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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. The practice of charging different prices to consumers for the same good or service
Cooperative equilibrium
Price discrimination
Natural Monopoly (local phone or electric company)
Follower
2. Multiple firms make the same pricing decisions even though they have not explicitly consulted with each other
One-shot game
Perfect Competition Long Run Supply
Implicit Collusion
Natural Monopoly (local phone or electric company)
3. Different units of a product are sold at different prices. Examples are buying in bulk - or - commodity-bundling
Second-Degree Price Discrimination
Horizontal Merger/Integration
Cournot oligopoly
Maximizing profit in Oligopoly games
4. The situation when a firm's long-run average costs fall as it increases output
Economies of scale
Profit
Repeated game
Two-part Tariff Method of Pricing
5. Produce identical products
Monopolistic Competition
Perfect Competitor Characteristics
Business strategy
Joint Venture
6. A situation where one firm is able to provide a service at a lower cost than could several competing firms
Credible threat
Patent
Natural Monopoly (local phone or electric company)
Price matching
7. The competition for sales between the products of one industry and the products of another industry
Empty threat
Payoff table
Inter-industry competition
Fair return price
8. Pricing strategy in which higher prices are charged during peak hours than during off-peak hours
Peak-load pricing
Primary Sources of Monopolistic Power
Non-cooperative equilibrium
Implicit Collusion
9. 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
Covert Collusion
Extensive-form game
Bargaining Power of Suppliers
Conglomerate Merger
10. When something can be consumed without reducing the benefits available for subsequent consumption; can be consumed without supporting rivalry between consumers
Concentration Ratio
Examples of Oligopoly
Rothschild index
Non-rivalrous consumption
11. 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
Limit pricing
Pure monopoly
Perfect Competitor Making a Profit
First-Degree Price Discrimination (Perfect)
12. Rules - strategies - payoffs - outcomes
Double marginalization
What is game?
Open Collusion
Mutual interdependence
13. A table that shows the payoffs for every possible action by each player for every possible action by the other player
Third-Degree Price Discrimination
Payoff matrix
Dominant firm oligopoly
Limit price
14. Revenue-Costs
Block pricing
Market
Profit
Mutual Interdependence
15. Single seller in an industry - Strong barriers to entry - Profit maximization - faces market demand and sets MR=MC - Unexploited gains from trade
Oligopoly
Monopoly (characteristics)
Dominant firm oligopoly
What is game?
16. Simultaneous move game that is not repeated
Bargaining Power of Buyers
Follower
One-shot game
Cross-subsidy pricing
17. Rival who sets its output after the leader (Stackelberg's model)
Perfect Competition (characteristics)
Second-Degree Price Discrimination
Follower
No cooperative equilibrium
18. 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
Monopolistic Competition
Nonprime competition
Cooperation
Product Differentiation
19. A strategy whereby a player randomizes over two or more available actions in order to keep rivals from being able to predict his action
Mixed (randomized) strategy
Economies of scale
Limit price
Horizontal Merger/Integration
20. 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
Cooperation
Third-degree price discrimination
Disappearing invisible hand
Fair return price
21. 1/(1+i)n
Present Value (PV)
Limit pricing
Indefinitely repeated game
Two-part Tariff Method of Pricing
22. First firm to set its output (Stackelberg's model)
Non-rivalrous consumption
Leader
Two-part Tariff Method of Pricing
Inefficiency
23. 2 firms - simplest case in an oligopoly. Profits higher if limiting their production
Finding profit for oligopoly games
Duopoly
Non-cooperative behavior
Network effects
24. Pricing strategy in which a firm intentionally varies its price in an attempt to "hide" price information from consumers and rivals
Common knowledge
Implicit Collusion
Tacit collusion
Randomized pricing
25. The actions by persons - firms - or unions to gain special benefits from government at taxpayer's or someone else's expense
