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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. 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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2. 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
No cooperative equilibrium
Vertical Merger
Price discrimination
Oligopoly
3. The actions by persons - firms - or unions to gain special benefits from government at taxpayer's or someone else's expense
Non-rivalrous consumption
Mutual interdependence
Equilibrium
Rent-seeking behavior
4. An establishment firm commits to setting price below the profit-maximizing level to prevent entry
Market Structure
Limit pricing
Interdependence
Simultaneous-move game
5. The smallest quantity at which the average cost curve reaches its minimum
Minimum efficient scale (full capacity)
Disappearing invisible hand
Empty threat
Homogenous oligopoly
6. Single seller in an industry - Strong barriers to entry - Profit maximization - faces market demand and sets MR=MC - Unexploited gains from trade
Profit
Homogenous oligopoly
Monopoly (characteristics)
Dominant strategy
7. 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
Monopolistic Characteristics:
Lerner index
Prisoners' dilemma
8. The physical characteristics of the market within which firms interact
Market Structure
Sequential-move game
Transfer pricing
Two-part Tariff Method of Pricing
9. A situation in which a change in price strategy by one firm affects sales and profits of another
High Price Elasticity
Network effects
Mutual interdependence
Perfect Competition Long Run Supply
10. When a manager makes a noncooperative decision
Cheating
Homogenous oligopoly
Product differentiation
Open Collusion
11. Long-run marginal cost curve above long-run average cost
Perfect Competition Long Run Supply
Leader
Two-part Tariff Method of Pricing
Double marginalization
12. A table that shows the payoffs for every possible action by each player for every possible action by the other player
The Threat from Potential Entrants Firms
High Price Elasticity
Payoff matrix
Credible threat
13. A strategy in which a firm advertises a price and a promise to match any lower prices offered by a competitor
Finding profit for oligopoly games
Product Differentiation
Price matching
Patent
14. An oligopoly in which the firms produce a standardized product
Basis for Product Differentiation
Homogenous oligopoly
Equilibrium
Product Differentiation
15. A combination of two or more companies into one company
Subgame perfect equilibrium
Merger
Oligopoly
Herfindahl-Hirschman index (HHI)
16. Involves price-fixing
Covert Collusion
Cross-subsidy pricing
Simultaneous-move game
Examples of Monopolistic Competition
17. Pricing strategy in which a firm intentionally varies its price in an attempt to "hide" price information from consumers and rivals
Market
Randomized pricing
Bargaining Power of Buyers
Perfect Competition (characteristics)
18. A strategy that guarantees the highest payoff given the worst possible scenario
Secure strategy
Inter-industry competition
Merger
Perfect Competition Barriers to Entry
19. 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
Kinked demand curve model
Bargaining Power of Buyers
Non-cooperative equilibrium
Implicit Collusion
20. One large firm that has a significant cost advantage over many other - smaller competing firms; -the large firm operates as a monopoly: setting price and output to maximize profit; -the small firms act as perfect competitors: taking as given the mar
Competitive market
Dominant firm oligopoly
Primary Sources of Monopolistic Power
High Price Elasticity
21. An equilibrium in a game in which players cooperate to increase their mutual payoff
Secure strategy
Stackelberg oligopoly
Cooperative equilibrium
Simultaneous consumption
22. Multiple firms make the same pricing decisions even though they have not explicitly consulted with each other
Dominant firm oligopoly
Third-degree price discrimination
Bargaining Power of Suppliers
Implicit Collusion
23. Both players have dominant strategies and play them
Monopoly (characteristics)
Dominant strategy equilibrium
Dansby-Willig performance index
Conglomerate Merger
24. Single firm is sole producer of a product for which there are no close substitutes
Market Structure
Tacit collusion
Economies of scale
Pure monopoly
25. 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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26. In game theory - a decision rule that describes the actions a player will take at each decision point
Unbalanced Oligopoly
Dansby-Willig performance index
Collusion
Strategy
27. In game theory - game where parties make their moves in turn - one party making the first move followed by the other
No cooperative equilibrium
Sequential game
Payoff matrix
Profit
28. A pricing strategy in which profits gained from the sale of one product are used to subsidize sales of a related product
Cross-subsidy pricing
Empty threat
Mixed (randomized) strategy
Second-Degree Price Discrimination
29. Price Sensitive
Monopolistic Characteristics:
Non-rivalrous consumption
Perfect Competition (characteristics)
High Price Elasticity
30. Operates like the alleged Mafia. Region division of the market among the firms in the industry
Open Collusion
First-Degree Price Discrimination (Perfect)
No cooperative equilibrium
Differentiated oligopoly
31. The maximum price that a buyer is willing to pay for a good - or the minimum price that a seller will accept
Cournot equilibrium
Horizontal Merger/Integration
Reservation Price
Cheating
32. Rules - strategies - payoffs - outcomes
What is game?
Market Structure
Joint Venture
Tit-for-tat strategy
33. 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
Cournot oligopoly
Cheating
Mutual Interdependence
Perfect Competitor Characteristics
34. A situation in which all decision makers know the payoff table - and they believe all other decision makers also know the payoff table
Joint Venture
Limit pricing
Common knowledge
First-mover advantage
35. Cooperation among firms that does not involve an explicit agreement
Non-cooperative equilibrium
Inefficiency
Tacit collusion
Bargaining Power of Buyers
36. Revenue-Costs
Profit
Inefficiency
Kinked demand curve model
Network effects
37. 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
Ownership of a Key Input
Two-part pricing
Leader
Profit
38. 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
Joint Venture
Strategy
Two-part Tariff Method of Pricing
Mutual interdependence
39. Produce identical products
Perfect Competitor Characteristics
Duopoly
Imperfect competition
Tit-for-tat strategy
40. An index of market concentration. Sum of squared market shares of all the firms in the industry times 10K HHI=10 - 000Σwi2
Cross-subsidy pricing
Network effects
Herfindahl-Hirschman index (HHI)
Bargaining Power of Suppliers
41. Actions taken by firms to plan for and react to competition from rival firms
What is game?
Strategic behavior
Commodity bundling
Reservation Price
42. Simultaneous move game that is not repeated
One-shot game
Perfect Competitor Characteristics
Reservation Price
Business strategy
43. 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
Primary Sources of Monopolistic Power
The Threat from Potential Entrants Firms
Monopolistic Characteristics:
Rothschild index
44. The price of a product that results in the most efficient allocation of an economy's resources and that is equal to the marginal cost of the product
Profit
Socially optimal price
Duopoly
Dansby-Willig performance index
45. Identical or substitutable
Undifferentiated
Present Value (PV)
Prisoner's dilemma
Mutual interdependence
46. 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"
Credible threat
Limit pricing
Block pricing
Payoff matrix
47. A measure of market power - the percentage of all sales that is accounted for by the four or eight largest firms in the market
Stackelberg oligopoly
Perfect Competition Short Run Supply
First-mover advantage
Concentration Ratio
48. The situation when a firm's long-run average costs fall as it increases output
Nash equilibrium
Tacit collusion
Simultaneous decision games
Economies of scale
49. A strategy or action that always provides the best outcome no matter what decisions rivals make
Block pricing
Concentration Ratio
Rothschild index
Dominant strategy
50. 2 firms - simplest case in an oligopoly. Profits higher if limiting their production
Business strategy
One-shot game
Import competition
Duopoly