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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. 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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2. Keeps the price just where it is to maximize profit
Cutthroat Competition
Mutual Interdependence
Examples of Monopolistic Competition
Two-part pricing
3. 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
Market Structure
Monopoly (characteristics)
Subgame perfect equilibrium
Four-firm concentration ratio
4. A situation in which neither firm has incentive to change its output given the other firm's output
Cournot equilibrium
Double marginalization
Market Structure
Follower
5. A situation in which all decision makers know the payoff table - and they believe all other decision makers also know the payoff table
Concentration Ratio
Simultaneous consumption
Subgame perfect equilibrium
Common knowledge
6. 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
Prisoners' dilemma
Sweezy oligopoly
Limit price
Marginal Revenue
7. 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)
Price matching
Lerner index
First-Degree Price Discrimination (Perfect)
Four-firm concentration ratio
8. The price that is low enough to deter entry
Limit price
Prisoners' dilemma
Differentiated oligopoly
Network effects
9. Price of a product that enables its producer to obtain a normal profit & that is equal to the ATC of producing it
Follower
Perfect Competition Barriers to Entry
Fair return price
Empty threat
10. Rules - strategies - payoffs - outcomes
Perfect Competitor Making a Profit
What is game?
Cheating
Cournot equilibrium
11. A table that shows the payoffs for every possible action by each player for every possible action by the other player
Payoff matrix
Vertical Merger
Joint Venture
Price matching
12. In game theory - benefit obtained by party that moves first in a sequential game
Mutual Interdependence
Examples of Monopolistic Competition
First-mover advantage
Prisoner's dilemma
13. 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
Dominant firm oligopoly
Nonprime competition
Lerner index
14. 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
Reservation Price
Double marginalization
Disappearing invisible hand
Patent
15. A merger between firms who have a buyer/supplier relationship. Example: BF Goodrich merging with rubber plantations
Transfer pricing
Sequential-move game
Peak-load pricing
Vertical Merger
16. An equilibrium in a game in which players cooperate to increase their mutual payoff
Cooperative equilibrium
Perfect Competition Short Run Supply
Joint Venture
Pure monopoly
17. Cooperation among firms that does not involve an explicit agreement
Tacit collusion
Mixed (randomized) strategy
Price matching
Secure strategy
18. In game theory - a statement of harmful intent easily dismissed by recipient because threat not considered believable
Inter-industry competition
Mutual Interdependence
Maximizing profit in Oligopoly games
Empty threat
19. Many buyers and sellers - product homogeneity - low cost and accurate information - free entry and exit - best regarded as a benchmark
Primary Sources of Monopolistic Power
Natural Monopoly (local phone or electric company)
Perfect Competition (characteristics)
Fair return price
20. Where a firm can charge different groups of consumers different prices for the same product. Example: student or senior discounts
Third-degree price discrimination
Four-firm concentration ratio
Strategic behavior
No cooperative equilibrium
21. A firm whose price decisions are tacitly accepted and followed by others in the industry
Disappearing invisible hand
Merger
Maximizing profit in Oligopoly games
Price Leadership
22. Actions taken by a firm to achieve a goal - such as maximizing profits
Price Leadership
Business strategy
Indefinitely repeated game
Extensive-form game
23. Price Sensitive
Peak-load pricing
High Price Elasticity
Leader
Barrier to entry
24. A combination of two or more companies into one company
Inter-industry competition
Maximizing profit in Oligopoly games
Subgame perfect equilibrium
Merger
25. 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
Follower
Extensive-form game
Bargaining Power of Suppliers
First-mover advantage
26. All firms and individuals willing and able to buy or sell a particular product
Market
Four-firm concentration ratio
Brand Multiplication
Secure strategy
27. When firms make decisions that make every firm better off than in a noncooperative Nash equilibrium
Collusion
Pure monopoly
Two-part Tariff Method of Pricing
Cooperation
28. An equilibrium in a game in which players do not cooperate but pursue their own self-interest
No cooperative equilibrium
Randomized pricing
Credible threat
Kinked-demand curve
29. The competition that domestic firms encounter from the products and services of foreign producers
Price discrimination
Present Value (PV)
Import competition
Unbalanced Oligopoly
30. If production of a good requires a particular input - then control of that input can be a barrier to entry
Ownership of a Key Input
Implicit Collusion
Equilibrium
Perfect Competition (characteristics)
31. Operates like the alleged Mafia. Region division of the market among the firms in the industry
Reservation Price
Perfect Competition (characteristics)
Third-Degree Price Discrimination
Open Collusion
32. 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
Profit
Lerner index
Monopolistic Competition
Transfer pricing
33. 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
Profit
Commodity bundling
Market Structure
34. The reward received by a player in a game - such as the profit earned by an oligopolist
Duopoly
Payoff
Fair return price
Undifferentiated
35. Rival who sets its output after the leader (Stackelberg's model)
Import competition
Simultaneous decision games
Market Structure
Follower
36. An oligopoly in which the firms produce a standardized product
Homogenous oligopoly
Cooperative equilibrium
Cournot equilibrium
Collusion
37. Demand line is above ATC curve
Present Value (PV)
Perfect Competitor Making a Profit
Network effects
Rent-seeking behavior
38. If buyers have enough bargaining power - they can insist on lower prices - higher-quality products - or additional services
Extensive-form game
Product Differentiation
Mixed (randomized) strategy
Bargaining Power of Buyers
39. Intense competition in which competitors cut retail prices to gain business--oligopolistic competition
Examples of Oligopoly
Merger
Price war
Covert Collusion
40. Maximize economic profit by producing the quantity at which MC=MR
Maximizing profit in Oligopoly games
Non-price competition
Two-part Tariff Method of Pricing
Perfect Competition Barriers to Entry
41. Physical differences - Convenience - Ambience - Reputations - Appeals to vanity - Unconscious fears and desires - Snob appeal - Customized products
Inefficiency
Non-cooperative behavior
Basis for Product Differentiation
Two-part pricing
42. Different units of a product are sold at different prices. Examples are buying in bulk - or - commodity-bundling
Horizontal Merger/Integration
Second-Degree Price Discrimination
Third-Degree Price Discrimination
Perfect Competition Long Run Supply
43. Multiple firms make the same pricing decisions even though they have not explicitly consulted with each other
Third-degree price discrimination
Commodity bundling
Patent
Implicit Collusion
44. Specific assets - Economies of scale - Excess capacity - Reputation effects
Lerner index
Contestable market
Perfect Competition Barriers to Entry
Fair return price
45. A product's ability to satisfy a large number of consumers at the same time
Perfect Competition Short Run Supply
Simultaneous consumption
Contestable market
Strategy
46. Long-run marginal cost curve above long-run average cost
Perfect Competition Long Run Supply
Non-rivalrous consumption
Equilibrium
Joint Venture
47. 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
Non-cooperative equilibrium
Tit-for-tat strategy
Covert Collusion
Herfindahl-Hirschman index (HHI)
48. An attempt by a firm to convince buyers that its product is different from the products of other firms in the industry
Cournot oligopoly
Strategy
What is game?
Product differentiation
49. Revenue-Costs
Inefficiency
Third-degree price discrimination
Implicit Collusion
Profit
50. A strategy that guarantees the highest payoff given the worst possible scenario
Non-cooperative equilibrium
Secure strategy
Sequential-move game
Two-part Tariff Method of Pricing