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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. All firms and individuals willing and able to buy or sell a particular product
Market
Double marginalization
Patent
Undifferentiated
2. Ignoring the effects of their actions on each others' profits
Limit pricing
Non-cooperative behavior
Cooperation
Simultaneous-move game
3. The competition that domestic firms encounter from the products and services of foreign producers
Economies of scale
Horizontal Merger/Integration
Import competition
Commodity bundling
4. A combination of two or more companies into one company
Rothschild index
Merger
Collusion
Sequential game
5. An oligopoly in which the firms produce a differentiated product
Differentiated oligopoly
Empty threat
Homogenous oligopoly
Reservation Price
6. When managers are able to charge each consumer their reservation price. Examples are car and home sales
Monopolistic Competition
First-Degree Price Discrimination (Perfect)
Disappearing invisible hand
Monopoly (characteristics)
7. 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
Pure monopoly
Contestable market
Undifferentiated
Mutual Interdependence
8. A firm whose price decisions are tacitly accepted and followed by others in the industry
Simultaneous consumption
Present Value (PV)
Two-part Tariff Method of Pricing
Price Leadership
9. 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
Tit-for-tat strategy
Dansby-Willig performance index
Disappearing invisible hand
Non-cooperative equilibrium
10. Rival who sets its output after the leader (Stackelberg's model)
Follower
Imperfect competition
Randomized pricing
Block pricing
11. When firms limit production and raise prices in a way that raises each others' profits - even though they have not made any formal agreement
Disappearing invisible hand
Market Structure
Tacit collusion
Differentiated oligopoly
12. Demand line is above ATC curve
Perfect Competitor Making a Profit
Duopoly
Vertical Merger
Normal-form game
13. In game theory - a game that is played again sometime after the previous game ends
Repeated game
Implicit Collusion
What is game?
Simultaneous decision games
14. When the decisions of two or more firms significantly affect each others' profits
Sweezy oligopoly
Inter-industry competition
Interdependence
Competitive market
15. 2 firms - simplest case in an oligopoly. Profits higher if limiting their production
Common knowledge
Bargaining Power of Suppliers
Cross-subsidy pricing
Duopoly
16. Rules - strategies - payoffs - outcomes
Four-firm concentration ratio
Prisoners' dilemma
Perfect Competition Short Run Supply
What is game?
17. A merger between firms who have a buyer/supplier relationship. Example: BF Goodrich merging with rubber plantations
Vertical Merger
Payoff matrix
Prisoners' dilemma
Tacit collusion
18. 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
Cournot oligopoly
Kinked demand curve model
Primary Sources of Monopolistic Power
Payoff
19. Pricing strategy in which higher prices are charged during peak hours than during off-peak hours
Price discrimination
Cutthroat Competition
Peak-load pricing
Finding profit for oligopoly games
20. 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
Concentration Ratio
Two-part pricing
Profit
Kinked-demand curve
21. A situation where one firm is able to provide a service at a lower cost than could several competing firms
Collusion
Present Value (PV)
Cooperative equilibrium
Natural Monopoly (local phone or electric company)
22. The situation when a firm's long-run average costs fall as it increases output
Horizontal Merger/Integration
Interdependence
Limit pricing
Economies of scale
23. A table that shows the payoffs that each firm earns from every combination of strategies by the firms
Monopoly (characteristics)
Payoff matrix
Limit pricing
Minimum efficient scale (full capacity)
24. When an upstream divisions leverages "monopoly like" power to charge higher marginal cost to a downstream division - resulting in failure of the firm to optimize profits based on the wrong quantity decision at the firms level
Kinked demand curve model
Economies of scale
Finding profit for oligopoly games
Double marginalization
25. Price Sensitive
High Price Elasticity
Kinked demand curve model
Mixed (randomized) strategy
Horizontal Merger/Integration
26. Involves price-fixing
Product Differentiation
Covert Collusion
Double marginalization
Examples of Monopolistic Competition
27. 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
Repeated game
Disappearing invisible hand
Import competition
Non-cooperative equilibrium
28. The maximum price that a buyer is willing to pay for a good - or the minimum price that a seller will accept
Reservation Price
Payoff table
Interdependence
Third-degree price discrimination
29. 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
Fair return price
Competitive market
Perfect Competitor Characteristics
Tit-for-tat strategy
30. A situation in which competing firms must make their individual decisions without knowing the decisions of their rivals
Payoff
Simultaneous decision games
Conglomerate Merger
Unbalanced Oligopoly
31. Identical or substitutable
Covert Collusion
Undifferentiated
Dominant strategy
Dominant strategy equilibrium
32. Marginal cost curve above average variable cost - P* = SRMC
Perfect Competition Short Run Supply
Lerner index
Vertical Merger
Interdependence
33. A measure of market power - the percentage of all sales that is accounted for by the four or eight largest firms in the market
Perfect Competitor Making a Profit
Dominant strategy equilibrium
Concentration Ratio
Two-part Tariff Method of Pricing
34. In game theory - a decision rule that describes the actions a player will take at each decision point
Third-degree price discrimination
Open Collusion
Interdependence
Strategy
35. 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)
Cooperation
Socially optimal price
Perfect Competitor Characteristics
Stackelberg oligopoly
36. Anything that keeps new firms from entering an industry in which firms are earning economic profits (e.g. Ownership of a Key Input - Capital - Patents - Economies of scale)
Barrier to entry
Limit pricing
Implicit Collusion
Cross-subsidy pricing
37. 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
Competitive market
Barrier to entry
Prisoners' dilemma
38. Game in which each player makes decisions without knowledge of the other player's decisions
Simultaneous-move game
High Price Elasticity
Examples of Oligopoly
Rent-seeking behavior
39. Occurs when a firm produces output - whatever its level - at a higher cost than is necessary to produce it
Inefficiency
Tacit collusion
Mixed (randomized) strategy
Patent
40. The price that is low enough to deter entry
Tacit collusion
Socially optimal price
Limit price
Differentiated oligopoly
41. 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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42. 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
Limit pricing
Lerner index
Product Differentiation
Second-Degree Price Discrimination
43. An industry where (1) there are few firms serving many customers; (2) firms produce differentiated products; (3) each firm believes rivals will respond to price reductions but will not follow price increases; and (4) barriers to entry exist
Limit pricing
Sweezy oligopoly
Prisoners' dilemma
Conglomerate Merger
44. Different units of a product are sold at different prices. Examples are buying in bulk - or - commodity-bundling
Perfect Competitor Making a Profit
Basis for Product Differentiation
Second-Degree Price Discrimination
Monopoly (characteristics)
45. An oligopoly in which the sales of the leading (top four) firms are distributed unevenly among them
Unbalanced Oligopoly
Market Structure
Cross-subsidy pricing
Vertical Merger
46. Toothpaste - shampoo - restaurants - banks
Conglomerate Merger
Third-degree price discrimination
Examples of Monopolistic Competition
Business strategy
47. Sellers can identify different types of customers and offer each a different price. Examples are special prices for students or the elderly
Price war
Third-Degree Price Discrimination
Open Collusion
Profit
48. Steel - autos - colas - airlines
Indefinitely repeated game
High Price Elasticity
Joint Venture
Examples of Oligopoly
49. If production of a good requires a particular input - then control of that input can be a barrier to entry
Normal-form game
Ownership of a Key Input
The Threat from Potential Entrants Firms
Imperfect competition
50. 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
Open Collusion
Natural Monopoly (local phone or electric company)
Repeated game