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Test your basic knowledge |
Business Competition
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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. 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
One-shot game
Concentration Ratio
First-Degree Price Discrimination (Perfect)
2. The competition that domestic firms encounter from the products and services of foreign producers
Bargaining Power of Buyers
Product Differentiation
Extensive-form game
Import competition
3. Maximize economic profit by producing the quantity at which MC=MR
Maximizing profit in Oligopoly games
Lerner index
Prisoner's dilemma
Kinked demand curve model
4. 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
Monopoly (characteristics)
Monopolistic Competition
Tit-for-tat strategy
Primary Sources of Monopolistic Power
5. 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
Monopolistic Competition
Cournot oligopoly
Limit pricing
Present Value (PV)
6. A strategy in which a firm advertises a price and a promise to match any lower prices offered by a competitor
Homogenous oligopoly
Price matching
Non-cooperative behavior
Tacit collusion
7. 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
Kinked-demand curve
Horizontal Merger/Integration
Non-cooperative equilibrium
Interdependence
8. 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
Block pricing
Dominant firm oligopoly
Cooperation
Homogenous oligopoly
9. The situation when a firm's long-run average costs fall as it increases output
Economies of scale
Prisoner's dilemma
Reservation Price
Open Collusion
10. A simpler way to operationalize first-degree price discrimination
Subgame perfect equilibrium
Third-Degree Price Discrimination
Conglomerate Merger
Two-part Tariff Method of Pricing
11. Price Sensitive
Dominant firm oligopoly
High Price Elasticity
Examples of Monopolistic Competition
Cournot equilibrium
12. A representation of a game indicating the players - their possible strategies - and the payoffs resulting from alternative strategies
Normal-form game
Rothschild index
Non-price competition
Concentration Ratio
13. In game theory - a decision rule that describes the actions a player will take at each decision point
Limit pricing
Strategic behavior
What is game?
Strategy
14. Takes Place inside the Mind of the consumer
Product Differentiation
Primary Sources of Monopolistic Power
Two-part Tariff Method of Pricing
Examples of Monopolistic Competition
15. First firm to set its output (Stackelberg's model)
Credible threat
Leader
Price Leadership
Kinked demand curve model
16. Competition based on factors that are not related to price - such as product quality - service and financing - business location - and reputation
Randomized pricing
Economies of scale
Prisoner's dilemma
Nonprime competition
17. Actions taken by a firm to achieve a goal - such as maximizing profits
Inter-industry competition
What is game?
Business strategy
Two-part pricing
18. Where a firm can charge different groups of consumers different prices for the same product. Example: student or senior discounts
Follower
Monopolistic Characteristics:
Third-degree price discrimination
Inefficiency
19. Different units of a product are sold at different prices. Examples are buying in bulk - or - commodity-bundling
Dominant firm oligopoly
Four-firm concentration ratio
Perfect Competitor Making a Profit
Second-Degree Price Discrimination
20. Single seller in an industry - Strong barriers to entry - Profit maximization - faces market demand and sets MR=MC - Unexploited gains from trade
Cutthroat Competition
Monopoly (characteristics)
Simultaneous-move game
Minimum efficient scale (full capacity)
21. Ignoring the effects of their actions on each others' profits
Perfect Competition Short Run Supply
Non-cooperative behavior
Two-part pricing
Cournot equilibrium
22. Single firm is sole producer of a product for which there are no close substitutes
Tit-for-tat strategy
Pure monopoly
Tacit collusion
Mutual Interdependence
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
High Price Elasticity
Concentration Ratio
Secure strategy
Tit-for-tat strategy
24. 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
Dansby-Willig performance index
Economies of scale
Oligopoly
Basis for Product Differentiation
25. When something can be consumed without reducing the benefits available for subsequent consumption; can be consumed without supporting rivalry between consumers
Payoff matrix
Non-rivalrous consumption
Cooperative equilibrium
Merger
26. 1/(1+i)n
Examples of Monopolistic Competition
Present Value (PV)
Ownership of a Key Input
Two-part Tariff Method of Pricing
27. Rival who sets its output after the leader (Stackelberg's model)
Perfect Competition Short Run Supply
Price war
Follower
Economies of scale
28. When managers are able to charge each consumer their reservation price. Examples are car and home sales
First-Degree Price Discrimination (Perfect)
Inter-industry competition
Nonprime competition
Tit-for-tat strategy
29. Pricing strategy in which a firm optimally sets the internal price at which an upstream division wells an input to a downstream division
Profit
Transfer pricing
Inter-industry competition
Common knowledge
30. Steel - autos - colas - airlines
Examples of Oligopoly
Perfect Competitor Characteristics
Dominant strategy
Extensive-form game
31. When firms make decisions that make every firm better off than in a noncooperative Nash equilibrium
Secure strategy
Peak-load pricing
Differentiated oligopoly
Cooperation
32. 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"
Duopoly
Tacit collusion
Third-degree price discrimination
Credible threat
33. An equilibrium in a game in which players do not cooperate but pursue their own self-interest
No cooperative equilibrium
Product Differentiation
Tit-for-tat strategy
Inefficiency
34. An attempt by a firm to convince buyers that its product is different from the products of other firms in the industry
Inefficiency
Product differentiation
Ownership of a Key Input
Natural Monopoly (local phone or electric company)
35. When no one firm has a monopoly - but producers nonetheless realize that they can affect market prices. Firms compete but possess market power
Price discrimination
Extensive-form game
Interdependence
Imperfect competition
36. A business arrangement in which two or more firms undertake a specific economic activity together. Once the activity is over - the firms go their own way
Basis for Product Differentiation
Price war
Socially optimal price
Joint Venture
37. When the decisions of two or more firms significantly affect each others' profits
Barrier to entry
Duopoly
Imperfect competition
Interdependence
38. 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
Bargaining Power of Suppliers
Leader
Differentiated oligopoly
Kinked-demand curve
39. 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
Price matching
Tacit collusion
Bargaining Power of Suppliers
Lerner index
40. (1) Economies of Scale; (2) Economies of Scope; (3) Cost Complementarity; and (4)Patents & Other Legal Barriers
Leader
Primary Sources of Monopolistic Power
What is game?
Tit-for-tat strategy
41. The derivative of total revenue
Perfect Competition Short Run Supply
Marginal Revenue
Credible threat
Non-cooperative behavior
42. The price that is low enough to deter entry
Cournot equilibrium
Double marginalization
Limit price
Reservation Price
43. 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
Concentration Ratio
Marginal Revenue
Primary Sources of Monopolistic Power
Finding profit for oligopoly games
44. An oligopoly in which the firms produce a standardized product
Monopolistic Competition
Examples of Monopolistic Competition
Homogenous oligopoly
Fair return price
45. Pricing strategy in which higher prices are charged during peak hours than during off-peak hours
Price Leadership
Conglomerate Merger
Maximizing profit in Oligopoly games
Peak-load pricing
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
Dominant strategy equilibrium
Limit pricing
Herfindahl-Hirschman index (HHI)
Price matching
47. An index of market concentration. Sum of squared market shares of all the firms in the industry times 10K HHI=10 - 000Σwi2
Horizontal Merger/Integration
Conglomerate Merger
Herfindahl-Hirschman index (HHI)
Simultaneous consumption
48. The reward received by a player in a game - such as the profit earned by an oligopolist
Payoff
Kinked demand curve model
Price discrimination
Horizontal Merger/Integration
49. 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
Repeated game
Limit price
Strategic behavior
50. The exclusive right to a product for a period of 20 years from the date the product is invented
Sequential-move game
Patent
Disappearing invisible hand
Collusion