Rent-seeking behavior
Monopolistic Competition
Monopolistic Characteristics:
Bargaining Power of Suppliers
26. When managers are able to charge each consumer their reservation price. Examples are car and home sales
Limit pricing
Nonprime competition
First-Degree Price Discrimination (Perfect)
Competitive market
27. An establishment firm commits to setting price below the profit-maximizing level to prevent entry
Transfer pricing
Leader
Barrier to entry
Limit pricing
28. 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
Randomized pricing
Collusion
Open Collusion
Dominant firm oligopoly
29. All firms and individuals willing and able to buy or sell a particular product
Horizontal Merger/Integration
Perfect Competition Barriers to Entry
Market
Inefficiency
30. A merger of firms in unrelated industries. Example: If Purina Dow Chow merged with Pampers Diaper Company
Contestable market
Conglomerate Merger
Covert Collusion
Credible threat
31. A situation in which a change in price strategy by one firm affects sales and profits of another
Nash equilibrium
Interdependence
Mutual interdependence
Bargaining Power of Suppliers
32. Intense competition in which competitors cut retail prices to gain business--oligopolistic competition
Minimum efficient scale (full capacity)
Covert Collusion
Price war
Profit
33. Keeps the price just where it is to maximize profit
Follower
Commodity bundling
Prisoner's dilemma
Cutthroat Competition
34. 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
Dominant strategy equilibrium
Non-cooperative equilibrium
Mixed (randomized) strategy
Price war
35. The exclusive right to a product for a period of 20 years from the date the product is invented
First-Degree Price Discrimination (Perfect)
Patent
Dominant strategy equilibrium
Non-price competition
36. Ignoring the effects of their actions on each others' profits
Non-cooperative behavior
Perfect Competitor Characteristics
Simultaneous consumption
Randomized pricing
37. The physical characteristics of the market within which firms interact
Market Structure
Business strategy
Perfect Competition (characteristics)
Kinked demand curve model
38. 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
What is game?
Peak-load pricing
Perfect Competitor Characteristics
Subgame perfect equilibrium
39. Demand line is above ATC curve
Monopolistic Competition
Perfect Competitor Making a Profit
Inter-industry competition
Examples of Oligopoly
40. 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
Double marginalization
Payoff
Profit
Dominant strategy equilibrium
41. A situation in which competing firms must make their individual decisions without knowing the decisions of their rivals
Simultaneous decision games
Business strategy
First-mover advantage
Dansby-Willig performance index
42. In game theory - a decision rule that describes the actions a player will take at each decision point
Dominant firm oligopoly
Strategy
Fair return price
Dominant strategy equilibrium
43. An agreement among firms in a market about quantities to produce or prices to charge in attempts to limit competition
Limit pricing
Secure strategy
Common knowledge
Collusion
44. Toothpaste - shampoo - restaurants - banks
Double marginalization
Duopoly
Examples of Monopolistic Competition
Competitive market
45. When firms make decisions that make every firm better off than in a noncooperative Nash equilibrium
Third-Degree Price Discrimination
Cooperation
Herfindahl-Hirschman index (HHI)
Bertrand oligopoly
46. A merger between two firms in the same industry. Example: 2004 K-Mart merged with Sears
Cutthroat Competition
Pure monopoly
Price Leadership
Horizontal Merger/Integration
47. Face competition from companies that currently are not in the market but might enter
Bargaining Power of Buyers
Vertical Merger
The Threat from Potential Entrants Firms
Covert Collusion
48. A strategy that guarantees the highest payoff given the worst possible scenario
What is game?
Secure strategy
Implicit Collusion
Price war
49. Physical differences - Convenience - Ambience - Reputations - Appeals to vanity - Unconscious fears and desires - Snob appeal - Customized products
Patent
Economies of scale
Kinked-demand curve
Basis for Product Differentiation
50. A product's ability to satisfy a large number of consumers at the same time
Oligopoly
Simultaneous consumption
Dominant firm oligopoly
Profit