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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 exclusive right to a product for a period of 20 years from the date the product is invented
Fair return price
Sequential game
Patent
Mutual Interdependence
2. 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)
Socially optimal price
Cheating
Barrier to entry
Inter-industry competition
3. Keeps the price just where it is to maximize profit
Competitive market
Monopolistic Competition
Cutthroat Competition
Nash equilibrium
4. A measure of market power - the percentage of all sales that is accounted for by the four or eight largest firms in the market
Price war
Dominant firm oligopoly
Marginal Revenue
Concentration Ratio
5. Pricing strategy in which a firm intentionally varies its price in an attempt to "hide" price information from consumers and rivals
Trigger strategy
Mutual interdependence
Imperfect competition
Randomized pricing
6. The practice of charging different prices to consumers for the same good or service
Differentiated oligopoly
Price discrimination
Sweezy oligopoly
Marginal Revenue
7. 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
Randomized pricing
Repeated game
Rothschild index
Indefinitely repeated game
8. 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
Limit price
Extensive-form game
Cournot oligopoly
Finding profit for oligopoly games
9. The situation when a firm's long-run average costs fall as it increases output
Oligopoly
Monopolistic Characteristics:
Economies of scale
Price discrimination
10. In game theory - a decision rule that describes the actions a player will take at each decision point
Mutual Interdependence
Strategy
Subgame perfect equilibrium
Differentiated oligopoly
11. An equilibrium in a game in which players cooperate to increase their mutual payoff
Simultaneous decision games
Contestable market
Herfindahl-Hirschman index (HHI)
Cooperative equilibrium
12. Produce identical products
Reservation Price
Minimum efficient scale (full capacity)
Perfect Competitor Characteristics
Lerner index
13. A product's ability to satisfy a large number of consumers at the same time
Simultaneous consumption
Limit pricing
Profit
Price discrimination
14. In game theory - a game that is played again sometime after the previous game ends
Repeated game
Product Differentiation
Payoff matrix
Second-Degree Price Discrimination
15. The smallest quantity at which the average cost curve reaches its minimum
Minimum efficient scale (full capacity)
Nash equilibrium
Indefinitely repeated game
Extensive-form game
16. 1/(1+i)n
Contestable market
Mixed (randomized) strategy
Present Value (PV)
The Threat from Potential Entrants Firms
17. A simpler way to operationalize first-degree price discrimination
Empty threat
Two-part Tariff Method of Pricing
High Price Elasticity
Collusion
18. Game in which each player makes decisions without knowledge of the other player's decisions
Simultaneous-move game
Product differentiation
Rothschild index
Nash equilibrium
19. 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
Undifferentiated
Bargaining Power of Suppliers
Disappearing invisible hand
Competitive market
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
Perfect Competitor Making a Profit
Disappearing invisible hand
Brand Multiplication
Subgame perfect equilibrium
21. In game theory - game where parties make their moves in turn - one party making the first move followed by the other
Sequential game
Profit
Import competition
Randomized pricing
22. 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.)
Monopolistic Characteristics:
Second-Degree Price Discrimination
Simultaneous decision games
Cooperative equilibrium
23. Face competition from companies that currently are not in the market but might enter
First-mover advantage
Present Value (PV)
The Threat from Potential Entrants Firms
Monopolistic Competition
24. 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
Perfect Competition Barriers to Entry
Price war
Leader
Sweezy oligopoly
25. Increases in the value of a product to each user - including existing users - as the total number of users rises
Network effects
Sweezy oligopoly
Undifferentiated
Cooperation
26. If buyers have enough bargaining power - they can insist on lower prices - higher-quality products - or additional services
Examples of Monopolistic Competition
First-Degree Price Discrimination (Perfect)
Undifferentiated
Bargaining Power of Buyers
27. First firm to set its output (Stackelberg's model)
Strategy
Leader
Indefinitely repeated game
The Threat from Potential Entrants Firms
28. All firms and individuals willing and able to buy or sell a particular product
Cheating
Rothschild index
Interdependence
Market
29. A table that shows the payoffs that each firm earns from every combination of strategies by the firms
Cheating
Limit pricing
Payoff matrix
Collusion
30. Identical or substitutable
Inter-industry competition
Sweezy oligopoly
Undifferentiated
Import competition
31. A situation in which neither firm has incentive to change its output given the other firm's output
Profit
Sequential game
Disappearing invisible hand
Cournot equilibrium
32. Ranks industries according to how much social welfare would improve if the output in an industry were increased by a small amount
Dominant strategy
Block pricing
Common knowledge
Dansby-Willig performance index
33. 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
Second-Degree Price Discrimination
Sequential game
Dansby-Willig performance index
34. 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
Kinked-demand curve
Profit
Joint Venture
Equilibrium
35. Competition based on factors that are not related to price - such as product quality - service and financing - business location - and reputation
Nonprime competition
Tacit collusion
The Threat from Potential Entrants Firms
Follower
36. 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
Kinked-demand curve
Payoff
Patent
Ownership of a Key Input
37. An equilibrium in a game in which players do not cooperate but pursue their own self-interest
Leader
Oligopoly
No cooperative equilibrium
Extensive-form game
38. Pricing strategy in which a firm optimally sets the internal price at which an upstream division wells an input to a downstream division
Transfer pricing
Inter-industry competition
Non-rivalrous consumption
Dominant strategy equilibrium
39. A measure of the difference between price and marginal cost as a fraction of the product's price. L=(P-MC)/P - refactoring gives: P=MC(1/(1-L)) - which gives us the "1/(1-L)" markup factor
Disappearing invisible hand
Peak-load pricing
Lerner index
Cournot oligopoly
40. Variations on one good so that a firm can increase market sharea
Brand Multiplication
Strategy
Pure monopoly
Inefficiency
41. Operates like the alleged Mafia. Region division of the market among the firms in the industry
Monopoly (characteristics)
Dominant strategy
Open Collusion
Concentration Ratio
42. A strategy in which a firm advertises a price and a promise to match any lower prices offered by a competitor
Dominant strategy
Minimum efficient scale (full capacity)
Price matching
No cooperative equilibrium
43. Steel - autos - colas - airlines
Perfect Competition Long Run Supply
Oligopoly
Examples of Oligopoly
Limit price
44. 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
Market Structure
Bargaining Power of Buyers
Subgame perfect equilibrium
Two-part Tariff Method of Pricing
45. 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
Perfect Competition Barriers to Entry
What is game?
Monopolistic Competition
Randomized pricing
46. 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
Perfect Competition Barriers to Entry
Economies of scale
Limit pricing
47. A representation of a game indicating the players - their possible strategies - and the payoffs resulting from alternative strategies
Merger
Credible threat
Normal-form game
Fair return price
48. A pricing strategy in which profits gained from the sale of one product are used to subsidize sales of a related product
Perfect Competition Short Run Supply
Business strategy
Cross-subsidy pricing
Unbalanced Oligopoly
49. 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
Payoff table
Non-cooperative behavior
No cooperative equilibrium
Price Leadership
50. Industry in which (1) there are few firms serving many customers; (2) firms produce either differentiated or homogenous products; (3) a single (leader) firm chooses an output quantity before their rivals select their outputs; (4) all other (follower)
Stackelberg oligopoly
Open Collusion
Second-Degree Price Discrimination
Nonprime competition