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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. When the decisions of two or more firms significantly affect each others' profits
Interdependence
Monopolistic Competition
Dominant strategy
Two-part Tariff Method of Pricing
2. 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
Commodity bundling
Socially optimal price
Differentiated oligopoly
Joint Venture
3. A situation in which a change in price strategy by one firm affects sales and profits of another
Price war
Sequential game
Prisoner's dilemma
Mutual interdependence
4. A trigger strategy that punishes after an episode of cheating and returns to cooperation if cheating ends
Tit-for-tat strategy
Price matching
Payoff table
Repeated game
5. Pricing strategy in which a firm intentionally varies its price in an attempt to "hide" price information from consumers and rivals
Randomized pricing
Credible threat
Perfect Competition Short Run Supply
Joint Venture
6. Intense competition in which competitors cut retail prices to gain business--oligopolistic competition
Payoff
Price war
Price Leadership
Two-part Tariff Method of Pricing
7. Revenue-Costs
Mixed (randomized) strategy
Perfect Competitor Characteristics
Cooperative equilibrium
Profit
8. Simultaneous move game that is not repeated
Pure monopoly
Interdependence
Fair return price
One-shot game
9. Long-run marginal cost curve above long-run average cost
Limit pricing
Perfect Competition Short Run Supply
Price war
Perfect Competition Long Run Supply
10. A strategy or action that always provides the best outcome no matter what decisions rivals make
Dominant firm oligopoly
Dominant strategy
Concentration Ratio
Trigger strategy
11. In game theory - a decision rule that describes the actions a player will take at each decision point
Strategy
Secure strategy
Bargaining Power of Buyers
Implicit Collusion
12. In game theory - a statement of harmful intent easily dismissed by recipient because threat not considered believable
Empty threat
Network effects
Block pricing
Sequential game
13. When firms make decisions that make every firm better off than in a noncooperative Nash equilibrium
Four-firm concentration ratio
Monopolistic Characteristics:
Double marginalization
Cooperation
14. An oligopoly in which the sales of the leading (top four) firms are distributed unevenly among them
Pure monopoly
Unbalanced Oligopoly
Inefficiency
Rent-seeking behavior
15. Game in which each player makes decisions without knowledge of the other player's decisions
Perfect Competition Short Run Supply
Tacit collusion
Market Structure
Simultaneous-move game
16. A situation where one firm is able to provide a service at a lower cost than could several competing firms
Prisoners' dilemma
Payoff matrix
Reservation Price
Natural Monopoly (local phone or electric company)
17. 2 firms - simplest case in an oligopoly. Profits higher if limiting their production
Perfect Competition Long Run Supply
Block pricing
Duopoly
Lerner index
18. Keeps the price just where it is to maximize profit
Vertical Merger
Barrier to entry
Cutthroat Competition
Duopoly
19. An agreement among firms in a market about quantities to produce or prices to charge in attempts to limit competition
No cooperative equilibrium
Collusion
Basis for Product Differentiation
Undifferentiated
20. Produce identical products
Payoff matrix
No cooperative equilibrium
Perfect Competitor Characteristics
Simultaneous-move game
21. An oligopoly in which the firms produce a standardized product
Limit pricing
Homogenous oligopoly
Market
Product Differentiation
22. Different units of a product are sold at different prices. Examples are buying in bulk - or - commodity-bundling
Perfect Competition (characteristics)
Rothschild index
Randomized pricing
Second-Degree Price Discrimination
23. 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
Inter-industry competition
Prisoner's dilemma
Nash equilibrium
Payoff table
24. Price of a product that enables its producer to obtain a normal profit & that is equal to the ATC of producing it
First-mover advantage
Contestable market
Fair return price
Joint Venture
25. The maximum price that a buyer is willing to pay for a good - or the minimum price that a seller will accept
Tacit collusion
Reservation Price
Price matching
Perfect Competition Barriers to Entry
26. An oligopoly in which the firms produce a differentiated product
Differentiated oligopoly
