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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. 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






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






3. 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






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






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






6. Pricing strategy in which a firm optimally sets the internal price at which an upstream division wells an input to a downstream division






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






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






9. 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.)






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






12. 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






13. 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






14. An equilibrium in a game in which players cooperate to increase their mutual payoff






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






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






17. In game theory - a decision rule that describes the actions a player will take at each decision point






18. 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






19. The smallest quantity at which the average cost curve reaches its minimum






20. 2 firms - simplest case in an oligopoly. Profits higher if limiting their production






21. Variations on one good so that a firm can increase market sharea






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






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






24. The competition for sales between the products of one industry and the products of another industry






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






26. Steel - autos - colas - airlines






27. Demand line is above ATC curve






28. The situation when a firm's long-run average costs fall as it increases output






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. Pricing strategy in which a firm intentionally varies its price in an attempt to "hide" price information from consumers and rivals






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






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






33. 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






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






35. The percentage of the total industry sales accounted for by the four largest firms in the industry. OUTPUT of 4 largest firms over TOTAL output in industry. C4=(S1+...+S4)/St or (w1+...+w4)






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






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






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






39. The reward received by a player in a game - such as the profit earned by an oligopolist






40. A product's ability to satisfy a large number of consumers at the same time






41. 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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42. 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






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






44. 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)






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






46. 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






47. 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






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






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






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