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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. Game in which one player makes a move after observing the other player's move
Sequential-move game
First-Degree Price Discrimination (Perfect)
Payoff matrix
Mixed (randomized) strategy
2. Different units of a product are sold at different prices. Examples are buying in bulk - or - commodity-bundling
Second-Degree Price Discrimination
Tit-for-tat strategy
Dominant strategy
Network effects
3. 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
Reservation Price
Non-cooperative equilibrium
Cooperative equilibrium
The Threat from Potential Entrants Firms
4. 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
Double marginalization
Tacit collusion
Limit pricing
Competitive market
5. Price of a product that enables its producer to obtain a normal profit & that is equal to the ATC of producing it
Leader
Herfindahl-Hirschman index (HHI)
Strategic behavior
Fair return price
6. A game that is played over and over again forever and in which players receive payoffs during each play of the game
Perfect Competition Long Run Supply
Bertrand oligopoly
Indefinitely repeated game
Cournot equilibrium
7. A merger between firms who have a buyer/supplier relationship. Example: BF Goodrich merging with rubber plantations
Prisoner's dilemma
Block pricing
Vertical Merger
Common knowledge
8. Occurs when a firm produces output - whatever its level - at a higher cost than is necessary to produce it
Product Differentiation
Stackelberg oligopoly
Inefficiency
Simultaneous decision games
9. 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
Price discrimination
Monopolistic Competition
High Price Elasticity
Socially optimal price
10. In game theory - game where parties make their moves in turn - one party making the first move followed by the other
Normal-form game
Sequential game
Interdependence
Dominant strategy
11. Sellers can identify different types of customers and offer each a different price. Examples are special prices for students or the elderly
Third-Degree Price Discrimination
Imperfect competition
Four-firm concentration ratio
Network effects
12. 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
Cross-subsidy pricing
Trigger strategy
Repeated game
Strategic behavior
13. An oligopoly in which the firms produce a standardized product
Mutual interdependence
Barrier to entry
Homogenous oligopoly
Network effects
14. A situation in which all decision makers know the payoff table - and they believe all other decision makers also know the payoff table
Rent-seeking behavior
Common knowledge
Merger
Tacit collusion
15. 2 firms - simplest case in an oligopoly. Profits higher if limiting their production
Economies of scale
Non-price competition
Duopoly
Subgame perfect equilibrium
16. The rules describe the setting of the game - the actions the players may take - and the consequences of those actions; -Advertising and R&D are also prisoners' dilemmas
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17. Ignoring the effects of their actions on each others' profits
Non-cooperative behavior
What is game?
Perfect Competitor Characteristics
Secure strategy
18. Single seller in an industry - Strong barriers to entry - Profit maximization - faces market demand and sets MR=MC - Unexploited gains from trade
Simultaneous decision games
Interdependence
Monopoly (characteristics)
Implicit Collusion
19. Revenue-Costs
Maximizing profit in Oligopoly games
Disappearing invisible hand
Profit
Strategy
20. 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
Monopolistic Competition
Cutthroat Competition
Finding profit for oligopoly games
Simultaneous decision games
21. Actions taken by a firm to achieve a goal - such as maximizing profits
Business strategy
Perfect Competition Barriers to Entry
Monopolistic Characteristics:
Inter-industry competition
22. 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
Kinked-demand curve
Simultaneous consumption
Disappearing invisible hand
Market Structure
23. 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
Perfect Competition Long Run Supply
Homogenous oligopoly
Two-part pricing
Third-Degree Price Discrimination
24. An establishment firm commits to setting price below the profit-maximizing level to prevent entry
Limit pricing
Cooperative equilibrium
Lerner index
Horizontal Merger/Integration
25. An equilibrium in a game in which players do not cooperate but pursue their own self-interest
First-mover advantage
