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Test your basic knowledge |
Business Competition
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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 - a decision rule that describes the actions a player will take at each decision point
Natural Monopoly (local phone or electric company)
Brand Multiplication
Third-Degree Price Discrimination
Strategy
2. 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
Non-cooperative equilibrium
Nash equilibrium
Maximizing profit in Oligopoly games
Transfer pricing
3. Variations on one good so that a firm can increase market sharea
Payoff matrix
Maximizing profit in Oligopoly games
Brand Multiplication
Second-Degree Price Discrimination
4. An index of market concentration. Sum of squared market shares of all the firms in the industry times 10K HHI=10 - 000Σwi2
Market Structure
Bargaining Power of Buyers
Peak-load pricing
Herfindahl-Hirschman index (HHI)
5. 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
Sequential-move game
Oligopoly
Bargaining Power of Buyers
Conglomerate Merger
6. Steel - autos - colas - airlines
Payoff matrix
Examples of Oligopoly
Joint Venture
Price Leadership
7. Takes Place inside the Mind of the consumer
Indefinitely repeated game
Homogenous oligopoly
Product Differentiation
Monopoly (characteristics)
8. A situation in which no one wants to change his or her behavior
Block pricing
Simultaneous decision games
Equilibrium
Basis for Product Differentiation
9. Simultaneous move game that is not repeated
Perfect Competition (characteristics)
Mixed (randomized) strategy
Nash equilibrium
One-shot game
10. 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
Lerner index
Limit price
What is game?
Limit pricing
11. Identical or substitutable
Herfindahl-Hirschman index (HHI)
Bertrand oligopoly
Undifferentiated
Non-cooperative behavior
12. Demand line is above ATC curve
Double marginalization
Concentration Ratio
Perfect Competitor Making a Profit
Cournot equilibrium
13. Physical differences - Convenience - Ambience - Reputations - Appeals to vanity - Unconscious fears and desires - Snob appeal - Customized products
Non-rivalrous consumption
Rent-seeking behavior
Basis for Product Differentiation
Rothschild index
14. Operates like the alleged Mafia. Region division of the market among the firms in the industry
Imperfect competition
Perfect Competition (characteristics)
Market Structure
Open Collusion
15. Sellers can identify different types of customers and offer each a different price. Examples are special prices for students or the elderly
Perfect Competition (characteristics)
Third-Degree Price Discrimination
Implicit Collusion
Kinked demand curve model
16. 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
First-Degree Price Discrimination (Perfect)
Bargaining Power of Suppliers
17. Marginal cost curve above average variable cost - P* = SRMC
Perfect Competition Short Run Supply
Cooperation
Second-Degree Price Discrimination
Monopolistic Characteristics:
18. A simpler way to operationalize first-degree price discrimination
What is game?
