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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. If production of a good requires a particular input - then control of that input can be a barrier to entry
Mutual interdependence
Oligopoly
Price matching
Ownership of a Key Input
2. (1) Economies of Scale; (2) Economies of Scope; (3) Cost Complementarity; and (4)Patents & Other Legal Barriers
Price discrimination
Primary Sources of Monopolistic Power
Conglomerate Merger
Interdependence
3. Cooperation among firms that does not involve an explicit agreement
Transfer pricing
Leader
Merger
Tacit collusion
4. The actions by persons - firms - or unions to gain special benefits from government at taxpayer's or someone else's expense
Sequential-move game
Examples of Monopolistic Competition
Price matching
Rent-seeking behavior
5. Where a firm can charge different groups of consumers different prices for the same product. Example: student or senior discounts
Mutual interdependence
Third-degree price discrimination
Dansby-Willig performance index
Perfect Competition (characteristics)
6. Involves price-fixing
Barrier to entry
One-shot game
Covert Collusion
Merger
7. A strategy or action that always provides the best outcome no matter what decisions rivals make
Empty threat
Herfindahl-Hirschman index (HHI)
Dominant strategy
Limit pricing
8. In game theory - a statement of harmful intent by one party that the other party views as believable-- "if you do this - we will do that"
Herfindahl-Hirschman index (HHI)
Examples of Oligopoly
Cross-subsidy pricing
Credible threat
9. A simpler way to operationalize first-degree price discrimination
Bertrand oligopoly
Strategy
Two-part Tariff Method of Pricing
Mixed (randomized) strategy
10. A firm whose price decisions are tacitly accepted and followed by others in the industry
Price Leadership
Mutual interdependence
Differentiated oligopoly
Payoff matrix
11. An establishment firm commits to setting price below the profit-maximizing level to prevent entry
What is game?
Simultaneous consumption
Market
Limit pricing
12. A strategy that guarantees the highest payoff given the worst possible scenario
Product differentiation
Cournot equilibrium
Dansby-Willig performance index
Secure strategy
13. The physical characteristics of the market within which firms interact
Perfect Competition Short Run Supply
What is game?
Mutual Interdependence
Market Structure
14. Rival who sets its output after the leader (Stackelberg's model)
Dansby-Willig performance index
Follower
No cooperative equilibrium
Concentration Ratio
15. 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
Pure monopoly
Oligopoly
Business strategy
Socially optimal price
16. An oligopoly in which the firms produce a differentiated product
Natural Monopoly (local phone or electric company)
Differentiated oligopoly
Secure strategy
Kinked-demand curve
17. First firm to set its output (Stackelberg's model)
Perfect Competitor Characteristics
Differentiated oligopoly
Payoff table
Leader
18. When firms limit production and raise prices in a way that raises each others' profits - even though they have not made any formal agreement
Payoff
Limit pricing
Tacit collusion
Joint Venture
19. When managers are able to charge each consumer their reservation price. Examples are car and home sales
Transfer pricing
First-Degree Price Discrimination (Perfect)
Commodity bundling
Ownership of a Key Input
20. 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.)
Network effects
Primary Sources of Monopolistic Power
Monopolistic Characteristics:
Second-Degree Price Discrimination
21. 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
Disappearing invisible hand
Implicit Collusion
Collusion
Interdependence
22. Ranks industries according to how much social welfare would improve if the output in an industry were increased by a small amount
Maximizing profit in Oligopoly games
Mutual Interdependence
High Price Elasticity
Dansby-Willig performance index
23. If buyers have enough bargaining power - they can insist on lower prices - higher-quality products - or additional services
Bargaining Power of Buyers
Implicit Collusion
Interdependence
Credible threat
24. A pricing strategy in which profits gained from the sale of one product are used to subsidize sales of a related product
Cheating
Bargaining Power of Buyers
Cross-subsidy pricing
Monopoly (characteristics)
25. The reward received by a player in a game - such as the profit earned by an oligopolist
Business strategy
Non-cooperative equilibrium
Interdependence
Payoff
26. A situation in which all decision makers know the payoff table - and they believe all other decision makers also know the payoff table
Common knowledge
Ownership of a Key Input
Randomized pricing
Lerner index
27. Multiple firms make the same pricing decisions even though they have not explicitly consulted with each other
Kinked demand curve model
Implicit Collusion
Rent-seeking behavior
Non-price competition
28. Rules - strategies - payoffs - outcomes
Product Differentiation
First-Degree Price Discrimination (Perfect)
Repeated game
What is game?
