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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. When firms make decisions that make every firm better off than in a noncooperative Nash equilibrium
Concentration Ratio
Perfect Competitor Making a Profit
Market
Cooperation
2. 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.)
Economies of scale
Price discrimination
Monopolistic Characteristics:
Product Differentiation
3. When managers are able to charge each consumer their reservation price. Examples are car and home sales
Monopolistic Competition
Tit-for-tat strategy
Common knowledge
First-Degree Price Discrimination (Perfect)
4. An index of market concentration. Sum of squared market shares of all the firms in the industry times 10K HHI=10 - 000Σwi2
Import competition
Four-firm concentration ratio
Undifferentiated
Herfindahl-Hirschman index (HHI)
5. Single seller in an industry - Strong barriers to entry - Profit maximization - faces market demand and sets MR=MC - Unexploited gains from trade
Ownership of a Key Input
Herfindahl-Hirschman index (HHI)
Monopoly (characteristics)
Inter-industry competition
6. A situation in which a change in price strategy by one firm affects sales and profits of another
Mutual interdependence
Competitive market
Mixed (randomized) strategy
Profit
7. Variations on one good so that a firm can increase market sharea
Monopolistic Characteristics:
Open Collusion
Monopolistic Competition
Brand Multiplication
8. The reward received by a player in a game - such as the profit earned by an oligopolist
Dominant strategy equilibrium
Perfect Competition Short Run Supply
Homogenous oligopoly
Payoff
9. A measure of market power - the percentage of all sales that is accounted for by the four or eight largest firms in the market
Simultaneous-move game
Nash equilibrium
Payoff table
Concentration Ratio
10. Sellers can identify different types of customers and offer each a different price. Examples are special prices for students or the elderly
Third-Degree Price Discrimination
Non-cooperative equilibrium
What is game?
Concentration Ratio
11. Many buyers and sellers - product homogeneity - low cost and accurate information - free entry and exit - best regarded as a benchmark
Brand Multiplication
Disappearing invisible hand
Non-cooperative equilibrium
Perfect Competition (characteristics)
12. The physical characteristics of the market within which firms interact
Simultaneous decision games
Market Structure
Simultaneous-move game
Non-cooperative equilibrium
13. A merger between two firms in the same industry. Example: 2004 K-Mart merged with Sears
Competitive market
Horizontal Merger/Integration
Finding profit for oligopoly games
Strategic behavior
14. 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
Open Collusion
Profit
Trigger strategy
Finding profit for oligopoly games
15. In game theory - a game that is played again sometime after the previous game ends
Covert Collusion
Follower
Repeated game
Indefinitely repeated game
16. Different units of a product are sold at different prices. Examples are buying in bulk - or - commodity-bundling
Competitive market
Equilibrium
Second-Degree Price Discrimination
Duopoly
17. 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
Collusion
Subgame perfect equilibrium
Non-price competition
Cournot equilibrium
18. Face competition from companies that currently are not in the market but might enter
Second-Degree Price Discrimination
Examples of Oligopoly
Cooperative equilibrium
The Threat from Potential Entrants Firms
19. The situation when a firm's long-run average costs fall as it increases output
Undifferentiated
Economies of scale
Repeated game
Pure monopoly
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
Disappearing invisible hand
Reservation Price
Patent
Payoff matrix
21. 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)
Mutual Interdependence
Two-part pricing
Leader
22. When a manager makes a noncooperative decision
Cheating
Price war
Perfect Competitor Characteristics
Normal-form game
23. 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
Joint Venture
Vertical Merger
Two-part Tariff Method of Pricing
24. In game theory - a statement of harmful intent easily dismissed by recipient because threat not considered believable
Non-price competition
Empty threat
Simultaneous-move game
Dansby-Willig performance index
25. 2 firms - simplest case in an oligopoly. Profits higher if limiting their production
Limit pricing
Duopoly
Second-Degree Price Discrimination
Undifferentiated
26. The competition that domestic firms encounter from the products and services of foreign producers
Four-firm concentration ratio
Import competition
Non-rivalrous consumption
Cross-subsidy pricing
27. A game that is played over and over again forever and in which players receive payoffs during each play of the game
Perfect Competition Short Run Supply
Monopolistic Characteristics:
Bertrand oligopoly
Indefinitely repeated game
28. 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
Fair return price
Conglomerate Merger
Oligopoly
Perfect Competition Short Run Supply
29. A merger between firms who have a buyer/supplier relationship. Example: BF Goodrich merging with rubber plantations
Non-cooperative equilibrium
Bertrand oligopoly
Vertical Merger
Two-part Tariff Method of Pricing
30. 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
Market Structure
Perfect Competition Barriers to Entry
Pure monopoly
Competitive market
31. 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
Primary Sources of Monopolistic Power
Undifferentiated
Sweezy oligopoly
Two-part pricing
32. 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
Kinked-demand curve
Horizontal Merger/Integration
Lerner index
Cooperative equilibrium
33. Occurs when a firm produces output - whatever its level - at a higher cost than is necessary to produce it
Inefficiency
Two-part pricing
Network effects
Homogenous oligopoly
34. Multiple firms make the same pricing decisions even though they have not explicitly consulted with each other
Price discrimination
Implicit Collusion
Third-Degree Price Discrimination
Follower
35. First firm to set its output (Stackelberg's model)
Rent-seeking behavior
Differentiated oligopoly
Leader
Contestable market
36. The actions by persons - firms - or unions to gain special benefits from government at taxpayer's or someone else's expense
Third-degree price discrimination
Cutthroat Competition
Interdependence
Rent-seeking behavior
37. A representation of a game indicating the players - their possible strategies - and the payoffs resulting from alternative strategies
Normal-form game
Product differentiation
Implicit Collusion
Kinked-demand curve
38. Single firm is sole producer of a product for which there are no close substitutes
Perfect Competition Long Run Supply
Prisoner's dilemma
Pure monopoly
Third-Degree Price Discrimination
39. In game theory - game where parties make their moves in turn - one party making the first move followed by the other
Merger
Limit pricing
Sequential game
Bertrand oligopoly
40. In game theory - a decision rule that describes the actions a player will take at each decision point
Payoff matrix
Strategy
Nonprime competition
Market Structure
41. Where a firm can charge different groups of consumers different prices for the same product. Example: student or senior discounts
Third-degree price discrimination
The Threat from Potential Entrants Firms
Repeated game
Concentration Ratio
42. Increases in the value of a product to each user - including existing users - as the total number of users rises
Business strategy
Network effects
Minimum efficient scale (full capacity)
Double marginalization
43. The exclusive right to a product for a period of 20 years from the date the product is invented
Disappearing invisible hand
Leader
Limit price
Patent
44. Simultaneous move game that is not repeated
One-shot game
Business strategy
Two-part Tariff Method of Pricing
Ownership of a Key Input
45. Price Sensitive
Normal-form game
Mutual interdependence
What is game?
High Price Elasticity
46. Marginal cost curve above average variable cost - P* = SRMC
Cheating
Perfect Competition Short Run Supply
Two-part Tariff Method of Pricing
Repeated game
47. The rules describe the setting of the game - the actions the players may take - and the consequences of those actions; -Advertising and R&D are also prisoners' dilemmas
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48. 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)
What is game?
Monopolistic Competition
Stackelberg oligopoly
Bargaining Power of Buyers
49. 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
Indefinitely repeated game
Extensive-form game
Undifferentiated
50. All firms and individuals willing and able to buy or sell a particular product
Market
Repeated game
Payoff matrix
Price discrimination