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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. Toothpaste - shampoo - restaurants - banks
Inefficiency
Examples of Monopolistic Competition
Payoff table
Price discrimination
2. Cooperation among firms that does not involve an explicit agreement
Barrier to entry
Tacit collusion
Non-cooperative behavior
Prisoners' dilemma
3. When firms make decisions that make every firm better off than in a noncooperative Nash equilibrium
Collusion
The Threat from Potential Entrants Firms
Cooperation
Cutthroat Competition
4. Sellers can identify different types of customers and offer each a different price. Examples are special prices for students or the elderly
Non-cooperative equilibrium
Non-rivalrous consumption
Third-Degree Price Discrimination
Market Structure
5. Single seller in an industry - Strong barriers to entry - Profit maximization - faces market demand and sets MR=MC - Unexploited gains from trade
Herfindahl-Hirschman index (HHI)
Randomized pricing
Monopoly (characteristics)
Tacit collusion
6. Industry where (1) there are few firms serving many customers; (2) firms produce either differentiated or homogenous products; (3) each form believes rivals will hold their output constant if it changes its output; and (4) barriers to entry exist. Fi
Cournot oligopoly
Ownership of a Key Input
Tit-for-tat strategy
Non-rivalrous consumption
7. When managers are able to charge each consumer their reservation price. Examples are car and home sales
Oligopoly
First-Degree Price Discrimination (Perfect)
Duopoly
Prisoner's dilemma
8. 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
Present Value (PV)
Payoff table
Payoff matrix
Strategy
9. An equilibrium in a game in which players do not cooperate but pursue their own self-interest
Examples of Oligopoly
No cooperative equilibrium
Extensive-form game
Price Leadership
10. Competition based on factors that are not related to price - such as product quality - service and financing - business location - and reputation
Nonprime competition
Mixed (randomized) strategy
Non-cooperative behavior
Kinked demand curve model
11. Long-run marginal cost curve above long-run average cost
Perfect Competition Long Run Supply
Two-part pricing
Randomized pricing
Barrier to entry
12. 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
Finding profit for oligopoly games
Tacit collusion
Lerner index
Market
13. Actions taken by firms to plan for and react to competition from rival firms
First-Degree Price Discrimination (Perfect)
Cooperative equilibrium
Rothschild index
Strategic behavior
14. Rival who sets its output after the leader (Stackelberg's model)
Follower
Minimum efficient scale (full capacity)
Second-Degree Price Discrimination
Payoff
15. 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
Normal-form game
Dominant strategy
Commodity bundling
Monopolistic Competition
16. 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
Contestable market
Repeated game
Leader
Concentration Ratio
17. 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)
Patent
Tacit collusion
Price matching
Barrier to entry
18. 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.)
Common knowledge
Import competition
Differentiated oligopoly
Monopolistic Characteristics:
19. The physical characteristics of the market within which firms interact
Market Structure
Limit pricing
Ownership of a Key Input
Peak-load pricing
20. Ranks industries according to how much social welfare would improve if the output in an industry were increased by a small amount
Limit price
Cheating
Dansby-Willig performance index
Examples of Monopolistic Competition
21. Ignoring the effects of their actions on each others' profits
Payoff
Non-cooperative behavior
Bargaining Power of Buyers
Price matching
22. A strategy whereby a player randomizes over two or more available actions in order to keep rivals from being able to predict his action
Mixed (randomized) strategy
Disappearing invisible hand
Present Value (PV)
Marginal Revenue
23. The price that is low enough to deter entry
Limit price
Examples of Oligopoly
Subgame perfect equilibrium
Undifferentiated
24. 2 firms - simplest case in an oligopoly. Profits higher if limiting their production
Duopoly
Strategic behavior
Tacit collusion
Horizontal Merger/Integration
25. Pricing strategy in which a firm optimally sets the internal price at which an upstream division wells an input to a downstream division
Lerner index
Rent-seeking behavior
Price war
Transfer pricing
