Test your basic knowledge |

Business Competition

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. An oligopoly in which the firms produce a standardized product






2. All firms and individuals willing and able to buy or sell a particular product






3. 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






4. The practice of charging different prices to consumers for the same good or service






5. 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






6. 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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7. 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






8. 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.)






9. Keeps the price just where it is to maximize profit






10. A representation of a game indicating the players - their possible strategies - and the payoffs resulting from alternative strategies






11. 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






12. Specific assets - Economies of scale - Excess capacity - Reputation effects






13. Involves price-fixing






14. In game theory - a game that is played again sometime after the previous game ends






15. (1) Economies of Scale; (2) Economies of Scope; (3) Cost Complementarity; and (4)Patents & Other Legal Barriers






16. 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






17. Toothpaste - shampoo - restaurants - banks






18. 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






19. A strategy whereby a player randomizes over two or more available actions in order to keep rivals from being able to predict his action






20. A situation where one firm is able to provide a service at a lower cost than could several competing firms






21. Intense competition in which competitors cut retail prices to gain business--oligopolistic competition






22. A situation in which all decision makers know the payoff table - and they believe all other decision makers also know the payoff table






23. 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






24. When firms limit production and raise prices in a way that raises each others' profits - even though they have not made any formal agreement






25. An agreement among firms in a market about quantities to produce or prices to charge in attempts to limit competition






26. An oligopoly in which the sales of the leading (top four) firms are distributed unevenly among them






27. A table that shows the payoffs for every possible action by each player for every possible action by the other player






28. Face competition from companies that currently are not in the market but might enter






29. Rival who sets its output after the leader (Stackelberg's model)






30. Maximize economic profit by producing the quantity at which MC=MR






31. Pricing strategy in which a firm intentionally varies its price in an attempt to "hide" price information from consumers and rivals






32. When the decisions of two or more firms significantly affect each others' profits






33. First firm to set its output (Stackelberg's model)






34. The situation that exists when two or more groups need each other and must depend on each other to accomplish a goal that is important to each of them






35. Physical differences - Convenience - Ambience - Reputations - Appeals to vanity - Unconscious fears and desires - Snob appeal - Customized products






36. Demand line is above ATC curve






37. Ignoring the effects of their actions on each others' profits






38. The competition for sales between the products of one industry and the products of another industry






39. A strategy that guarantees the highest payoff given the worst possible scenario






40. A merger between firms who have a buyer/supplier relationship. Example: BF Goodrich merging with rubber plantations






41. Multiple firms make the same pricing decisions even though they have not explicitly consulted with each other






42. A measure of market power - the percentage of all sales that is accounted for by the four or eight largest firms in the market






43. 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






44. Takes Place inside the Mind of the consumer






45. A game that is played over and over again forever and in which players receive payoffs during each play of the game






46. 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






47. When managers are able to charge each consumer their reservation price. Examples are car and home sales






48. In game theory - a decision rule that describes the actions a player will take at each decision point






49. Both players have dominant strategies and play them






50. A merger between two firms in the same industry. Example: 2004 K-Mart merged with Sears