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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
Product differentiation
Cooperation
Non-rivalrous consumption
Four-firm concentration ratio
2. Produce identical products
Vertical Merger
Perfect Competitor Characteristics
Inefficiency
Prisoners' dilemma
3. A pricing strategy in which profits gained from the sale of one product are used to subsidize sales of a related product
Cross-subsidy pricing
Lerner index
Reservation Price
Simultaneous decision games
4. Game in which one player makes a move after observing the other player's move
Homogenous oligopoly
Disappearing invisible hand
Normal-form game
Sequential-move game
5. Pricing strategy in which a firm optimally sets the internal price at which an upstream division wells an input to a downstream division
Dominant strategy equilibrium
Transfer pricing
Product Differentiation
Empty threat
6. A trigger strategy that punishes after an episode of cheating and returns to cooperation if cheating ends
Pure monopoly
Tit-for-tat strategy
Commodity bundling
Covert Collusion
7. In game theory - a decision rule that describes the actions a player will take at each decision point
Perfect Competitor Making a Profit
Examples of Oligopoly
Strategy
Kinked-demand curve
8. The situation when a firm's long-run average costs fall as it increases output
Credible threat
Non-cooperative behavior
Economies of scale
Price war
9. 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
Cournot oligopoly
Block pricing
Ownership of a Key Input
Price Leadership
10. 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
Third-degree price discrimination
Payoff table
Unbalanced Oligopoly
Cournot oligopoly
11. 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
No cooperative equilibrium
Strategy
Follower
12. 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
Limit price
Empty threat
Cooperative equilibrium
Kinked demand curve model
13. The exclusive right to a product for a period of 20 years from the date the product is invented
Patent
Perfect Competition Long Run Supply
Perfect Competition (characteristics)
Monopolistic Competition
14. Variations on one good so that a firm can increase market sharea
Maximizing profit in Oligopoly games
Brand Multiplication
Unbalanced Oligopoly
Conglomerate Merger
15. Long-run marginal cost curve above long-run average cost
No cooperative equilibrium
The Threat from Potential Entrants Firms
Rent-seeking behavior
Perfect Competition Long Run Supply
16. Competition based on factors that are not related to price - such as product quality - service and financing - business location - and reputation
Brand Multiplication
Price Leadership
Tit-for-tat strategy
Nonprime competition
17. When firms limit production and raise prices in a way that raises each others' profits - even though they have not made any formal agreement
Perfect Competition Barriers to Entry
Tacit collusion
Fair return price
Simultaneous-move game
18. A merger between firms who have a buyer/supplier relationship. Example: BF Goodrich merging with rubber plantations
Dominant strategy
Homogenous oligopoly
Vertical Merger
Payoff table
19. 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
Leader
Simultaneous decision games
Subgame perfect equilibrium
Profit
20. Demand line is above ATC curve
Monopoly (characteristics)
Perfect Competitor Making a Profit
Economies of scale
Dominant strategy
21. A merger between two firms in the same industry. Example: 2004 K-Mart merged with Sears
Horizontal Merger/Integration
Monopoly (characteristics)
Cheating
Stackelberg oligopoly
22. 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
Marginal Revenue
Covert Collusion
Non-cooperative equilibrium
23. Simultaneous move game that is not repeated
Cheating
One-shot game
Fair return price
Product Differentiation
24. An index of market concentration. Sum of squared market shares of all the firms in the industry times 10K HHI=10 - 000Σwi2
Perfect Competitor Characteristics
Herfindahl-Hirschman index (HHI)
Horizontal Merger/Integration
Product differentiation
25. 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"
Credible threat
Perfect Competition (characteristics)
Network effects
Simultaneous-move game
26. A situation in which neither firm has incentive to change its output given the other firm's output
Cournot equilibrium
Reservation Price
Perfect Competition Barriers to Entry
Concentration Ratio
27. An oligopoly in which the firms produce a standardized product
Perfect Competition Long Run Supply
Third-Degree Price Discrimination
Homogenous oligopoly
Brand Multiplication
28. Cooperation among firms that does not involve an explicit agreement
Tacit collusion
Four-firm concentration ratio
Product differentiation
Patent
29. (1) Economies of Scale; (2) Economies of Scope; (3) Cost Complementarity; and (4)Patents & Other Legal Barriers
Market Structure
Limit pricing
Basis for Product Differentiation
Primary Sources of Monopolistic Power
30. Actions taken by a firm to achieve a goal - such as maximizing profits
Imperfect competition
First-mover advantage
Perfect Competition Short Run Supply
Business strategy
31. First firm to set its output (Stackelberg's model)
Monopoly (characteristics)
Leader
Inter-industry competition
Dominant strategy
32. A representation of a game indicating the players - their possible strategies - and the payoffs resulting from alternative strategies
Undifferentiated
Vertical Merger
Prisoner's dilemma
Normal-form game
33. 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
Socially optimal price
Marginal Revenue
First-Degree Price Discrimination (Perfect)
Product Differentiation
34. In game theory - game where parties make their moves in turn - one party making the first move followed by the other
Sequential game
Randomized pricing
Extensive-form game
Interdependence
35. A table that shows the payoffs that each firm earns from every combination of strategies by the firms
Examples of Oligopoly
Payoff matrix
Limit price
Simultaneous decision games
36. 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
Bargaining Power of Suppliers
Maximizing profit in Oligopoly games
Prisoner's dilemma
Finding profit for oligopoly games
37. A strategy in which a firm advertises a price and a promise to match any lower prices offered by a competitor
Price matching
Common knowledge
Simultaneous-move game
Homogenous oligopoly
38. 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
Monopoly (characteristics)
Price discrimination
Sweezy oligopoly
Economies of scale
39. A strategy whereby a player randomizes over two or more available actions in order to keep rivals from being able to predict his action
Concentration Ratio
Cheating
Mixed (randomized) strategy
Kinked demand curve model
40. When managers are able to charge each consumer their reservation price. Examples are car and home sales
Perfect Competitor Making a Profit
Differentiated oligopoly
Simultaneous-move game
First-Degree Price Discrimination (Perfect)
41. A product's ability to satisfy a large number of consumers at the same time
Imperfect competition
Oligopoly
Price war
Simultaneous consumption
42. In game theory - a statement of harmful intent easily dismissed by recipient because threat not considered believable
Empty threat
Bargaining Power of Buyers
One-shot game
Kinked demand curve model
43. 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
Bertrand oligopoly
Perfect Competitor Making a Profit
Kinked demand curve model
44. A strategy or action that always provides the best outcome no matter what decisions rivals make
Lerner index
Maximizing profit in Oligopoly games
Follower
Dominant strategy
45. Price of a product that enables its producer to obtain a normal profit & that is equal to the ATC of producing it
Sequential-move game
Non-price competition
Fair return price
Monopolistic Competition
46. A situation in which no one wants to change his or her behavior
Equilibrium
Peak-load pricing
Examples of Monopolistic Competition
Indefinitely repeated game
47. Actions taken by firms to plan for and react to competition from rival firms
No cooperative equilibrium
Ownership of a Key Input
Strategic behavior
Prisoners' dilemma
48. When something can be consumed without reducing the benefits available for subsequent consumption; can be consumed without supporting rivalry between consumers
Non-rivalrous consumption
Prisoners' dilemma
Monopolistic Competition
Brand Multiplication
49. 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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50. A situation where one firm is able to provide a service at a lower cost than could several competing firms
Product Differentiation
Patent
Natural Monopoly (local phone or electric company)
Non-rivalrous consumption