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. Using advertising and other means to try to increase a firm's sales






2. 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






3. Marginal cost curve above average variable cost - P* = SRMC






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






5. 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






6. A situation in which no one wants to change his or her behavior






7. 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.)






8. 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)






9. An equilibrium in a game in which players do not cooperate but pursue their own self-interest






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






11. 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






12. Single firm is sole producer of a product for which there are no close substitutes






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






14. Game in which one player makes a move after observing the other player's move






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






16. 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






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






18. Revenue-Costs






19. When no one firm has a monopoly - but producers nonetheless realize that they can affect market prices. Firms compete but possess market power






20. Actions taken by a firm to achieve a goal - such as maximizing profits






21. When firms make decisions that make every firm better off than in a noncooperative Nash equilibrium






22. The smallest quantity at which the average cost curve reaches its minimum






23. Ranks industries according to how much social welfare would improve if the output in an industry were increased by a small amount






24. Price Sensitive






25. The reward received by a player in a game - such as the profit earned by an oligopolist






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






27. 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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28. The exclusive right to a product for a period of 20 years from the date the product is invented






29. 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






30. 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






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






32. An attempt by a firm to convince buyers that its product is different from the products of other firms in the industry






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






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






35. 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






36. 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)






37. Industry in which (1) few firms serving many customers; (2) firms produce identical products t constant marginal cost; (3) firms compete in price and react optimally to competitor's prices; (4) consumers have perfect information and here are no trans






38. A table that shows the payoffs that each firm earns from every combination of strategies by the firms






39. 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






40. Operates like the alleged Mafia. Region division of the market among the firms in the industry






41. Occurs when a firm produces output - whatever its level - at a higher cost than is necessary to produce it






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






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






44. An establishment firm commits to setting price below the profit-maximizing level to prevent entry






45. 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






46. Pricing strategy in which higher prices are charged during peak hours than during off-peak hours






47. A situation in which competing firms must make their individual decisions without knowing the decisions of their rivals






48. Pricing strategy in which a firm optimally sets the internal price at which an upstream division wells an input to a downstream division






49. 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






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