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Business Competition

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. 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






2. An establishment firm commits to setting price below the profit-maximizing level to prevent entry






3. A merger between two firms in the same industry. Example: 2004 K-Mart merged with Sears






4. A game that is played over and over again forever and in which players receive payoffs during each play of the game






5. 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






6. The competition that domestic firms encounter from the products and services of foreign producers






7. Increases in the value of a product to each user - including existing users - as the total number of users rises






8. 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






9. 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






10. Sellers can identify different types of customers and offer each a different price. Examples are special prices for students or the elderly






11. When the decisions of two or more firms significantly affect each others' profits






12. Competition based on factors that are not related to price - such as product quality - service and financing - business location - and reputation






13. The smallest quantity at which the average cost curve reaches its minimum






14. The situation when a firm's long-run average costs fall as it increases output






15. Involves price-fixing






16. Intense competition in which competitors cut retail prices to gain business--oligopolistic competition






17. A condition describing a set of strategies in which no player can improve their payoff by unilaterally changing their own strategy given the other player's strategy






18. 1/(1+i)n






19. Steel - autos - colas - airlines






20. If production of a good requires a particular input - then control of that input can be a barrier to entry






21. When firms limit production and raise prices in a way that raises each others' profits - even though they have not made any formal agreement






22. A situation in which a change in price strategy by one firm affects sales and profits of another






23. In game theory - a game that is played again sometime after the previous game ends






24. The exclusive right to a product for a period of 20 years from the date the product is invented






25. 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






26. First firm to set its output (Stackelberg's model)






27. Pricing strategy in which a firm optimally sets the internal price at which an upstream division wells an input to a downstream division






28. A situation in which neither firm has incentive to change its output given the other firm's output






29. A situation in which all decision makers know the payoff table - and they believe all other decision makers also know the payoff table






30. 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






31. Actions taken by a firm to achieve a goal - such as maximizing profits






32. Game in which one player makes a move after observing the other player's move






33. 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.)






34. The competition for sales between the products of one industry and the products of another industry






35. 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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36. Pricing strategy in which higher prices are charged during peak hours than during off-peak hours






37. An attempt by a firm to convince buyers that its product is different from the products of other firms in the industry






38. Demand line is above ATC curve






39. All firms and individuals willing and able to buy or sell a particular product






40. 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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41. Ignoring the effects of their actions on each others' profits






42. 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)






43. A firm whose price decisions are tacitly accepted and followed by others in the industry






44. An equilibrium in a game in which players cooperate to increase their mutual payoff






45. Different units of a product are sold at different prices. Examples are buying in bulk - or - commodity-bundling






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






47. A merger between firms who have a buyer/supplier relationship. Example: BF Goodrich merging with rubber plantations






48. A pricing strategy in which profits gained from the sale of one product are used to subsidize sales of a related product






49. The reward received by a player in a game - such as the profit earned by an oligopolist






50. Price of a product that enables its producer to obtain a normal profit & that is equal to the ATC of producing it







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