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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. The price of a product that results in the most efficient allocation of an economy's resources and that is equal to the marginal cost of the product






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






3. Maximize economic profit by producing the quantity at which MC=MR






4. 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






5. 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






6. 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






7. 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






8. 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






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






10. Rival who sets its output after the leader (Stackelberg's model)






11. Ignoring the effects of their actions on each others' profits






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






13. 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






14. A merger of firms in unrelated industries. Example: If Purina Dow Chow merged with Pampers Diaper Company






15. 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






16. The competition that domestic firms encounter from the products and services of foreign producers






17. 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






18. Physical differences - Convenience - Ambience - Reputations - Appeals to vanity - Unconscious fears and desires - Snob appeal - Customized products






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






20. 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)






21. 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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22. Different units of a product are sold at different prices. Examples are buying in bulk - or - commodity-bundling






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






24. 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






25. The percentage of the total industry sales accounted for by the four largest firms in the industry. OUTPUT of 4 largest firms over TOTAL output in industry. C4=(S1+...+S4)/St or (w1+...+w4)






26. A merger between two firms in the same industry. Example: 2004 K-Mart merged with Sears






27. An attempt by a firm to convince buyers that its product is different from the products of other firms in the industry






28. The competition for sales between the products of one industry and the products of another industry






29. The reward received by a player in a game - such as the profit earned by an oligopolist






30. 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






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






32. The derivative of total revenue






33. Pricing strategy in which a firm optimally sets the internal price at which an upstream division wells an input to a downstream division






34. Steel - autos - colas - airlines






35. A strategy that guarantees the highest payoff given the worst possible scenario






36. In game theory - a game that is played again sometime after the previous game ends






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






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






39. Where a firm can charge different groups of consumers different prices for the same product. Example: student or senior discounts






40. Cooperation among firms that does not involve an explicit agreement






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






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






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






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






45. Increases in the value of a product to each user - including existing users - as the total number of users rises






46. When a manager makes a noncooperative decision






47. 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






48. 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






49. 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






50. 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