High Price Elasticity
Disappearing invisible hand
Empty threat
27. In game theory - a game that is played again sometime after the previous game ends
Concentration Ratio
Nonprime competition
Repeated game
Natural Monopoly (local phone or electric company)
28. 1/(1+i)n
Two-part Tariff Method of Pricing
Present Value (PV)
Dominant strategy equilibrium
Limit pricing
29. The situation that exists when two or more groups need each other and must depend on each other to accomplish a goal that is important to each of them
Mutual Interdependence
The Threat from Potential Entrants Firms
Secure strategy
One-shot game
30. All firms and individuals willing and able to buy or sell a particular product
Lerner index
Unbalanced Oligopoly
Market
Payoff matrix
31. Takes Place inside the Mind of the consumer
Normal-form game
Mutual Interdependence
Tacit collusion
Product Differentiation
32. 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
Randomized pricing
First-Degree Price Discrimination (Perfect)
Contestable market
Market
33. An equilibrium in a game in which players do not cooperate but pursue their own self-interest
Economies of scale
No cooperative equilibrium
Cutthroat Competition
High Price Elasticity
34. 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
Concentration Ratio
Lerner index
Economies of scale
35. Many buyers and sellers - product homogeneity - low cost and accurate information - free entry and exit - best regarded as a benchmark
Third-Degree Price Discrimination
Perfect Competition (characteristics)
First-mover advantage
Homogenous oligopoly
36. 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
Interdependence
Dominant firm oligopoly
Secure strategy
37. Each seller can sell all he wants to sell at the going price - Buyers and sellers are price takers - The goods offered by the different sellers are largely the same - The actions of any single buyer or seller will have a negligible impact on the m
Credible threat
Competitive market
Covert Collusion
Cournot oligopoly
38. The actions by persons - firms - or unions to gain special benefits from government at taxpayer's or someone else's expense
Rent-seeking behavior
Differentiated oligopoly
Cournot equilibrium
Tacit collusion
39. Using advertising and other means to try to increase a firm's sales
Primary Sources of Monopolistic Power
Cross-subsidy pricing
Undifferentiated
Non-price competition
40. 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
Price war
Business strategy
Dominant firm oligopoly
Sequential-move game
41. Involves price-fixing
Payoff
Price matching
Covert Collusion
Price war
42. If production of a good requires a particular input - then control of that input can be a barrier to entry
Vertical Merger
Ownership of a Key Input
Imperfect competition
Perfect Competition Long Run Supply
43. Single seller in an industry - Strong barriers to entry - Profit maximization - faces market demand and sets MR=MC - Unexploited gains from trade
One-shot game
Monopoly (characteristics)
Indefinitely repeated game
Non-cooperative behavior
44. 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
Perfect Competition (characteristics)
Bargaining Power of Suppliers
Commodity bundling
Economies of scale
45. Physical differences - Convenience - Ambience - Reputations - Appeals to vanity - Unconscious fears and desires - Snob appeal - Customized products
Disappearing invisible hand
Basis for Product Differentiation
Brand Multiplication
Contestable market
46. The competition for sales between the products of one industry and the products of another industry
Commodity bundling
Patent
Inter-industry competition
Dominant strategy equilibrium
47. Competition based on factors that are not related to price - such as product quality - service and financing - business location - and reputation
Nonprime competition
Inter-industry competition
Homogenous oligopoly
Transfer pricing
48. A pricing strategy in which profits gained from the sale of one product are used to subsidize sales of a related product
Joint Venture
Product differentiation
Cross-subsidy pricing
Covert Collusion
49. A merger of firms in unrelated industries. Example: If Purina Dow Chow merged with Pampers Diaper Company
Dominant strategy equilibrium
Cooperative equilibrium
Conglomerate Merger
Sequential-move game
50. 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
Block pricing
Randomized pricing
Prisoner's dilemma
Cooperative equilibrium