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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. An attempt by a firm to convince buyers that its product is different from the products of other firms in the industry
Perfect Competition (characteristics)
Product differentiation
Minimum efficient scale (full capacity)
Subgame perfect equilibrium
2. Many buyers and sellers - product homogeneity - low cost and accurate information - free entry and exit - best regarded as a benchmark
Nash equilibrium
Unbalanced Oligopoly
Cheating
Perfect Competition (characteristics)
3. Sellers can identify different types of customers and offer each a different price. Examples are special prices for students or the elderly
Tacit collusion
Third-Degree Price Discrimination
Kinked-demand curve
Basis for Product Differentiation
4. An industry where (1) there are few firms serving many customers; (2) firms produce differentiated products; (3) each firm believes rivals will respond to price reductions but will not follow price increases; and (4) barriers to entry exist
Sweezy oligopoly
Vertical Merger
Non-rivalrous consumption
Peak-load pricing
5. Involves price-fixing
Product differentiation
Monopoly (characteristics)
Four-firm concentration ratio
Covert Collusion
6. A condition describing a set of strategies in which no player can improve their payoff by unilaterally changing their own strategy given the other player's strategy
Differentiated oligopoly
Tacit collusion
Nash equilibrium
Bargaining Power of Buyers
7. Occurs when a firm produces output - whatever its level - at a higher cost than is necessary to produce it
Perfect Competition (characteristics)
Inefficiency
Limit pricing
Business strategy
8. A strategy that guarantees the highest payoff given the worst possible scenario
Secure strategy
One-shot game
Strategy
Implicit Collusion
9. An oligopoly in which the sales of the leading (top four) firms are distributed unevenly among them
Empty threat
Unbalanced Oligopoly
Two-part pricing
Leader
10. In game theory - a game that is played again sometime after the previous game ends
Repeated game
Limit price
Joint Venture
Nonprime competition
11. Multiple firms make the same pricing decisions even though they have not explicitly consulted with each other
Implicit Collusion
Inter-industry competition
Non-cooperative equilibrium
Cheating
12. Specific assets - Economies of scale - Excess capacity - Reputation effects
Perfect Competition Barriers to Entry
Oligopoly
Differentiated oligopoly
Simultaneous decision games
13. All firms and individuals willing and able to buy or sell a particular product
Perfect Competitor Characteristics
Cheating
Simultaneous decision games
Market
14. A merger of firms in unrelated industries. Example: If Purina Dow Chow merged with Pampers Diaper Company
Conglomerate Merger
Perfect Competition Short Run Supply
Cooperative equilibrium
Examples of Monopolistic Competition
15. 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
Economies of scale
Disappearing invisible hand
Inter-industry competition
Finding profit for oligopoly games
16. A situation in which all decision makers know the payoff table - and they believe all other decision makers also know the payoff table
Tacit collusion
First-mover advantage
Common knowledge
Profit
17. A simpler way to operationalize first-degree price discrimination
Two-part Tariff Method of Pricing
Randomized pricing
Finding profit for oligopoly games
Equilibrium
18. When the decisions of two or more firms significantly affect each others' profits
Present Value (PV)
Interdependence
Trigger strategy
Kinked demand curve model
19. 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
Perfect Competition Long Run Supply
Disappearing invisible hand
No cooperative equilibrium
High Price Elasticity
20. Revenue-Costs
Kinked-demand curve
Horizontal Merger/Integration
Mixed (randomized) strategy
Profit
21. 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
Unbalanced Oligopoly
Common knowledge
Rent-seeking behavior
22. Single firm is sole producer of a product for which there are no close substitutes
Differentiated oligopoly
Tacit collusion
Price Leadership
Pure monopoly
23. Variations on one good so that a firm can increase market sharea
Brand Multiplication
Duopoly
Limit price
Tacit collusion
24. Each firm believes that if it raises its price - its competitors will not follow - but if it lowers its price all of its competitors will follow; -a model in which firms in an oligopoly match price cuts by other firms - but do not match price hike
Collusion
Kinked demand curve model
Non-cooperative behavior
Bertrand oligopoly
25. 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
Natural Monopoly (local phone or electric company)
Tit-for-tat strategy
Block pricing
Barrier to entry
26. The price that is low enough to deter entry
First-mover advantage
Examples of Monopolistic Competition
Randomized pricing
Limit price
27. A situation in which neither firm has incentive to change its output given the other firm's output
Empty threat
Vertical Merger
Cournot equilibrium
Profit
28. 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)
Monopolistic Competition
Stackelberg oligopoly
Cutthroat Competition
Inter-industry competition
29. A representation of a game indicating the players - their possible strategies - and the payoffs resulting from alternative strategies
What is game?