26. Multiple firms make the same pricing decisions even though they have not explicitly consulted with each other
Implicit Collusion
Block pricing
Herfindahl-Hirschman index (HHI)
Sequential game
27. The practice of bundling several different products together and selling them at a single "bundle" price
Business strategy
Limit pricing
Commodity bundling
Prisoners' dilemma
28. 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
Profit
Two-part pricing
Bargaining Power of Buyers
29. 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
Ownership of a Key Input
Profit
Product differentiation
Block pricing
30. Using advertising and other means to try to increase a firm's sales
Nash equilibrium
Non-price competition
Market Structure
Interdependence
31. An agreement among firms in a market about quantities to produce or prices to charge in attempts to limit competition
Prisoner's dilemma
Collusion
Disappearing invisible hand
Trigger strategy
32. Marginal cost curve above average variable cost - P* = SRMC
Payoff
Market
Perfect Competition Short Run Supply
Cournot oligopoly
33. Many buyers and sellers - product homogeneity - low cost and accurate information - free entry and exit - best regarded as a benchmark
Conglomerate Merger
Brand Multiplication
Perfect Competition (characteristics)
Joint Venture
34. A situation in which no one wants to change his or her behavior
Equilibrium
Bertrand oligopoly
Implicit Collusion
Sweezy oligopoly
35. When each firm has an incentive to cheat - but both are worse off if both cheat -- illustrates why cooperation is difficult to maintain even when it is mutually beneficial to do so
36. 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"
Product differentiation
Credible threat
Homogenous oligopoly
Third-degree price discrimination
37. Pricing strategy in which higher prices are charged during peak hours than during off-peak hours
Perfect Competition Short Run Supply
Peak-load pricing
Double marginalization
Strategy
38. Both players have dominant strategies and play them
Stackelberg oligopoly
Perfect Competition Long Run Supply
Dominant strategy equilibrium
Reservation Price
39. A table that shows the payoffs for every possible action by each player for every possible action by the other player
Cournot oligopoly
Merger
Payoff matrix
Transfer pricing
40. A merger between firms who have a buyer/supplier relationship. Example: BF Goodrich merging with rubber plantations
Payoff
Vertical Merger
Inefficiency
Empty threat
41. Game in which one player makes a move after observing the other player's move
Business strategy
Basis for Product Differentiation
Sequential-move game
Dominant firm oligopoly
42. A situation in which all decision makers know the payoff table - and they believe all other decision makers also know the payoff table
Interdependence
Common knowledge
Equilibrium
Covert Collusion
43. Price of a product that enables its producer to obtain a normal profit & that is equal to the ATC of producing it
Prisoners' dilemma
Market Structure
Fair return price
Reservation Price
44. A representation of a game indicating the players - their possible strategies - and the payoffs resulting from alternative strategies
Empty threat
Undifferentiated
Normal-form game
Perfect Competition Long Run Supply
45. A strategy in which a firm advertises a price and a promise to match any lower prices offered by a competitor
Simultaneous-move game
Price matching
Bargaining Power of Suppliers
Second-Degree Price Discrimination
46. An oligopoly in which the firms produce a differentiated product
Inefficiency
Differentiated oligopoly
Cross-subsidy pricing
Marginal Revenue
47. When something can be consumed without reducing the benefits available for subsequent consumption; can be consumed without supporting rivalry between consumers
Concentration Ratio
Sequential-move game
Non-rivalrous consumption
Equilibrium
48. When firms limit production and raise prices in a way that raises each others' profits - even though they have not made any formal agreement
Sequential-move game
The Threat from Potential Entrants Firms
Tacit collusion
Four-firm concentration ratio
49. Specific assets - Economies of scale - Excess capacity - Reputation effects
Perfect Competitor Characteristics
Present Value (PV)
Perfect Competition Barriers to Entry
Joint Venture
50. Single firm is sole producer of a product for which there are no close substitutes
Pure monopoly
Perfect Competition Barriers to Entry
Maximizing profit in Oligopoly games
Double marginalization