition
Perfect Competitor Characteristics
Stackelberg oligopoly
Cutthroat Competition
8. Produce identical products
Brand Multiplication
Contestable market
Product differentiation
Perfect Competitor Characteristics
9. 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
Unbalanced Oligopoly
One-shot game
Limit pricing
Covert Collusion
10. Steel - autos - colas - airlines
Mutual Interdependence
Lerner index
Examples of Oligopoly
Simultaneous decision games
11. A table that shows the payoffs that each firm earns from every combination of strategies by the firms
Mutual interdependence
Payoff matrix
Commodity bundling
Socially optimal price
12. An index of market concentration. Sum of squared market shares of all the firms in the industry times 10K HHI=10 - 000Σwi2
Horizontal Merger/Integration
Competitive market
Natural Monopoly (local phone or electric company)
Herfindahl-Hirschman index (HHI)
13. Both players have dominant strategies and play them
Kinked demand curve model
Dominant strategy equilibrium
Extensive-form game
Perfect Competition (characteristics)
14. Many buyers and sellers - product homogeneity - low cost and accurate information - free entry and exit - best regarded as a benchmark
Simultaneous-move game
Examples of Oligopoly
Transfer pricing
Perfect Competition (characteristics)
15. The exclusive right to a product for a period of 20 years from the date the product is invented
Patent
Third-Degree Price Discrimination
Basis for Product Differentiation
Payoff matrix
16. Intense competition in which competitors cut retail prices to gain business--oligopolistic competition
Bargaining Power of Suppliers
Commodity bundling
Price war
Perfect Competition Short Run Supply
17. Rules - strategies - payoffs - outcomes
Normal-form game
What is game?
Non-cooperative equilibrium
Secure strategy
18. Different units of a product are sold at different prices. Examples are buying in bulk - or - commodity-bundling
Leader
Payoff matrix
Empty threat
Second-Degree Price Discrimination
19. Game in which one player makes a move after observing the other player's move
Strategy
Extensive-form game
Block pricing
Sequential-move game
20. Keeps the price just where it is to maximize profit
Lerner index
Collusion
Bertrand oligopoly
Cutthroat Competition
21. Price Sensitive
High Price Elasticity
Non-price competition
Competitive market
Primary Sources of Monopolistic Power
22. The maximum price that a buyer is willing to pay for a good - or the minimum price that a seller will accept
Minimum efficient scale (full capacity)
Socially optimal price
Reservation Price
Simultaneous-move game
23. Operates like the alleged Mafia. Region division of the market among the firms in the industry
Competitive market
Implicit Collusion
Bargaining Power of Suppliers
Open Collusion
24. Anything that keeps new firms from entering an industry in which firms are earning economic profits (e.g. Ownership of a Key Input - Capital - Patents - Economies of scale)
Barrier to entry
Dominant strategy
Cournot oligopoly
Marginal Revenue
25. 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
Dominant strategy
Oligopoly
Non-rivalrous consumption
Imperfect competition
26. Pricing strategy in which higher prices are charged during peak hours than during off-peak hours
Mutual Interdependence
Peak-load pricing
Product Differentiation
Minimum efficient scale (full capacity)
27. A table that shows the payoffs for every possible action by each player for every possible action by the other player
Price Leadership
Brand Multiplication
Mutual interdependence
Payoff matrix
28. A strategy in which a firm advertises a price and a promise to match any lower prices offered by a competitor
Peak-load pricing
Competitive market
Price matching
Prisoner's dilemma
29. Sellers can identify different types of customers and offer each a different price. Examples are special prices for students or the elderly
Maximizing profit in Oligopoly games
Third-Degree Price Discrimination
Common knowledge
Implicit Collusion
30. When managers are able to charge each consumer their reservation price. Examples are car and home sales
Non-price competition
Marginal Revenue
Cutthroat Competition
First-Degree Price Discrimination (Perfect)
31. A situation in which a change in price strategy by one firm affects sales and profits of another
Differentiated oligopoly
Mutual interdependence
Peak-load pricing
Market Structure
32. 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
Tacit collusion
Kinked demand curve model
Perfect Competitor Making a Profit
Mutual Interdependence
33. 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
Subgame perfect equilibrium
What is game?
Marginal Revenue
Follower
34. 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
Dominant firm oligopoly
Differentiated oligopoly
Tacit collusion
Perfect Competition Barriers to Entry
35. An agreement among firms in a market about quantities to produce or prices to charge in attempts to limit competition
Collusion
Mutual Interdependence
Inter-industry competition
Dominant firm oligopoly
36. Identical or substitutable
Stackelberg oligopoly
Monopolistic Characteristics:
Patent
Undifferentiated
37. 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
Merger
Network effects
Subgame perfect equilibrium
Disappearing invisible hand
38. 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
Lerner index
Extensive-form game
Credible threat
Limit pricing
39. A situation in which no one wants to change his or her behavior
Empty threat
Concentration Ratio
Limit price
Equilibrium
40. 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
Monopolistic Competition
Leader
Finding profit for oligopoly games
Import competition
41. When firms make decisions that make every firm better off than in a noncooperative Nash equilibrium
Cooperation
Market Structure
Price Leadership
Contestable market
42. 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.)
Monopolistic Characteristics:
Follower
Inefficiency
Fair return price
43. In game theory - a statement of harmful intent easily dismissed by recipient because threat not considered believable
Rothschild index
Non-cooperative equilibrium
Randomized pricing
Empty threat
44. Competition based on factors that are not related to price - such as product quality - service and financing - business location - and reputation
Nonprime competition
Limit pricing
Randomized pricing
Disappearing invisible hand
45. A merger between two firms in the same industry. Example: 2004 K-Mart merged with Sears
Limit pricing
Horizontal Merger/Integration
Rent-seeking behavior
Joint Venture
46. Takes Place inside the Mind of the consumer
Product Differentiation
One-shot game
Primary Sources of Monopolistic Power
Horizontal Merger/Integration
47. An oligopoly in which the firms produce a differentiated product
Differentiated oligopoly
Equilibrium
Dominant strategy equilibrium
Business strategy
48. In game theory - a statement of harmful intent by one party that the other party views as believable-- "if you do this - we will do that"
Herfindahl-Hirschman index (HHI)
Credible threat
Open Collusion
Tit-for-tat strategy
49. A simpler way to operationalize first-degree price discrimination
Natural Monopoly (local phone or electric company)
First-Degree Price Discrimination (Perfect)
Common knowledge
Two-part Tariff Method of Pricing
50. When no one firm has a monopoly - but producers nonetheless realize that they can affect market prices. Firms compete but possess market power
Cutthroat Competition
Trigger strategy
Imperfect competition
Natural Monopoly (local phone or electric company)