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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. Actions taken by firms to plan for and react to competition from rival firms
Kinked demand curve model
Rothschild index
Examples of Monopolistic Competition
Strategic behavior
2. A merger between two firms in the same industry. Example: 2004 K-Mart merged with Sears
Sweezy oligopoly
Herfindahl-Hirschman index (HHI)
Payoff matrix
Horizontal Merger/Integration
3. 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
Kinked-demand curve
Tit-for-tat strategy
Pure monopoly
Commodity bundling
4. The situation when a firm's long-run average costs fall as it increases output
Normal-form game
Patent
Indefinitely repeated game
Economies of scale
5. 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
Perfect Competition Short Run Supply
Follower
Herfindahl-Hirschman index (HHI)
Trigger strategy
6. The derivative of total revenue
Inter-industry competition
Marginal Revenue
Horizontal Merger/Integration
Competitive market
7. A merger between firms who have a buyer/supplier relationship. Example: BF Goodrich merging with rubber plantations
Vertical Merger
Commodity bundling
What is game?
Undifferentiated
8. 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)
Stackelberg oligopoly
Dominant strategy equilibrium
Repeated game
Two-part pricing
9. When each firm has an incentive to cheat - but both are worse off if both cheat -- illustrates why cooperation is difficult to maintain even when it is mutually beneficial to do so
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10. Increases in the value of a product to each user - including existing users - as the total number of users rises
Network effects
Kinked demand curve model
Peak-load pricing
Leader
11. 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"
Concentration Ratio
Tit-for-tat strategy
Perfect Competition (characteristics)
Credible threat
12. 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
Cournot equilibrium
Empty threat
Non-price competition
Socially optimal price
13. An equilibrium in a game in which players cooperate to increase their mutual payoff
Payoff matrix
Market Structure
Market
Cooperative equilibrium
14. 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
Business strategy
Cheating
Simultaneous-move game
Contestable market
15. 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
Prisoners' dilemma
Commodity bundling
Examples of Monopolistic Competition
Monopolistic Competition
16. Marginal cost curve above average variable cost - P* = SRMC
Finding profit for oligopoly games
Monopoly (characteristics)
Perfect Competition Short Run Supply
The Threat from Potential Entrants Firms
17. A table that shows the payoffs that each firm earns from every combination of strategies by the firms
Tacit collusion
Vertical Merger
Payoff matrix
Stackelberg oligopoly
18. A strategy that guarantees the highest payoff given the worst possible scenario
Non-cooperative equilibrium
Secure strategy
Joint Venture
Randomized pricing
19. A simpler way to operationalize first-degree price discrimination
Normal-form game
Examples of Oligopoly
Two-part Tariff Method of Pricing
Cooperation
20. Game in which each player makes decisions without knowledge of the other player's decisions
Repeated game
Simultaneous-move game
Secure strategy
Randomized pricing
21. Rival who sets its output after the leader (Stackelberg's model)
Follower
Sequential game
Limit price
Mixed (randomized) strategy
22. Different units of a product are sold at different prices. Examples are buying in bulk - or - commodity-bundling
Economies of scale
Second-Degree Price Discrimination
Double marginalization
Primary Sources of Monopolistic Power
23. 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
Mutual Interdependence
Non-cooperative equilibrium
Cutthroat Competition
Horizontal Merger/Integration
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
Simultaneous-move game
Finding profit for oligopoly games
Dansby-Willig performance index
Monopoly (characteristics)
25. A game that is played over and over again forever and in which players receive payoffs during each play of the game
Barrier to entry
Indefinitely repeated game
Socially optimal price
Dansby-Willig performance index
26. Ranks industries according to how much social welfare would improve if the output in an industry were increased by a small amount
Dansby-Willig performance index
Simultaneous consumption
Market Structure
Nonprime competition
27. 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
Import competition
Dominant firm oligopoly
Normal-form game
Minimum efficient scale (full capacity)
28. An oligopoly in which the firms produce a differentiated product
Perfect Competition Barriers to Entry
Differentiated oligopoly
Nash equilibrium
Natural Monopoly (local phone or electric company)
29. An oligopoly in which the firms produce a standardized product
Monopolistic Characteristics:
Homogenous oligopoly
Tit-for-tat strategy
Inefficiency
30. A situation in which all decision makers know the payoff table - and they believe all other decision makers also know the payoff table
Common knowledge
Credible threat
Market
Herfindahl-Hirschman index (HHI)
31. 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
Double marginalization
Leader
Market
Nonprime competition
32. 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
Sequential-move game
Sequential game
Rothschild index
Secure strategy
33. The smallest quantity at which the average cost curve reaches its minimum
Bargaining Power of Suppliers
Minimum efficient scale (full capacity)
Product Differentiation
Tacit collusion
34. In game theory - game where parties make their moves in turn - one party making the first move followed by the other
Perfect Competitor Characteristics
Monopoly (characteristics)
Strategic behavior
Sequential game
35. Keeps the price just where it is to maximize profit
Cutthroat Competition
Dominant firm oligopoly
Fair return price
Vertical Merger
36. The actions by persons - firms - or unions to gain special benefits from government at taxpayer's or someone else's expense
Rent-seeking behavior
Product Differentiation
Cournot equilibrium
Inter-industry competition
37. Face competition from companies that currently are not in the market but might enter
Prisoners' dilemma
Import competition
The Threat from Potential Entrants Firms
Bargaining Power of Buyers
38. Maximize economic profit by producing the quantity at which MC=MR
Simultaneous consumption
Simultaneous-move game
Maximizing profit in Oligopoly games
One-shot game
39. 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
Network effects
Duopoly
Tit-for-tat strategy
Kinked demand curve model
40. In game theory - a statement of harmful intent easily dismissed by recipient because threat not considered believable
Empty threat
Prisoner's dilemma
Business strategy
Sequential game
41. In game theory - a game that is played again sometime after the previous game ends
Randomized pricing
Repeated game
Maximizing profit in Oligopoly games
Indefinitely repeated game
42. Occurs when a firm produces output - whatever its level - at a higher cost than is necessary to produce it
Prisoners' dilemma
Inefficiency
Business strategy
Maximizing profit in Oligopoly games
43. Pricing strategy in which consumers are charged a fixed fee for the right to purchase a product - plus a per-unit charge for each unit purchased
Two-part pricing
Monopoly (characteristics)
Block pricing
Duopoly
44. Cooperation among firms that does not involve an explicit agreement
Sequential game
Tacit collusion
Cross-subsidy pricing
Finding profit for oligopoly games
45. Price Sensitive
Product differentiation
High Price Elasticity
Indefinitely repeated game
Reservation Price
46. A pricing strategy in which profits gained from the sale of one product are used to subsidize sales of a related product
Cross-subsidy pricing
Bertrand oligopoly
Unbalanced Oligopoly
Brand Multiplication
47. Intense competition in which competitors cut retail prices to gain business--oligopolistic competition
Price war
Economies of scale
Competitive market
First-Degree Price Discrimination (Perfect)
48. 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
Sweezy oligopoly
Payoff matrix
Sequential game
Business strategy
49. Toothpaste - shampoo - restaurants - banks
Product differentiation
Stackelberg oligopoly
Empty threat
Examples of Monopolistic Competition
50. A measure of market power - the percentage of all sales that is accounted for by the four or eight largest firms in the market
Duopoly
Trigger strategy
Concentration Ratio
Payoff matrix