Test your basic knowledge |

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






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






3. Single firm is sole producer of a product for which there are no close substitutes






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






5. When no one firm has a monopoly - but producers nonetheless realize that they can affect market prices. Firms compete but possess market power






6. 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


7. An oligopoly in which the firms produce a differentiated product






8. 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






9. A table showing - for every possible combination of decisions players can make - the outcomes or "payoffs" for each of the players in each decision combination






10. 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






11. The maximum price that a buyer is willing to pay for a good - or the minimum price that a seller will accept






12. 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.)






13. 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






14. 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






15. 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)






16. 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






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






18. Operates like the alleged Mafia. Region division of the market among the firms in the industry






19. Specific assets - Economies of scale - Excess capacity - Reputation effects






20. A table that shows the payoffs for every possible action by each player for every possible action by the other player






21. 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






22. When a manager makes a noncooperative decision






23. When firms make decisions that make every firm better off than in a noncooperative Nash equilibrium






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






25. 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






26. A trigger strategy that punishes after an episode of cheating and returns to cooperation if cheating ends






27. In game theory - a statement of harmful intent easily dismissed by recipient because threat not considered believable






28. A strategy or action that always provides the best outcome no matter what decisions rivals make






29. Identical or substitutable






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






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






32. Pricing strategy in which a firm intentionally varies its price in an attempt to "hide" price information from consumers and rivals






33. A representation of a game indicating the players - their possible strategies - and the payoffs resulting from alternative strategies






34. Using advertising and other means to try to increase a firm's sales






35. 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






36. Marginal cost curve above average variable cost - P* = SRMC






37. Single seller in an industry - Strong barriers to entry - Profit maximization - faces market demand and sets MR=MC - Unexploited gains from trade






38. 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






39. A strategy whereby a player randomizes over two or more available actions in order to keep rivals from being able to predict his action






40. Variations on one good so that a firm can increase market sharea






41. Involves price-fixing






42. Rules - strategies - payoffs - outcomes






43. A measure of market power - the percentage of all sales that is accounted for by the four or eight largest firms in the market






44. Keeps the price just where it is to maximize profit






45. Takes Place inside the Mind of the consumer






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






47. 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






48. A situation in which no one wants to change his or her behavior






49. A table that shows the payoffs that each firm earns from every combination of strategies by the firms






50. A product's ability to satisfy a large number of consumers at the same time