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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
Price discrimination
Market
Present Value (PV)
Interdependence
2. The situation that exists when two or more groups need each other and must depend on each other to accomplish a goal that is important to each of them
Mutual Interdependence
Nonprime competition
Finding profit for oligopoly games
Fair return price
3. A strategy in which a firm advertises a price and a promise to match any lower prices offered by a competitor
Simultaneous-move game
Commodity bundling
Duopoly
Price matching
4. A simpler way to operationalize first-degree price discrimination
First-mover advantage
Price war
Minimum efficient scale (full capacity)
Two-part Tariff Method of Pricing
5. In game theory - benefit obtained by party that moves first in a sequential game
Perfect Competitor Making a Profit
First-mover advantage
Indefinitely repeated game
What is game?
6. A table that shows the payoffs for every possible action by each player for every possible action by the other player
Payoff matrix
Sequential game
Covert Collusion
Limit pricing
7. 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
Network effects
Interdependence
Oligopoly
Monopolistic Characteristics:
8. 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
Secure strategy
Socially optimal price
Monopolistic Characteristics:
9. The price that is low enough to deter entry
Strategic behavior
Product differentiation
Trigger strategy
Limit price
10. When no one firm has a monopoly - but producers nonetheless realize that they can affect market prices. Firms compete but possess market power
Non-cooperative equilibrium
Imperfect competition
Perfect Competitor Making a Profit
First-mover advantage
11. In game theory - a game that is played again sometime after the previous game ends
Reservation Price
Competitive market
Repeated game
Randomized pricing
12. Produce identical products
Perfect Competitor Characteristics
Two-part Tariff Method of Pricing
Cournot oligopoly
First-mover advantage
13. If many firms can supply an input and the input is not specialized - the suppliers are unlikely to have the bargaining power to limit a firm's profits
Bargaining Power of Suppliers
Oligopoly
Reservation Price
Simultaneous-move game
14. 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
Lerner index
Prisoner's dilemma
Simultaneous consumption
Subgame perfect equilibrium
15. The competition that domestic firms encounter from the products and services of foreign producers
Collusion
Import competition
Lerner index
Undifferentiated
16. When managers are able to charge each consumer their reservation price. Examples are car and home sales
Indefinitely repeated game
Simultaneous consumption
The Threat from Potential Entrants Firms
First-Degree Price Discrimination (Perfect)
17. 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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18. Variations on one good so that a firm can increase market sharea
Brand Multiplication
Commodity bundling
Block pricing
Simultaneous-move game
19. Game in which each player makes decisions without knowledge of the other player's decisions
Strategic behavior
Simultaneous-move game
Perfect Competitor Making a Profit
Simultaneous consumption
20. Increases in the value of a product to each user - including existing users - as the total number of users rises
Credible threat
Third-degree price discrimination
Cooperative equilibrium
Network effects
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
Rent-seeking behavior
Cournot oligopoly
Inefficiency
Secure strategy
22. 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
Sweezy oligopoly
Rothschild index
Present Value (PV)
Dominant strategy equilibrium
23. A game that is played over and over again forever and in which players receive payoffs during each play of the game
One-shot game
Indefinitely repeated game
Dominant firm oligopoly
Tacit collusion
24. 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
Disappearing invisible hand
Implicit Collusion
Dominant strategy
Prisoners' dilemma
25. Maximize economic profit by producing the quantity at which MC=MR
The Threat from Potential Entrants Firms
Nash equilibrium
Rent-seeking behavior
Maximizing profit in Oligopoly games
26. A representation of a game indicating the players - their possible strategies - and the payoffs resulting from alternative strategies
Simultaneous decision games
Covert Collusion
Cutthroat Competition
Normal-form game
27. 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
Double marginalization
Price discrimination
Payoff table
Competitive market
28. 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
Common knowledge
Monopolistic Competition
Equilibrium
Brand Multiplication
29. A product's ability to satisfy a large number of consumers at the same time
Transfer pricing
Barrier to entry
Simultaneous consumption
Double marginalization
30. An equilibrium in a game in which players do not cooperate but pursue their own self-interest
Price discrimination
Block pricing
Commodity bundling
No cooperative equilibrium
31. A merger between firms who have a buyer/supplier relationship. Example: BF Goodrich merging with rubber plantations
Collusion
Socially optimal price
Vertical Merger
Follower
32. A situation in which a change in price strategy by one firm affects sales and profits of another
Duopoly
Dominant strategy equilibrium
Perfect Competition Long Run Supply
Mutual interdependence
33. 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
Fair return price
Dansby-Willig performance index
Perfect Competition Barriers to Entry
Dominant firm oligopoly
34. Pricing strategy in which a firm optimally sets the internal price at which an upstream division wells an input to a downstream division
Lerner index
Kinked-demand curve
Tacit collusion
Transfer pricing
35. Involves price-fixing
Extensive-form game
Covert Collusion
Strategy
Non-rivalrous consumption
36. Physical differences - Convenience - Ambience - Reputations - Appeals to vanity - Unconscious fears and desires - Snob appeal - Customized products
Present Value (PV)
Price war
Patent
Basis for Product Differentiation
37. 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
Cournot equilibrium
Implicit Collusion
Bertrand oligopoly
High Price Elasticity
38. An oligopoly in which the sales of the leading (top four) firms are distributed unevenly among them
Unbalanced Oligopoly
Imperfect competition
Conglomerate Merger
Perfect Competition (characteristics)
39. All firms and individuals willing and able to buy or sell a particular product
Market
Nash equilibrium
Perfect Competition Barriers to Entry
Kinked-demand curve
40. Toothpaste - shampoo - restaurants - banks
Simultaneous consumption
Third-Degree Price Discrimination
Perfect Competition Long Run Supply
Examples of Monopolistic Competition
41. 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
Brand Multiplication
Network effects
Non-cooperative equilibrium
Present Value (PV)
42. An agreement among firms in a market about quantities to produce or prices to charge in attempts to limit competition
Payoff
Collusion
Cooperative equilibrium
Credible threat
43. In game theory - a decision rule that describes the actions a player will take at each decision point
Normal-form game
Ownership of a Key Input
Strategy
Four-firm concentration ratio
44. Demand line is above ATC curve
Perfect Competitor Making a Profit
Commodity bundling
Dominant strategy
Socially optimal price
45. A situation in which competing firms must make their individual decisions without knowing the decisions of their rivals
Simultaneous decision games
Sequential-move game
Tacit collusion
Cutthroat Competition
46. 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
Kinked demand curve model
Tit-for-tat strategy
First-mover advantage
Unbalanced Oligopoly
47. Single seller in an industry - Strong barriers to entry - Profit maximization - faces market demand and sets MR=MC - Unexploited gains from trade
Homogenous oligopoly
Monopoly (characteristics)
Inefficiency
Randomized pricing
48. The derivative of total revenue
Monopoly (characteristics)
Marginal Revenue
Nash equilibrium
Imperfect competition
49. A strategy that guarantees the highest payoff given the worst possible scenario
Monopolistic Competition
Sweezy oligopoly
Equilibrium
Secure strategy
50. Occurs when a firm produces output - whatever its level - at a higher cost than is necessary to produce it
Inefficiency
Vertical Merger
Tit-for-tat strategy
Implicit Collusion