Normal-form game
Inter-industry competition
Subgame perfect equilibrium
30. A combination of two or more companies into one company
Interdependence
Merger
Perfect Competition Short Run Supply
Normal-form game
31. When firms make decisions that make every firm better off than in a noncooperative Nash equilibrium
Cooperation
No cooperative equilibrium
Perfect Competition Long Run Supply
Perfect Competition (characteristics)
32. Increases in the value of a product to each user - including existing users - as the total number of users rises
Cournot oligopoly
Network effects
Market
One-shot game
33. 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)
Third-Degree Price Discrimination
Covert Collusion
Four-firm concentration ratio
Price Leadership
34. Ranks industries according to how much social welfare would improve if the output in an industry were increased by a small amount
Dansby-Willig performance index
Leader
Dominant firm oligopoly
Tacit collusion
35. 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
Non-cooperative equilibrium
Price Leadership
Subgame perfect equilibrium
Contestable market
36. An establishment firm commits to setting price below the profit-maximizing level to prevent entry
Limit pricing
Inefficiency
Perfect Competitor Making a Profit
Price matching
37. Rival who sets its output after the leader (Stackelberg's model)
Joint Venture
Follower
Herfindahl-Hirschman index (HHI)
Mutual Interdependence
38. A trigger strategy that punishes after an episode of cheating and returns to cooperation if cheating ends
Sequential-move game
Tit-for-tat strategy
Brand Multiplication
Pure monopoly
39. Demand line is above ATC curve
Prisoner's dilemma
Differentiated oligopoly
Perfect Competitor Making a Profit
No cooperative equilibrium
40. When a manager makes a noncooperative decision
Mixed (randomized) strategy
Bargaining Power of Buyers
Cheating
Limit pricing
41. Steel - autos - colas - airlines
Perfect Competition (characteristics)
Sequential-move game
Examples of Oligopoly
The Threat from Potential Entrants Firms
42. 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.)
Non-price competition
Reservation Price
Monopolistic Characteristics:
Interdependence
43. Intense competition in which competitors cut retail prices to gain business--oligopolistic competition
Transfer pricing
Barrier to entry
Price war
Bargaining Power of Buyers
44. Long-run marginal cost curve above long-run average cost
Payoff matrix
The Threat from Potential Entrants Firms
Sweezy oligopoly
Perfect Competition Long Run Supply
45. Simultaneous move game that is not repeated
Bargaining Power of Suppliers
Two-part pricing
Mutual Interdependence
One-shot game
46. 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
Nonprime competition
Extensive-form game
Equilibrium
Imperfect competition
47. Operates like the alleged Mafia. Region division of the market among the firms in the industry
Simultaneous decision games
Four-firm concentration ratio
Open Collusion
Market Structure
48. A measure of market power - the percentage of all sales that is accounted for by the four or eight largest firms in the market
Concentration Ratio
Perfect Competitor Characteristics
Payoff table
Patent
49. Actions taken by a firm to achieve a goal - such as maximizing profits
Business strategy
First-mover advantage
Perfect Competition Barriers to Entry
Socially optimal price
50. A strategy in which a firm advertises a price and a promise to match any lower prices offered by a competitor
Bargaining Power of Buyers
Herfindahl-Hirschman index (HHI)
Merger
Price matching