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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. In game theory - game where parties make their moves in turn - one party making the first move followed by the other
Sequential game
Credible threat
Vertical Merger
Limit pricing
2. When managers are able to charge each consumer their reservation price. Examples are car and home sales
Payoff table
Third-degree price discrimination
Oligopoly
First-Degree Price Discrimination (Perfect)
3. When a manager makes a noncooperative decision
Cheating
Perfect Competition (characteristics)
Differentiated oligopoly
Duopoly
4. An equilibrium in a game in which players cooperate to increase their mutual payoff
Cournot equilibrium
Price matching
Bargaining Power of Suppliers
Cooperative equilibrium
5. A table that shows the payoffs that each firm earns from every combination of strategies by the firms
Cheating
Payoff matrix
Basis for Product Differentiation
Duopoly
6. A table that shows the payoffs for every possible action by each player for every possible action by the other player
Business strategy
Profit
Payoff matrix
Price war
7. The competition for sales between the products of one industry and the products of another industry
Inter-industry competition
Non-cooperative behavior
Oligopoly
Monopolistic Characteristics:
8. A strategy that is contingent on the past play of a game and ion which some particular past action "triggers" a different action by a player
Dansby-Willig performance index
Trigger strategy
Concentration Ratio
Tit-for-tat strategy
9. Takes Place inside the Mind of the consumer
Product Differentiation
Barrier to entry
Cooperation
Inter-industry competition
10. An index of market concentration. Sum of squared market shares of all the firms in the industry times 10K HHI=10 - 000Σwi2
Concentration Ratio
Herfindahl-Hirschman index (HHI)
Mixed (randomized) strategy
Non-rivalrous consumption
11. The reward received by a player in a game - such as the profit earned by an oligopolist
Payoff matrix
Payoff
Dominant firm oligopoly
Sequential game
12. 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
Block pricing
Third-degree price discrimination
Minimum efficient scale (full capacity)
First-Degree Price Discrimination (Perfect)
13. The practice of charging different prices to consumers for the same good or service
Finding profit for oligopoly games
Cooperative equilibrium
Price discrimination
Monopolistic Characteristics:
14. Game in which one player makes a move after observing the other player's move
Dominant firm oligopoly
Sequential-move game
Barrier to entry
Implicit Collusion
15. Multiple firms make the same pricing decisions even though they have not explicitly consulted with each other
Sequential game
Indefinitely repeated game
Subgame perfect equilibrium
Implicit Collusion
16. 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
Cooperative equilibrium
Barrier to entry
Bertrand oligopoly
Pure monopoly
17. 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
Oligopoly
Marginal Revenue
Socially optimal price
Perfect Competitor Making a Profit
18. A situation where one firm is able to provide a service at a lower cost than could several competing firms
No cooperative equilibrium
Natural Monopoly (local phone or electric company)
Price matching
Simultaneous decision games
19. 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
Joint Venture
Import competition
Payoff table
Concentration Ratio
20. 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
Oligopoly
First-Degree Price Discrimination (Perfect)
Secure strategy
Repeated game
21. A simpler way to operationalize first-degree price discrimination
Randomized pricing
Joint Venture
Two-part Tariff Method of Pricing
Price matching
22. When firms make decisions that make every firm better off than in a noncooperative Nash equilibrium
Cooperation
Duopoly
Basis for Product Differentiation
Rothschild index
23. 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
Minimum efficient scale (full capacity)
Subgame perfect equilibrium
Mutual Interdependence
Lerner index
24. A strategy or action that always provides the best outcome no matter what decisions rivals make
Dominant strategy
Conglomerate Merger
Cutthroat Competition
Mutual interdependence
25. Steel - autos - colas - airlines
Contestable market
Examples of Oligopoly
Simultaneous consumption
Inefficiency
26. An attempt by a firm to convince buyers that its product is different from the products of other firms in the industry
Non-rivalrous consumption
Product differentiation
Market
Four-firm concentration ratio
27. Demand line is above ATC curve
Payoff table
Brand Multiplication
Kinked demand curve model
Perfect Competitor Making a Profit
28. Many buyers and sellers - product homogeneity - low cost and accurate information - free entry and exit - best regarded as a benchmark
Perfect Competition (characteristics)
Repeated game
Non-cooperative equilibrium
Dominant strategy
29. Specific assets - Economies of scale - Excess capacity - Reputation effects
Perfect Competition Barriers to Entry
Contestable market
Perfect Competitor Making a Profit
Third-Degree Price Discrimination
30. Rival who sets its output after the leader (Stackelberg's model)
Business strategy
Follower
Nonprime competition
Open Collusion
31. Rules - strategies - payoffs - outcomes
What is game?
Lerner index
Examples of Monopolistic Competition
One-shot game
32. 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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33. A strategy in which a firm advertises a price and a promise to match any lower prices offered by a competitor
Kinked demand curve model
Payoff matrix
Price matching
Perfect Competition Short Run Supply
34. A merger between two firms in the same industry. Example: 2004 K-Mart merged with Sears
Horizontal Merger/Integration
Cross-subsidy pricing
Competitive market
Block pricing
35. Operates like the alleged Mafia. Region division of the market among the firms in the industry
Indefinitely repeated game
Open Collusion
Cooperation
Four-firm concentration ratio
36. 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
Cournot oligopoly
First-Degree Price Discrimination (Perfect)
Perfect Competition Long Run Supply
Double marginalization
37. An oligopoly in which the sales of the leading (top four) firms are distributed unevenly among them
Bertrand oligopoly
Barrier to entry
Indefinitely repeated game
Unbalanced Oligopoly
38. Single seller in an industry - Strong barriers to entry - Profit maximization - faces market demand and sets MR=MC - Unexploited gains from trade
Normal-form game
First-mover advantage
Monopoly (characteristics)
Kinked demand curve model
39. In game theory - a game that is played again sometime after the previous game ends
Profit
Primary Sources of Monopolistic Power
Sweezy oligopoly
Repeated game
40. 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
Covert Collusion
Kinked-demand curve
Horizontal Merger/Integration
Subgame perfect equilibrium
41. A strategy that guarantees the highest payoff given the worst possible scenario
Payoff matrix
Secure strategy
Cross-subsidy pricing
Joint Venture
42. If production of a good requires a particular input - then control of that input can be a barrier to entry
Primary Sources of Monopolistic Power
Ownership of a Key Input
Cooperative equilibrium
Third-Degree Price Discrimination
43. An agreement among firms in a market about quantities to produce or prices to charge in attempts to limit competition
Collusion
Profit
Commodity bundling
Present Value (PV)
44. Actions taken by firms to plan for and react to competition from rival firms
Dansby-Willig performance index
Strategic behavior
Homogenous oligopoly
Perfect Competition Short Run Supply
45. If buyers have enough bargaining power - they can insist on lower prices - higher-quality products - or additional services
Kinked-demand curve
Bargaining Power of Buyers
Perfect Competition Long Run Supply
Payoff table
46. A game that is played over and over again forever and in which players receive payoffs during each play of the game
Block pricing
Indefinitely repeated game
Non-cooperative equilibrium
Dominant firm oligopoly
47. 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
Cooperative equilibrium
Inter-industry competition
Third-Degree Price Discrimination
Bargaining Power of Suppliers
48. 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
Tacit collusion
Vertical Merger
Non-cooperative equilibrium
Simultaneous consumption
49. The price that is low enough to deter entry
Transfer pricing
Randomized pricing
Credible threat
Limit price
50. An establishment firm commits to setting price below the profit-maximizing level to prevent entry
Cooperation
Marginal Revenue
Horizontal Merger/Integration
Limit pricing