Third-Degree Price Discrimination
Conglomerate Merger
No cooperative equilibrium
26. Variations on one good so that a firm can increase market sharea
Simultaneous-move game
Imperfect competition
Concentration Ratio
Brand Multiplication
27. If production of a good requires a particular input - then control of that input can be a barrier to entry
Price war
Ownership of a Key Input
Perfect Competition Long Run Supply
Perfect Competitor Making a Profit
28. When a manager makes a noncooperative decision
Tit-for-tat strategy
Cheating
Perfect Competitor Making a Profit
Monopolistic Competition
29. A situation where one firm is able to provide a service at a lower cost than could several competing firms
Follower
Natural Monopoly (local phone or electric company)
Tit-for-tat strategy
Import competition
30. 1/(1+i)n
Covert Collusion
Minimum efficient scale (full capacity)
Mutual interdependence
Present Value (PV)
31. 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
Prisoner's dilemma
Cournot equilibrium
Stackelberg oligopoly
32. 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
One-shot game
Empty threat
Normal-form game
Block pricing
33. A measure of the difference between price and marginal cost as a fraction of the product's price. L=(P-MC)/P - refactoring gives: P=MC(1/(1-L)) - which gives us the "1/(1-L)" markup factor
Monopolistic Characteristics:
Maximizing profit in Oligopoly games
Present Value (PV)
Lerner index
34. An index of market concentration. Sum of squared market shares of all the firms in the industry times 10K HHI=10 - 000Σwi2
Concentration Ratio
Minimum efficient scale (full capacity)
Herfindahl-Hirschman index (HHI)
Examples of Oligopoly
35. First firm to set its output (Stackelberg's model)
Third-Degree Price Discrimination
Barrier to entry
Price war
Leader
36. Intense competition in which competitors cut retail prices to gain business--oligopolistic competition
No cooperative equilibrium
Import competition
Price war
Conglomerate Merger
37. Keeps the price just where it is to maximize profit
Cournot oligopoly
Horizontal Merger/Integration
Joint Venture
Cutthroat Competition
38. 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
Present Value (PV)
Limit pricing
Rothschild index
Nash equilibrium
39. The competition for sales between the products of one industry and the products of another industry
Collusion
Inter-industry competition
Mutual interdependence
Rent-seeking behavior
40. Competition based on factors that are not related to price - such as product quality - service and financing - business location - and reputation
Nonprime competition
No cooperative equilibrium
Cournot equilibrium
The Threat from Potential Entrants Firms
41. Industry where (1) there are few firms serving many customers; (2) firms produce either differentiated or homogenous products; (3) each form believes rivals will hold their output constant if it changes its output; and (4) barriers to entry exist. Fi
Non-price competition
Non-cooperative equilibrium
Concentration Ratio
Cournot oligopoly
42. Pricing strategy in which a firm intentionally varies its price in an attempt to "hide" price information from consumers and rivals
Randomized pricing
Oligopoly
Covert Collusion
Cross-subsidy pricing
43. All firms and individuals willing and able to buy or sell a particular product
Price matching
Market
Joint Venture
Nash equilibrium
44. A situation in which competing firms must make their individual decisions without knowing the decisions of their rivals
Monopolistic Characteristics:
No cooperative equilibrium
Two-part Tariff Method of Pricing
Simultaneous decision games
45. When the decisions of two or more firms significantly affect each others' profits
Payoff
Socially optimal price
Interdependence
Simultaneous-move game
46. Operates like the alleged Mafia. Region division of the market among the firms in the industry
Open Collusion
Pure monopoly
Sequential-move game
Concentration Ratio
47. 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
Oligopoly
Stackelberg oligopoly
Inefficiency
Leader
48. 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
Bargaining Power of Suppliers
Homogenous oligopoly
Undifferentiated
Cooperation
49. A strategy or action that always provides the best outcome no matter what decisions rivals make
Mutual Interdependence
Reservation Price
Cournot oligopoly
Dominant strategy
50. Both players have dominant strategies and play them
Dominant firm oligopoly
Dominant strategy equilibrium
Payoff matrix
Credible threat