29. 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
Extensive-form game
Tit-for-tat strategy
Randomized pricing
Import competition
30. An index of market concentration. Sum of squared market shares of all the firms in the industry times 10K HHI=10 - 000Σwi2
Ownership of a Key Input
No cooperative equilibrium
Limit price
Herfindahl-Hirschman index (HHI)
31. 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)
Ownership of a Key Input
Payoff
Barrier to entry
Second-Degree Price Discrimination
32. When the decisions of two or more firms significantly affect each others' profits
Limit pricing
Undifferentiated
Maximizing profit in Oligopoly games
Interdependence
33. A game that is played over and over again forever and in which players receive payoffs during each play of the game
Indefinitely repeated game
Examples of Monopolistic Competition
High Price Elasticity
Prisoners' dilemma
34. An equilibrium in a game in which players cooperate to increase their mutual payoff
Bargaining Power of Suppliers
Open Collusion
Cooperative equilibrium
Simultaneous-move game
35. A situation where one firm is able to provide a service at a lower cost than could several competing firms
Examples of Monopolistic Competition
Natural Monopoly (local phone or electric company)
Commodity bundling
First-mover advantage
36. Physical differences - Convenience - Ambience - Reputations - Appeals to vanity - Unconscious fears and desires - Snob appeal - Customized products
Brand Multiplication
Basis for Product Differentiation
Minimum efficient scale (full capacity)
Mutual Interdependence
37. The exclusive right to a product for a period of 20 years from the date the product is invented
Herfindahl-Hirschman index (HHI)
Cheating
Double marginalization
Patent
38. 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
Four-firm concentration ratio
Transfer pricing
Competitive market
Oligopoly
39. Many buyers and sellers - product homogeneity - low cost and accurate information - free entry and exit - best regarded as a benchmark
Product differentiation
Perfect Competition (characteristics)
Credible threat
Sweezy oligopoly
40. When something can be consumed without reducing the benefits available for subsequent consumption; can be consumed without supporting rivalry between consumers
Fair return price
Inefficiency
Non-rivalrous consumption
Open Collusion
41. All firms and individuals willing and able to buy or sell a particular product
Disappearing invisible hand
Perfect Competitor Characteristics
Sequential game
Market
42. A strategy whereby a player randomizes over two or more available actions in order to keep rivals from being able to predict his action
Cheating
Covert Collusion
Two-part Tariff Method of Pricing
Mixed (randomized) strategy
43. Variations on one good so that a firm can increase market sharea
Brand Multiplication
Product Differentiation
Horizontal Merger/Integration
Oligopoly
44. Specific assets - Economies of scale - Excess capacity - Reputation effects
Perfect Competition Barriers to Entry
Strategic behavior
Socially optimal price
Inter-industry competition
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
Present Value (PV)
Dominant firm oligopoly
Perfect Competition Long Run Supply
Rent-seeking behavior
46. In game theory - benefit obtained by party that moves first in a sequential game
First-mover advantage
Price matching
Collusion
Third-degree price discrimination
47. 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
Payoff matrix
Equilibrium
Kinked-demand curve
Price Leadership
48. Occurs when a firm produces output - whatever its level - at a higher cost than is necessary to produce it
Perfect Competition Barriers to Entry
Repeated game
Inefficiency
Common knowledge
49. 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
Rent-seeking behavior
Non-cooperative equilibrium
Contestable market
Imperfect competition
50. A merger between two firms in the same industry. Example: 2004 K-Mart merged with Sears
Credible threat
First-Degree Price Discrimination (Perfect)
Subgame perfect equilibrium
Horizontal Merger/Integration