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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. Toothpaste - shampoo - restaurants - banks
Marginal Revenue
Examples of Monopolistic Competition
Payoff matrix
Two-part pricing
2. Maximize economic profit by producing the quantity at which MC=MR
Maximizing profit in Oligopoly games
Bertrand oligopoly
Rothschild index
Transfer pricing
3. Revenue-Costs
Profit
Indefinitely repeated game
Price matching
Business strategy
4. 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
What is game?
Extensive-form game
Ownership of a Key Input
Non-cooperative equilibrium
5. The derivative of total revenue
Cooperation
Limit pricing
Perfect Competition Barriers to Entry
Marginal Revenue
6. 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
Payoff table
Limit pricing
Imperfect competition
Barrier to entry
7. 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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8. 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
Import competition
Perfect Competition Short Run Supply
Prisoner's dilemma
Kinked demand curve model
9. A game that is played over and over again forever and in which players receive payoffs during each play of the game
Indefinitely repeated game
Sequential game
Non-price competition
Barrier to entry
10. A strategy in which a firm advertises a price and a promise to match any lower prices offered by a competitor
Mutual Interdependence
Merger
Perfect Competition (characteristics)
Price matching
11. All firms and individuals willing and able to buy or sell a particular product
Patent
Indefinitely repeated game
Market
Conglomerate Merger
12. 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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13. 2 firms - simplest case in an oligopoly. Profits higher if limiting their production
Perfect Competition Short Run Supply
Follower
Covert Collusion
Duopoly
14. In game theory - benefit obtained by party that moves first in a sequential game
Imperfect competition
Perfect Competition Barriers to Entry
First-mover advantage
Merger
15. A pricing strategy in which profits gained from the sale of one product are used to subsidize sales of a related product
Open Collusion
Prisoners' dilemma
Horizontal Merger/Integration
Cross-subsidy pricing
16. Single seller in an industry - Strong barriers to entry - Profit maximization - faces market demand and sets MR=MC - Unexploited gains from trade
Monopoly (characteristics)
Joint Venture
Profit
Block pricing
17. 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
Tacit collusion
Payoff matrix
Transfer pricing
Contestable market
18. Cooperation among firms that does not involve an explicit agreement
Tacit collusion
Kinked demand curve model
Bertrand oligopoly
Monopolistic Characteristics:
19. A measure of market power - the percentage of all sales that is accounted for by the four or eight largest firms in the market
Concentration Ratio
Nash equilibrium
The Threat from Potential Entrants Firms
Common knowledge
20. The situation when a firm's long-run average costs fall as it increases output
No cooperative equilibrium
Payoff matrix
Non-price competition
Economies of scale
21. 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
Bertrand oligopoly
Cournot oligopoly
Common knowledge
Stackelberg oligopoly
22. Actions taken by firms to plan for and react to competition from rival firms
Credible threat
Oligopoly
Tit-for-tat strategy
Strategic behavior
23. Simultaneous move game that is not repeated
Simultaneous consumption
Price Leadership
Maximizing profit in Oligopoly games
One-shot game
24. A trigger strategy that punishes after an episode of cheating and returns to cooperation if cheating ends
Market Structure
Limit pricing
Pure monopoly
Tit-for-tat strategy
25. The price that is low enough to deter entry
Market Structure
Limit price
Limit pricing
Strategy
26. 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
Joint Venture
Bargaining Power of Suppliers
Dansby-Willig performance index
Inefficiency
27. 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
Third-Degree Price Discrimination
Monopolistic Characteristics:
Dominant firm oligopoly
Market
28. Demand line is above ATC curve
Two-part pricing
Perfect Competitor Making a Profit
Perfect Competition Short Run Supply
Kinked demand curve model
29. Ignoring the effects of their actions on each others' profits
Mixed (randomized) strategy
Non-cooperative behavior
Market
Business strategy
30. The physical characteristics of the market within which firms interact
Two-part pricing
Monopolistic Competition
Payoff table
Market Structure
31. When firms limit production and raise prices in a way that raises each others' profits - even though they have not made any formal agreement
Cross-subsidy pricing
Implicit Collusion
Tacit collusion
Inefficiency
32. A situation in which all decision makers know the payoff table - and they believe all other decision makers also know the payoff table
Common knowledge
Non-rivalrous consumption
The Threat from Potential Entrants Firms
Nash equilibrium
33. A merger between firms who have a buyer/supplier relationship. Example: BF Goodrich merging with rubber plantations
Unbalanced Oligopoly
Third-Degree Price Discrimination
Vertical Merger
Import competition
34. When something can be consumed without reducing the benefits available for subsequent consumption; can be consumed without supporting rivalry between consumers
Strategic behavior
Rothschild index
Non-rivalrous consumption
Simultaneous decision games
35. Ranks industries according to how much social welfare would improve if the output in an industry were increased by a small amount
Cooperation
Dansby-Willig performance index
Two-part Tariff Method of Pricing
Cross-subsidy pricing
36. Many buyers and sellers - product homogeneity - low cost and accurate information - free entry and exit - best regarded as a benchmark
Competitive market
Unbalanced Oligopoly
Perfect Competition (characteristics)
Two-part Tariff Method of Pricing
37. First firm to set its output (Stackelberg's model)
Cross-subsidy pricing
Economies of scale
Product Differentiation
Leader
38. A merger of firms in unrelated industries. Example: If Purina Dow Chow merged with Pampers Diaper Company
Credible threat
Limit price
Undifferentiated
Conglomerate Merger
39. Marginal cost curve above average variable cost - P* = SRMC
Sweezy oligopoly
Cournot oligopoly
Non-cooperative equilibrium
Perfect Competition Short Run Supply
40. When a manager makes a noncooperative decision
Two-part Tariff Method of Pricing
Cheating
Vertical Merger
Extensive-form game
41. Sellers can identify different types of customers and offer each a different price. Examples are special prices for students or the elderly
Product Differentiation
Pure monopoly
Third-Degree Price Discrimination
Monopolistic Competition
42. An equilibrium in a game in which players cooperate to increase their mutual payoff
Lerner index
Inefficiency
Cooperative equilibrium
Commodity bundling
43. If production of a good requires a particular input - then control of that input can be a barrier to entry
Perfect Competitor Making a Profit
Ownership of a Key Input
Non-price competition
Trigger strategy
44. 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
Simultaneous consumption
Limit pricing
Payoff table
Rothschild index
45. Physical differences - Convenience - Ambience - Reputations - Appeals to vanity - Unconscious fears and desires - Snob appeal - Customized products
Kinked-demand curve
Dansby-Willig performance index
Cooperation
Basis for Product Differentiation
46. A combination of two or more companies into one company
Mutual Interdependence
Merger
Cournot equilibrium
Limit pricing
47. A table that shows the payoffs that each firm earns from every combination of strategies by the firms
Bargaining Power of Suppliers
Payoff matrix
Monopoly (characteristics)
Inter-industry competition
48. Industry in which (1) few firms serving many customers; (2) firms produce identical products t constant marginal cost; (3) firms compete in price and react optimally to competitor's prices; (4) consumers have perfect information and here are no trans
Bertrand oligopoly
Patent
Nonprime competition
Price Leadership
49. An agreement among firms in a market about quantities to produce or prices to charge in attempts to limit competition
Second-Degree Price Discrimination
Mutual Interdependence
Present Value (PV)
Collusion
50. When the decisions of two or more firms significantly affect each others' profits
Price war
Block pricing
Limit price
Interdependence