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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. Sellers can identify different types of customers and offer each a different price. Examples are special prices for students or the elderly
Natural Monopoly (local phone or electric company)
Product Differentiation
Differentiated oligopoly
Third-Degree Price Discrimination
2. The price that is low enough to deter entry
Cheating
Prisoner's dilemma
Limit price
Monopoly (characteristics)
3. Pricing strategy in which a firm intentionally varies its price in an attempt to "hide" price information from consumers and rivals
Randomized pricing
Merger
Disappearing invisible hand
Monopolistic Characteristics:
4. 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
Market
Third-Degree Price Discrimination
Kinked-demand curve
Reservation Price
5. An index of market concentration. Sum of squared market shares of all the firms in the industry times 10K HHI=10 - 000Σwi2
Ownership of a Key Input
Minimum efficient scale (full capacity)
Nash equilibrium
Herfindahl-Hirschman index (HHI)
6. 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
Herfindahl-Hirschman index (HHI)
Rent-seeking behavior
Limit pricing
Finding profit for oligopoly games
7. 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
Double marginalization
Cooperative equilibrium
Examples of Monopolistic Competition
Bargaining Power of Buyers
8. A situation where one firm is able to provide a service at a lower cost than could several competing firms
Sequential-move game
Monopolistic Characteristics:
First-mover advantage
Natural Monopoly (local phone or electric company)
9. Many buyers and sellers - product homogeneity - low cost and accurate information - free entry and exit - best regarded as a benchmark
Fair return price
Perfect Competition (characteristics)
Indefinitely repeated game
Open Collusion
10. In game theory - benefit obtained by party that moves first in a sequential game
Lerner index
Common knowledge
First-mover advantage
What is game?
11. A situation in which neither firm has incentive to change its output given the other firm's output
Barrier to entry
Cheating
Cournot equilibrium
Inter-industry competition
12. The exclusive right to a product for a period of 20 years from the date the product is invented
Equilibrium
Patent
Sequential-move game
Subgame perfect equilibrium
13. 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"
Non-price competition
Credible threat
Network effects
Subgame perfect equilibrium
14. Takes Place inside the Mind of the consumer
Subgame perfect equilibrium
Product Differentiation
Secure strategy
Concentration Ratio
15. Game in which each player makes decisions without knowledge of the other player's decisions
Two-part Tariff Method of Pricing
Double marginalization
Normal-form game
Simultaneous-move game
16. Pricing strategy in which a firm optimally sets the internal price at which an upstream division wells an input to a downstream division
Transfer pricing
Equilibrium
Sweezy oligopoly
Limit price
17. A combination of two or more companies into one company
Merger
Equilibrium
Patent
Market Structure
18. A strategy in which a firm advertises a price and a promise to match any lower prices offered by a competitor
Prisoners' dilemma
Transfer pricing
Price matching
Network effects
19. Multiple firms make the same pricing decisions even though they have not explicitly consulted with each other
Economies of scale
Contestable market
Implicit Collusion
Strategy
20. A measure of market power - the percentage of all sales that is accounted for by the four or eight largest firms in the market
Nonprime competition
Socially optimal price
Stackelberg oligopoly
Concentration Ratio
21. The maximum price that a buyer is willing to pay for a good - or the minimum price that a seller will accept
Bertrand oligopoly
Inefficiency
Limit price
Reservation Price
22. Physical differences - Convenience - Ambience - Reputations - Appeals to vanity - Unconscious fears and desires - Snob appeal - Customized products
Limit price
Perfect Competition Long Run Supply
Merger
Basis for Product Differentiation
23. 1/(1+i)n
Natural Monopoly (local phone or electric company)
Payoff matrix
Present Value (PV)
Open Collusion
24. 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
Ownership of a Key Input
Price matching
Limit price
Contestable market
25. Simultaneous move game that is not repeated
Examples of Oligopoly
Product differentiation
Dominant firm oligopoly
One-shot game
26. A strategy that guarantees the highest payoff given the worst possible scenario
Perfect Competition Barriers to Entry
Dominant strategy equilibrium
Dominant strategy
Secure strategy
27. 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
Cournot oligopoly
Primary Sources of Monopolistic Power
Leader
28. 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
Tacit collusion
High Price Elasticity
Payoff table
Lerner index
29. 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
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30. A table that shows the payoffs that each firm earns from every combination of strategies by the firms
Bargaining Power of Buyers
Horizontal Merger/Integration
Unbalanced Oligopoly
Payoff matrix
31. 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.)
Contestable market
Mutual interdependence
Sequential-move game
Monopolistic Characteristics:
32. Ignoring the effects of their actions on each others' profits
Non-cooperative behavior
Undifferentiated
Brand Multiplication
Perfect Competitor Characteristics
33. A trigger strategy that punishes after an episode of cheating and returns to cooperation if cheating ends
Tit-for-tat strategy
Finding profit for oligopoly games
Stackelberg oligopoly
Present Value (PV)
34. Maximize economic profit by producing the quantity at which MC=MR
Differentiated oligopoly
Follower
Maximizing profit in Oligopoly games
Extensive-form game
35. A business arrangement in which two or more firms undertake a specific economic activity together. Once the activity is over - the firms go their own way
Simultaneous consumption
Product differentiation
Joint Venture
Lerner index
36. Revenue-Costs
Brand Multiplication
Profit
Equilibrium
Present Value (PV)
37. When the decisions of two or more firms significantly affect each others' profits
Mutual Interdependence
Interdependence
High Price Elasticity
Tacit collusion
38. A firm whose price decisions are tacitly accepted and followed by others in the industry
Tacit collusion
Price Leadership
Imperfect competition
Dominant strategy equilibrium
39. An oligopoly in which the firms produce a standardized product
Conglomerate Merger
Non-price competition
Homogenous oligopoly
Equilibrium
40. When a manager makes a noncooperative decision
Disappearing invisible hand
Third-degree price discrimination
Cheating
Collusion
41. Both players have dominant strategies and play them
Perfect Competition Barriers to Entry
Finding profit for oligopoly games
Ownership of a Key Input
Dominant strategy equilibrium
42. When firms limit production and raise prices in a way that raises each others' profits - even though they have not made any formal agreement
Tacit collusion
Trigger strategy
Dominant strategy equilibrium
Stackelberg oligopoly
43. In game theory - a decision rule that describes the actions a player will take at each decision point
Strategy
Finding profit for oligopoly games
Inter-industry competition
Profit
44. The actions by persons - firms - or unions to gain special benefits from government at taxpayer's or someone else's expense
Inter-industry competition
Vertical Merger
Rent-seeking behavior
Conglomerate Merger
45. Occurs when a firm produces output - whatever its level - at a higher cost than is necessary to produce it
Second-Degree Price Discrimination
Transfer pricing
Inefficiency
Joint Venture
46. 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
Market Structure
Cournot equilibrium
Oligopoly
Third-Degree Price Discrimination
47. A pricing strategy in which profits gained from the sale of one product are used to subsidize sales of a related product
Strategy
Cross-subsidy pricing
Competitive market
Non-rivalrous consumption
48. An agreement among firms in a market about quantities to produce or prices to charge in attempts to limit competition
Implicit Collusion
First-Degree Price Discrimination (Perfect)
Collusion
Leader
49. Pricing strategy in which higher prices are charged during peak hours than during off-peak hours
Peak-load pricing
Transfer pricing
Credible threat
No cooperative equilibrium
50. Demand line is above ATC curve
Perfect Competitor Making a Profit
High Price Elasticity
Sequential game
Product differentiation