Two-part Tariff Method of Pricing
First-Degree Price Discrimination (Perfect)
Rothschild index
19. 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
One-shot game
Monopolistic Characteristics:
Peak-load pricing
Double marginalization
20. Sets the price at the highest level that is consistent with keeping the potential entrant out. -The strategy of reducing the price to deter entry
Patent
Limit pricing
Secure strategy
Cooperation
21. 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)
Basis for Product Differentiation
Inter-industry competition
Stackelberg oligopoly
Secure strategy
22. A pricing strategy in which profits gained from the sale of one product are used to subsidize sales of a related product
Secure strategy
Limit pricing
Prisoner's dilemma
Cross-subsidy pricing
23. An equilibrium in a game in which players do not cooperate but pursue their own self-interest
High Price Elasticity
No cooperative equilibrium
Finding profit for oligopoly games
Third-Degree Price Discrimination
24. 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
Business strategy
Payoff table
Bargaining Power of Buyers
Competitive market
25. 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
Payoff
Sequential-move game
Socially optimal price
26. A game that is played over and over again forever and in which players receive payoffs during each play of the game
Kinked demand curve model
Indefinitely repeated game
Cheating
Dansby-Willig performance index
27. Toothpaste - shampoo - restaurants - banks
Examples of Monopolistic Competition
Limit price
Contestable market
Strategy
28. Where a firm can charge different groups of consumers different prices for the same product. Example: student or senior discounts
Third-degree price discrimination
No cooperative equilibrium
Dominant firm oligopoly
Nash equilibrium
29. Single firm is sole producer of a product for which there are no close substitutes
Pure monopoly
Inefficiency
Payoff
Leader
30. Game in which each player makes decisions without knowledge of the other player's decisions
Simultaneous-move game
Dominant strategy equilibrium
Commodity bundling
Dominant strategy
31. If buyers have enough bargaining power - they can insist on lower prices - higher-quality products - or additional services
Differentiated oligopoly
Normal-form game
Non-cooperative behavior
Bargaining Power of Buyers
32. Revenue-Costs
Profit
Fair return price
Prisoners' dilemma
Cheating
33. The reward received by a player in a game - such as the profit earned by an oligopolist
Equilibrium
Dominant firm oligopoly
Payoff
Merger
34. An oligopoly in which the firms produce a differentiated product
Non-cooperative behavior
Limit price
Differentiated oligopoly
Open Collusion
35. An equilibrium in a game in which players cooperate to increase their mutual payoff
Cross-subsidy pricing
Imperfect competition
Cooperative equilibrium
Business strategy
36. When something can be consumed without reducing the benefits available for subsequent consumption; can be consumed without supporting rivalry between consumers
Homogenous oligopoly
Non-rivalrous consumption
Pure monopoly
Competitive market
37. Both players have dominant strategies and play them
Cooperative equilibrium
Dominant strategy equilibrium
What is game?
Imperfect competition
38. 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.)
Differentiated oligopoly
Repeated game
Dominant strategy equilibrium
Monopolistic Characteristics:
39. 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
Limit pricing
Third-degree price discrimination
Disappearing invisible hand
Mutual Interdependence
40. An attempt by a firm to convince buyers that its product is different from the products of other firms in the industry
Transfer pricing
Equilibrium
Inter-industry competition
Product differentiation
41. The actions by persons - firms - or unions to gain special benefits from government at taxpayer's or someone else's expense
Pure monopoly
Rent-seeking behavior
Credible threat
Perfect Competitor Making a Profit
42. A situation in which neither firm has incentive to change its output given the other firm's output
Perfect Competition Short Run Supply
Minimum efficient scale (full capacity)
Interdependence
Cournot equilibrium
43. Using advertising and other means to try to increase a firm's sales
Cutthroat Competition
Limit pricing
Non-price competition
Indefinitely repeated game
44. In game theory - a statement of harmful intent easily dismissed by recipient because threat not considered believable
Empty threat
Herfindahl-Hirschman index (HHI)
Peak-load pricing
Limit pricing
45. An agreement among firms in a market about quantities to produce or prices to charge in attempts to limit competition
The Threat from Potential Entrants Firms
Homogenous oligopoly
Collusion
Rent-seeking behavior
46. 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
Subgame perfect equilibrium
Randomized pricing
Examples of Oligopoly
Kinked demand curve model
47. Occurs when a firm produces output - whatever its level - at a higher cost than is necessary to produce it
Marginal Revenue
Inefficiency
Simultaneous decision games
The Threat from Potential Entrants Firms
48. Face competition from companies that currently are not in the market but might enter
Market Structure
The Threat from Potential Entrants Firms
Barrier to entry
Price matching
49. When managers are able to charge each consumer their reservation price. Examples are car and home sales
First-Degree Price Discrimination (Perfect)
Kinked demand curve model
Perfect Competition (characteristics)
Prisoners' dilemma
50. When no one firm has a monopoly - but producers nonetheless realize that they can affect market prices. Firms compete but possess market power
Bertrand oligopoly
Basis for Product Differentiation
Imperfect competition
Inter-industry competition