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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. An index of market concentration. Sum of squared market shares of all the firms in the industry times 10K HHI=10 - 000Σwi2
Perfect Competition (characteristics)
Herfindahl-Hirschman index (HHI)
Implicit Collusion
Perfect Competition Long Run Supply
2. Increases in the value of a product to each user - including existing users - as the total number of users rises
Import competition
Network effects
Inefficiency
Examples of Monopolistic Competition
3. An oligopoly in which the firms produce a standardized product
Homogenous oligopoly
Rothschild index
Normal-form game
What is game?
4. Actions taken by a firm to achieve a goal - such as maximizing profits
Payoff
Business strategy
Prisoner's dilemma
Third-degree price discrimination
5. The practice of bundling several different products together and selling them at a single "bundle" price
Commodity bundling
Kinked-demand curve
Simultaneous-move game
Tacit collusion
6. Steel - autos - colas - airlines
Examples of Oligopoly
Peak-load pricing
Empty threat
Dominant firm oligopoly
7. In game theory - benefit obtained by party that moves first in a sequential game
First-mover advantage
Joint Venture
Third-degree price discrimination
Cutthroat Competition
8. Keeps the price just where it is to maximize profit
Price matching
Sweezy oligopoly
Undifferentiated
Cutthroat Competition
9. Marginal cost curve above average variable cost - P* = SRMC
Tacit collusion
Perfect Competition Short Run Supply
Limit price
Perfect Competition Barriers to Entry
10. 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
Monopoly (characteristics)
Merger
Prisoners' dilemma
11. Sellers can identify different types of customers and offer each a different price. Examples are special prices for students or the elderly
Mutual Interdependence
Third-Degree Price Discrimination
Second-Degree Price Discrimination
No cooperative equilibrium
12. 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
Herfindahl-Hirschman index (HHI)
Payoff matrix
Kinked-demand curve
Price Leadership
13. In game theory - game where parties make their moves in turn - one party making the first move followed by the other
Tacit collusion
Sequential game
Bargaining Power of Suppliers
Second-Degree Price Discrimination
14. 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
Imperfect competition
Dominant strategy
Network effects
Dominant firm oligopoly
15. A pricing strategy in which profits gained from the sale of one product are used to subsidize sales of a related product
Reservation Price
Tit-for-tat strategy
Cross-subsidy pricing
Perfect Competition (characteristics)
16. A game that is played over and over again forever and in which players receive payoffs during each play of the game
Present Value (PV)
Cross-subsidy pricing
Cournot equilibrium
Indefinitely repeated game
17. 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
Minimum efficient scale (full capacity)
Tit-for-tat strategy
Oligopoly
Nonprime competition
18. A situation where one firm is able to provide a service at a lower cost than could several competing firms
Dansby-Willig performance index
Natural Monopoly (local phone or electric company)
Present Value (PV)
Limit pricing
19. An equilibrium in a game in which players cooperate to increase their mutual payoff
Payoff table
Leader
Cooperative equilibrium
Rothschild index
20. When firms limit production and raise prices in a way that raises each others' profits - even though they have not made any formal agreement
Network effects
Commodity bundling
Double marginalization
Tacit collusion
21. A table that shows the payoffs for every possible action by each player for every possible action by the other player
Market Structure
Limit pricing
Payoff matrix
Second-Degree Price Discrimination
22. The price that is low enough to deter entry
Undifferentiated
Limit price
Double marginalization
Competitive market
23. 1/(1+i)n
Brand Multiplication
Perfect Competition Long Run Supply
Present Value (PV)
High Price Elasticity
24. 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
Transfer pricing
Cutthroat Competition
Limit pricing
Economies of scale
25. Intense competition in which competitors cut retail prices to gain business--oligopolistic competition
Trigger strategy
Cross-subsidy pricing
Common knowledge
Price war
26. A situation in which a change in price strategy by one firm affects sales and profits of another
Non-cooperative behavior
Mutual interdependence
Kinked-demand curve
Economies of scale
27. When no one firm has a monopoly - but producers nonetheless realize that they can affect market prices. Firms compete but possess market power
Imperfect competition
Import competition
Open Collusion
Maximizing profit in Oligopoly games
28. 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
Monopolistic Characteristics:
Nash equilibrium
Trigger strategy
Prisoners' dilemma
29. A strategy in which a firm advertises a price and a promise to match any lower prices offered by a competitor
Price discrimination
Price matching
Mutual interdependence
Extensive-form game
30. Demand line is above ATC curve
Kinked-demand curve
Perfect Competitor Making a Profit
Limit pricing
Business strategy
31. 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
Simultaneous decision games
Kinked demand curve model
Second-Degree Price Discrimination
Peak-load pricing
32. If production of a good requires a particular input - then control of that input can be a barrier to entry
Concentration Ratio
Third-Degree Price Discrimination
Ownership of a Key Input
The Threat from Potential Entrants Firms
33. In game theory - a game that is played again sometime after the previous game ends
Brand Multiplication
Repeated game
Tacit collusion
Normal-form game
34. The practice of charging different prices to consumers for the same good or service
Joint Venture
Price discrimination
Profit
Tacit collusion
35. The actions by persons - firms - or unions to gain special benefits from government at taxpayer's or someone else's expense
Contestable market
Rent-seeking behavior
Fair return price
Interdependence
36. Price Sensitive
Maximizing profit in Oligopoly games
High Price Elasticity
Block pricing
Conglomerate Merger
37. The competition for sales between the products of one industry and the products of another industry
Product Differentiation
Limit pricing
Inter-industry competition
Cross-subsidy pricing
38. A situation in which neither firm has incentive to change its output given the other firm's output
Cheating
Bargaining Power of Suppliers
Cournot equilibrium
Reservation Price
39. Revenue-Costs
Homogenous oligopoly
Profit
Peak-load pricing
Bertrand oligopoly
40. 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
Non-price competition
Unbalanced Oligopoly
Pure monopoly
Contestable market
41. 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.)
Two-part Tariff Method of Pricing
Strategic behavior
Monopolistic Characteristics:
Price discrimination
42. A combination of two or more companies into one company
Third-Degree Price Discrimination
Common knowledge
Merger
Payoff
43. Produce identical products
Implicit Collusion
Bargaining Power of Suppliers
Perfect Competitor Characteristics
Limit price
44. 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
Nonprime competition
Covert Collusion
Second-Degree Price Discrimination
Competitive market
45. The smallest quantity at which the average cost curve reaches its minimum
Tacit collusion
Primary Sources of Monopolistic Power
Minimum efficient scale (full capacity)
Cutthroat Competition
46. When managers are able to charge each consumer their reservation price. Examples are car and home sales
Brand Multiplication
Implicit Collusion
Marginal Revenue
First-Degree Price Discrimination (Perfect)
47. Pricing strategy in which a firm intentionally varies its price in an attempt to "hide" price information from consumers and rivals
Profit
Randomized pricing
Nash equilibrium
Bertrand oligopoly
48. Using advertising and other means to try to increase a firm's sales
Non-price competition
Product differentiation
Economies of scale
Cross-subsidy pricing
49. 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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50. 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
Natural Monopoly (local phone or electric company)
Rothschild index
Payoff table
Cutthroat Competition