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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. A situation where one firm is able to provide a service at a lower cost than could several competing firms
Monopolistic Characteristics:
Natural Monopoly (local phone or electric company)
Four-firm concentration ratio
Block pricing
2. A situation in which no one wants to change his or her behavior
Third-degree price discrimination
Equilibrium
Product Differentiation
Payoff matrix
3. 1/(1+i)n
Present Value (PV)
First-Degree Price Discrimination (Perfect)
Concentration Ratio
Perfect Competitor Characteristics
4. Pricing strategy in which a firm intentionally varies its price in an attempt to "hide" price information from consumers and rivals
First-mover advantage
Vertical Merger
Randomized pricing
Price matching
5. Game in which each player makes decisions without knowledge of the other player's decisions
Simultaneous-move game
Disappearing invisible hand
Transfer pricing
Contestable market
6. The exclusive right to a product for a period of 20 years from the date the product is invented
Prisoners' dilemma
Patent
Rothschild index
Horizontal Merger/Integration
7. Maximize economic profit by producing the quantity at which MC=MR
Competitive market
Maximizing profit in Oligopoly games
Two-part Tariff Method of Pricing
Dansby-Willig performance index
8. An oligopoly in which the firms produce a differentiated product
Business strategy
Differentiated oligopoly
Dominant strategy
Common knowledge
9. When no one firm has a monopoly - but producers nonetheless realize that they can affect market prices. Firms compete but possess market power
Marginal Revenue
Imperfect competition
Payoff matrix
Third-degree price discrimination
10. Intense competition in which competitors cut retail prices to gain business--oligopolistic competition
Marginal Revenue
Empty threat
Rent-seeking behavior
Price war
11. When something can be consumed without reducing the benefits available for subsequent consumption; can be consumed without supporting rivalry between consumers
Price war
Sequential-move game
Perfect Competitor Making a Profit
Non-rivalrous consumption
12. Involves price-fixing
Limit pricing
Dominant firm oligopoly
Block pricing
Covert Collusion
13. Multiple firms make the same pricing decisions even though they have not explicitly consulted with each other
Implicit Collusion
Dansby-Willig performance index
Perfect Competitor Characteristics
Merger
14. The actions by persons - firms - or unions to gain special benefits from government at taxpayer's or someone else's expense
Rent-seeking behavior
Extensive-form game
Primary Sources of Monopolistic Power
Sweezy oligopoly
15. 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
Imperfect competition
Marginal Revenue
Disappearing invisible hand
Vertical Merger
16. Ignoring the effects of their actions on each others' profits
Simultaneous consumption
Non-cooperative behavior
Vertical Merger
Non-cooperative equilibrium
17. Revenue-Costs
No cooperative equilibrium
Limit price
Competitive market
Profit
18. When firms make decisions that make every firm better off than in a noncooperative Nash equilibrium
One-shot game
Cooperation
Non-cooperative equilibrium
Prisoner's dilemma
19. Toothpaste - shampoo - restaurants - banks
One-shot game
Examples of Monopolistic Competition
Cournot oligopoly
Business strategy
20. 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
Nash equilibrium
Equilibrium
Mutual Interdependence
Market Structure
21. An index of market concentration. Sum of squared market shares of all the firms in the industry times 10K HHI=10 - 000Σwi2
Barrier to entry
Monopoly (characteristics)
Herfindahl-Hirschman index (HHI)
Leader
22. 2 firms - simplest case in an oligopoly. Profits higher if limiting their production
Subgame perfect equilibrium
Equilibrium
Duopoly
Perfect Competition Barriers to Entry
23. Variations on one good so that a firm can increase market sharea
Tacit collusion
Brand Multiplication
Cheating
Empty threat
24. 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
Mutual interdependence
Non-cooperative equilibrium
Trigger strategy
25. The physical characteristics of the market within which firms interact
Market Structure
Dominant strategy
Subgame perfect equilibrium
Normal-form game
26. Produce identical products
Differentiated oligopoly
Monopoly (characteristics)
Perfect Competitor Characteristics
Cournot oligopoly
27. Identical or substitutable
Undifferentiated
Maximizing profit in Oligopoly games
Network effects
Cournot equilibrium
28. In game theory - benefit obtained by party that moves first in a sequential game
First-mover advantage
Bargaining Power of Suppliers
Horizontal Merger/Integration
Subgame perfect equilibrium
29. The reward received by a player in a game - such as the profit earned by an oligopolist
Ownership of a Key Input
Payoff
Market Structure
Market
30. A product's ability to satisfy a large number of consumers at the same time
Price war
Import competition
Oligopoly
Simultaneous consumption
31. The competition that domestic firms encounter from the products and services of foreign producers
Import competition
Dominant firm oligopoly
Reservation Price
Tacit collusion
32. Rival who sets its output after the leader (Stackelberg's model)
High Price Elasticity
Rothschild index
Follower
Dominant strategy equilibrium
33. The price that is low enough to deter entry
Mixed (randomized) strategy
Non-rivalrous consumption
Monopoly (characteristics)
Limit price
34. 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
Barrier to entry
Monopolistic Competition
Collusion
Dansby-Willig performance index
35. A measure of market power - the percentage of all sales that is accounted for by the four or eight largest firms in the market
Prisoner's dilemma
Concentration Ratio
Ownership of a Key Input
First-Degree Price Discrimination (Perfect)
36. A strategy or action that always provides the best outcome no matter what decisions rivals make
Repeated game
Perfect Competitor Characteristics
Competitive market
Dominant strategy
37. Pricing strategy in which consumers are charged a fixed fee for the right to purchase a product - plus a per-unit charge for each unit purchased
Two-part pricing
Repeated game
Perfect Competition Barriers to Entry
Barrier to entry
38. 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.)
Import competition
Monopolistic Competition
Perfect Competitor Making a Profit
Monopolistic Characteristics:
39. A situation in which a change in price strategy by one firm affects sales and profits of another
Bargaining Power of Buyers
Mutual interdependence
Cross-subsidy pricing
Sequential game
40. An attempt by a firm to convince buyers that its product is different from the products of other firms in the industry
Covert Collusion
Primary Sources of Monopolistic Power
Product differentiation
Common knowledge
41. The situation when a firm's long-run average costs fall as it increases output
Economies of scale
Conglomerate Merger
The Threat from Potential Entrants Firms
Payoff matrix
42. An establishment firm commits to setting price below the profit-maximizing level to prevent entry
Limit pricing
Lerner index
Follower
Dansby-Willig performance index
43. 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
Lerner index
Natural Monopoly (local phone or electric company)
Two-part pricing
Extensive-form game
44. A situation in which all decision makers know the payoff table - and they believe all other decision makers also know the payoff table
Limit pricing
Prisoners' dilemma
Common knowledge
Limit pricing
45. 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
Perfect Competitor Making a Profit
Concentration Ratio
Strategy
Dominant firm oligopoly
46. Both players have dominant strategies and play them
Monopolistic Characteristics:
Dominant strategy equilibrium
One-shot game
Common knowledge
47. A simpler way to operationalize first-degree price discrimination
Payoff matrix
Two-part Tariff Method of Pricing
Socially optimal price
Inter-industry competition
48. When a manager makes a noncooperative decision
Covert Collusion
Cheating
Patent
High Price Elasticity
49. 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
Dominant firm oligopoly
Conglomerate Merger
Fair return price
Oligopoly
50. Pricing strategy in which a firm optimally sets the internal price at which an upstream division wells an input to a downstream division
Covert Collusion
Maximizing profit in Oligopoly games
Transfer pricing
First-mover advantage