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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. Takes Place inside the Mind of the consumer
Contestable market
Product Differentiation
Maximizing profit in Oligopoly games
Limit pricing
2. Using advertising and other means to try to increase a firm's sales
Non-price competition
Monopoly (characteristics)
Credible threat
Leader
3. 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"
Vertical Merger
Covert Collusion
Credible threat
Perfect Competition Barriers to Entry
4. A merger of firms in unrelated industries. Example: If Purina Dow Chow merged with Pampers Diaper Company
Undifferentiated
Dansby-Willig performance index
Concentration Ratio
Conglomerate Merger
5. The price that is low enough to deter entry
Limit price
Undifferentiated
Peak-load pricing
Perfect Competition (characteristics)
6. An establishment firm commits to setting price below the profit-maximizing level to prevent entry
What is game?
Tit-for-tat strategy
Nonprime competition
Limit pricing
7. 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
Bertrand oligopoly
Monopoly (characteristics)
Mutual Interdependence
Lerner index
8. Where a firm can charge different groups of consumers different prices for the same product. Example: student or senior discounts
Product Differentiation
Third-degree price discrimination
Simultaneous decision games
Inefficiency
9. Occurs when a firm produces output - whatever its level - at a higher cost than is necessary to produce it
Maximizing profit in Oligopoly games
One-shot game
Inefficiency
Third-Degree Price Discrimination
10. Identical or substitutable
Payoff
High Price Elasticity
Cournot equilibrium
Undifferentiated
11. First firm to set its output (Stackelberg's model)
Dominant strategy
Cooperation
Leader
Transfer pricing
12. 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
Nash equilibrium
What is game?
Credible threat
Sweezy oligopoly
13. 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
Peak-load pricing
Perfect Competitor Making a Profit
Limit pricing
Monopoly (characteristics)
14. 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
Oligopoly
Non-rivalrous consumption
Sweezy oligopoly
Perfect Competition (characteristics)
15. Steel - autos - colas - airlines
Examples of Oligopoly
Cross-subsidy pricing
Simultaneous-move game
Homogenous oligopoly
16. When a manager makes a noncooperative decision
Cross-subsidy pricing
Leader
Examples of Monopolistic Competition
Cheating
17. An oligopoly in which the firms produce a differentiated product
Price matching
Differentiated oligopoly
Sweezy oligopoly
Rothschild index
18. 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
Joint Venture
Imperfect competition
Prisoner's dilemma
Kinked-demand curve
19. A situation in which neither firm has incentive to change its output given the other firm's output
Inter-industry competition
Bargaining Power of Suppliers
Dominant strategy
Cournot equilibrium
20. An equilibrium in a game in which players do not cooperate but pursue their own self-interest
Second-Degree Price Discrimination
Mutual interdependence
Four-firm concentration ratio
No cooperative equilibrium
21. 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
Tacit collusion
Patent
Collusion
22. All firms and individuals willing and able to buy or sell a particular product
Extensive-form game
Perfect Competition (characteristics)
Market
First-Degree Price Discrimination (Perfect)
23. 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
24. If buyers have enough bargaining power - they can insist on lower prices - higher-quality products - or additional services
Bargaining Power of Buyers
Dominant strategy
Brand Multiplication
Kinked demand curve model
25. Demand line is above ATC curve
Inter-industry competition
Perfect Competitor Making a Profit
Tacit collusion
Natural Monopoly (local phone or electric company)
26. 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
Socially optimal price
Strategy
Disappearing invisible hand
Equilibrium
27. Multiple firms produce similar products - Firms face downward sloping demand curves - Profit maximization occurs where MC=MR - With free entry and exit - firms compete away economic profits
Conglomerate Merger
Monopolistic Competition
Inter-industry competition
Common knowledge
28. A measure of market power - the percentage of all sales that is accounted for by the four or eight largest firms in the market
Limit pricing
Concentration Ratio
Business strategy
Dominant strategy equilibrium
29. Multiple firms make the same pricing decisions even though they have not explicitly consulted with each other
Implicit Collusion
Monopolistic Competition
Concentration Ratio
Mutual Interdependence
30. Pricing strategy in which a firm optimally sets the internal price at which an upstream division wells an input to a downstream division
Disappearing invisible hand
Follower
Transfer pricing
Payoff table
31. Specific assets - Economies of scale - Excess capacity - Reputation effects
Merger
Perfect Competition Barriers to Entry
Barrier to entry
Interdependence
32. A situation in which competing firms must make their individual decisions without knowing the decisions of their rivals
Simultaneous decision games
Empty threat
Competitive market
Price war
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)
Four-firm concentration ratio
Price Leadership
Limit pricing
Differentiated oligopoly
34. An oligopoly in which the sales of the leading (top four) firms are distributed unevenly among them
Mutual interdependence
Examples of Oligopoly
Unbalanced Oligopoly
Oligopoly
35. The derivative of total revenue
Perfect Competitor Characteristics
Marginal Revenue
Stackelberg oligopoly
Product differentiation
36. A combination of two or more companies into one company
Unbalanced Oligopoly
Merger
Sequential-move game
Homogenous oligopoly
37. The reward received by a player in a game - such as the profit earned by an oligopolist
Two-part pricing
Strategy
Monopolistic Competition
Payoff
38. 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
Perfect Competitor Making a Profit
Randomized pricing
Two-part pricing
Dominant firm oligopoly
39. If production of a good requires a particular input - then control of that input can be a barrier to entry
Duopoly
Perfect Competitor Characteristics
Ownership of a Key Input
Conglomerate Merger
40. Actions taken by firms to plan for and react to competition from rival firms
Non-cooperative equilibrium
Product differentiation
Strategic behavior
Duopoly
41. 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)
Two-part Tariff Method of Pricing
Market Structure
Stackelberg oligopoly
Ownership of a Key Input
42. Increases in the value of a product to each user - including existing users - as the total number of users rises
Network effects
Undifferentiated
Payoff matrix
Sequential game
43. 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
Competitive market
Minimum efficient scale (full capacity)
Lerner index
Perfect Competition Long Run Supply
44. 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)
Price matching
Duopoly
Barrier to entry
Subgame perfect equilibrium
45. A measure of the sensitivity to price of a product group as a whole relative to the sensitivity of the quantity demanded of a single firm to a change in its price. R=Et/Ef
Rent-seeking behavior
Limit pricing
Second-Degree Price Discrimination
Rothschild index
46. Toothpaste - shampoo - restaurants - banks
Homogenous oligopoly
Leader
Monopoly (characteristics)
Examples of Monopolistic Competition
47. A strategy whereby a player randomizes over two or more available actions in order to keep rivals from being able to predict his action
Payoff
Mixed (randomized) strategy
Prisoner's dilemma
Equilibrium
48. The practice of bundling several different products together and selling them at a single "bundle" price
Kinked demand curve model
Commodity bundling
Collusion
Present Value (PV)
49. When no one firm has a monopoly - but producers nonetheless realize that they can affect market prices. Firms compete but possess market power
Unbalanced Oligopoly
Market Structure
Leader
Imperfect competition
50. A trigger strategy that punishes after an episode of cheating and returns to cooperation if cheating ends
Secure strategy
Subgame perfect equilibrium
Tit-for-tat strategy
Herfindahl-Hirschman index (HHI)