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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. Steel - autos - colas - airlines
Prisoner's dilemma
Examples of Oligopoly
Trigger strategy
Network effects
2. The reward received by a player in a game - such as the profit earned by an oligopolist
Socially optimal price
Inter-industry competition
Cutthroat Competition
Payoff
3. 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
Credible threat
Extensive-form game
Perfect Competition Barriers to Entry
Mutual interdependence
4. 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
Non-cooperative equilibrium
Undifferentiated
Marginal Revenue
5. 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
Tacit collusion
Two-part Tariff Method of Pricing
Simultaneous-move game
6. Price Sensitive
Perfect Competition Barriers to Entry
Bargaining Power of Buyers
High Price Elasticity
Follower
7. A trigger strategy that punishes after an episode of cheating and returns to cooperation if cheating ends
Business strategy
Sweezy oligopoly
Tit-for-tat strategy
Dansby-Willig performance index
8. When the decisions of two or more firms significantly affect each others' profits
Dominant strategy
Interdependence
Price matching
Profit
9. Game in which each player makes decisions without knowledge of the other player's decisions
Equilibrium
Simultaneous-move game
Cutthroat Competition
Indefinitely repeated game
10. Actions taken by firms to plan for and react to competition from rival firms
Strategic behavior
Follower
Perfect Competition Short Run Supply
Socially optimal price
11. An oligopoly in which the sales of the leading (top four) firms are distributed unevenly among them
Nash equilibrium
Unbalanced Oligopoly
Strategic behavior
Primary Sources of Monopolistic Power
12. A situation in which all decision makers know the payoff table - and they believe all other decision makers also know the payoff table
Commodity bundling
Common knowledge
Prisoner's dilemma
Tacit collusion
13. When firms make decisions that make every firm better off than in a noncooperative Nash equilibrium
One-shot game
Empty threat
Import competition
Cooperation
14. The practice of bundling several different products together and selling them at a single "bundle" price
Tacit collusion
Commodity bundling
Tit-for-tat strategy
First-mover advantage
15. In game theory - a game that is played again sometime after the previous game ends
Fair return price
Homogenous oligopoly
Repeated game
Cournot oligopoly
16. Price of a product that enables its producer to obtain a normal profit & that is equal to the ATC of producing it
Concentration Ratio
Disappearing invisible hand
Fair return price
Inefficiency
17. 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
Joint Venture
Undifferentiated
Limit pricing
Dominant strategy
18. If buyers have enough bargaining power - they can insist on lower prices - higher-quality products - or additional services
Payoff table
Cournot oligopoly
Bargaining Power of Buyers
Prisoner's dilemma
19. Produce identical products
Leader
Perfect Competitor Characteristics
Simultaneous decision games
Bertrand oligopoly
20. Many buyers and sellers - product homogeneity - low cost and accurate information - free entry and exit - best regarded as a benchmark
Perfect Competition (characteristics)
Subgame perfect equilibrium
The Threat from Potential Entrants Firms
Cooperative equilibrium
21. An agreement among firms in a market about quantities to produce or prices to charge in attempts to limit competition
Collusion
Perfect Competition Barriers to Entry
Economies of scale
Non-cooperative equilibrium
22. In game theory - a statement of harmful intent easily dismissed by recipient because threat not considered believable
Repeated game
Dominant strategy equilibrium
Price Leadership
Empty threat
23. 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
Cross-subsidy pricing
Marginal Revenue
Homogenous oligopoly
Disappearing invisible hand
24. 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
Indefinitely repeated game
Kinked-demand curve
What is game?
Joint Venture
25. 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
One-shot game
Perfect Competition Long Run Supply
Kinked demand curve model
Repeated game
26. 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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27. Maximize economic profit by producing the quantity at which MC=MR
Present Value (PV)
Perfect Competition Long Run Supply
Third-degree price discrimination
Maximizing profit in Oligopoly games
28. Pricing strategy in which a firm intentionally varies its price in an attempt to "hide" price information from consumers and rivals
Merger
Cooperative equilibrium
Third-Degree Price Discrimination
Randomized pricing
29. The competition for sales between the products of one industry and the products of another industry
Perfect Competition Short Run Supply
Inter-industry competition
Homogenous oligopoly
Present Value (PV)
30. The price that is low enough to deter entry
Disappearing invisible hand
Limit price
Strategic behavior
Merger
31. A merger between two firms in the same industry. Example: 2004 K-Mart merged with Sears
Payoff matrix
Indefinitely repeated game
Simultaneous consumption
Horizontal Merger/Integration
32. Where a firm can charge different groups of consumers different prices for the same product. Example: student or senior discounts
Contestable market
High Price Elasticity
Bargaining Power of Buyers
Third-degree price discrimination
33. A combination of two or more companies into one company
Sequential game
Economies of scale
Product differentiation
Merger
34. 2 firms - simplest case in an oligopoly. Profits higher if limiting their production
Limit pricing
Homogenous oligopoly
Examples of Oligopoly
Duopoly
35. A game that is played over and over again forever and in which players receive payoffs during each play of the game
Patent
Indefinitely repeated game
Third-degree price discrimination
Cutthroat Competition
36. 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
Simultaneous decision games
Perfect Competitor Making a Profit
Non-cooperative equilibrium
Minimum efficient scale (full capacity)
37. 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
Finding profit for oligopoly games
Nash equilibrium
Monopolistic Characteristics:
Bargaining Power of Suppliers
38. Cooperation among firms that does not involve an explicit agreement
Joint Venture
Tacit collusion
Natural Monopoly (local phone or electric company)
Herfindahl-Hirschman index (HHI)
39. 1/(1+i)n
Monopolistic Characteristics:
Import competition
Present Value (PV)
Tit-for-tat strategy
40. In game theory - benefit obtained by party that moves first in a sequential game
First-mover advantage
Ownership of a Key Input
Tacit collusion
Cheating
41. Single seller in an industry - Strong barriers to entry - Profit maximization - faces market demand and sets MR=MC - Unexploited gains from trade
Monopoly (characteristics)
Market
Peak-load pricing
Block pricing
42. Occurs when a firm produces output - whatever its level - at a higher cost than is necessary to produce it
Market Structure
Payoff table
Perfect Competition Long Run Supply
Inefficiency
43. The maximum price that a buyer is willing to pay for a good - or the minimum price that a seller will accept
Reservation Price
Non-cooperative equilibrium
Rothschild index
Conglomerate Merger
44. A table that shows the payoffs that each firm earns from every combination of strategies by the firms
Undifferentiated
Covert Collusion
Non-price competition
Payoff matrix
45. 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
Bertrand oligopoly
Dominant firm oligopoly
Randomized pricing
Ownership of a Key Input
46. When firms limit production and raise prices in a way that raises each others' profits - even though they have not made any formal agreement
Conglomerate Merger
Concentration Ratio
Tacit collusion
Dominant strategy
47. The actions by persons - firms - or unions to gain special benefits from government at taxpayer's or someone else's expense
Non-cooperative behavior
Rent-seeking behavior
Block pricing
Joint Venture
48. The practice of charging different prices to consumers for the same good or service
Natural Monopoly (local phone or electric company)
Price discrimination
Limit price
Import competition
49. Increases in the value of a product to each user - including existing users - as the total number of users rises
Perfect Competition Barriers to Entry
Third-degree price discrimination
Network effects
Bargaining Power of Buyers
50. 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
Import competition
Collusion
Stackelberg oligopoly
Finding profit for oligopoly games