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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. Each seller can sell all he wants to sell at the going price - Buyers and sellers are price takers - The goods offered by the different sellers are largely the same - The actions of any single buyer or seller will have a negligible impact on the m
Competitive market
Payoff table
Dominant strategy equilibrium
Business strategy
2. When firms make decisions that make every firm better off than in a noncooperative Nash equilibrium
Cooperation
Examples of Oligopoly
Bertrand oligopoly
Cheating
3. An establishment firm commits to setting price below the profit-maximizing level to prevent entry
Network effects
Limit pricing
Equilibrium
Interdependence
4. 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
Perfect Competition Barriers to Entry
Monopolistic Characteristics:
Socially optimal price
5. When something can be consumed without reducing the benefits available for subsequent consumption; can be consumed without supporting rivalry between consumers
Non-rivalrous consumption
Examples of Oligopoly
Horizontal Merger/Integration
Contestable market
6. Pricing strategy in which a firm intentionally varies its price in an attempt to "hide" price information from consumers and rivals
Profit
Randomized pricing
Open Collusion
Inter-industry competition
7. Keeps the price just where it is to maximize profit
Cutthroat Competition
Rent-seeking behavior
Bargaining Power of Suppliers
Trigger strategy
8. 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
Secure strategy
Bertrand oligopoly
Perfect Competition Short Run Supply
Extensive-form game
9. A situation in which a change in price strategy by one firm affects sales and profits of another
Mutual interdependence
Strategy
Cooperation
Normal-form game
10. Price Sensitive
Repeated game
High Price Elasticity
Perfect Competitor Making a Profit
Limit pricing
11. Specific assets - Economies of scale - Excess capacity - Reputation effects
Payoff matrix
Perfect Competition Barriers to Entry
Market Structure
Maximizing profit in Oligopoly games
12. Toothpaste - shampoo - restaurants - banks
Examples of Monopolistic Competition
Marginal Revenue
Primary Sources of Monopolistic Power
Commodity bundling
13. 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
Bertrand oligopoly
Price matching
Two-part pricing
Maximizing profit in Oligopoly games
14. 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
Imperfect competition
Subgame perfect equilibrium
Indefinitely repeated game
Nonprime competition
15. A product's ability to satisfy a large number of consumers at the same time
Simultaneous consumption
Cross-subsidy pricing
Third-Degree Price Discrimination
Price discrimination
16. Cooperation among firms that does not involve an explicit agreement
Patent
Tacit collusion
Trigger strategy
Prisoner's dilemma
17. Produce identical products
Perfect Competitor Characteristics
Cross-subsidy pricing
Non-price competition
Bertrand oligopoly
18. Single seller in an industry - Strong barriers to entry - Profit maximization - faces market demand and sets MR=MC - Unexploited gains from trade
Peak-load pricing
Fair return price
Monopoly (characteristics)
Imperfect competition
19. A measure of market power - the percentage of all sales that is accounted for by the four or eight largest firms in the market
Repeated game
Stackelberg oligopoly
Present Value (PV)
Concentration Ratio
20. Takes Place inside the Mind of the consumer
Product Differentiation
Credible threat
Leader
Sequential-move game
21. The exclusive right to a product for a period of 20 years from the date the product is invented
The Threat from Potential Entrants Firms
Mixed (randomized) strategy
Disappearing invisible hand
Patent
22. The practice of bundling several different products together and selling them at a single "bundle" price
Sequential game
Commodity bundling
Ownership of a Key Input
Simultaneous consumption
23. Involves price-fixing
Concentration Ratio
Open Collusion
Rothschild index
Covert Collusion
24. The practice of charging different prices to consumers for the same good or service
Economies of scale
Third-degree price discrimination
Pure monopoly
Price discrimination
25. Ranks industries according to how much social welfare would improve if the output in an industry were increased by a small amount
Two-part Tariff Method of Pricing
Socially optimal price
Dansby-Willig performance index
Vertical Merger
26. A representation of a game indicating the players - their possible strategies - and the payoffs resulting from alternative strategies
Normal-form game
Perfect Competition Barriers to Entry
Inefficiency
Strategic behavior
27. Actions taken by firms to plan for and react to competition from rival firms
Strategic behavior
Network effects
Perfect Competition Short Run Supply
Trigger strategy
28. A trigger strategy that punishes after an episode of cheating and returns to cooperation if cheating ends
What is game?
Leader
Common knowledge
Tit-for-tat strategy
29. 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
Cournot equilibrium
First-mover advantage
Common knowledge
Oligopoly
30. A situation in which no one wants to change his or her behavior
Follower
Equilibrium
Barrier to entry
Perfect Competition Barriers to Entry
31. Demand line is above ATC curve
Perfect Competitor Making a Profit
Tacit collusion
Stackelberg oligopoly
Monopolistic Characteristics:
32. 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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33. A situation in which competing firms must make their individual decisions without knowing the decisions of their rivals
Differentiated oligopoly
Monopolistic Characteristics:
Simultaneous decision games
Cournot equilibrium
34. A merger between firms who have a buyer/supplier relationship. Example: BF Goodrich merging with rubber plantations
Leader
Vertical Merger
Repeated game
Payoff matrix
35. When no one firm has a monopoly - but producers nonetheless realize that they can affect market prices. Firms compete but possess market power
Imperfect competition
No cooperative equilibrium
Merger
Monopolistic Characteristics:
36. Pricing strategy in which higher prices are charged during peak hours than during off-peak hours
Market
Peak-load pricing
Present Value (PV)
Cross-subsidy pricing
37. 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
Cutthroat Competition
Price war
Four-firm concentration ratio
Contestable market
38. Competition based on factors that are not related to price - such as product quality - service and financing - business location - and reputation
Vertical Merger
Double marginalization
Horizontal Merger/Integration
Nonprime competition
39. The price that is low enough to deter entry
Limit price
Cournot equilibrium
Cooperative equilibrium
Nash equilibrium
40. Actions taken by a firm to achieve a goal - such as maximizing profits
Business strategy
Perfect Competition Barriers to Entry
Imperfect competition
Payoff table
41. A strategy that is contingent on the past play of a game and ion which some particular past action "triggers" a different action by a player
First-Degree Price Discrimination (Perfect)
Trigger strategy
Simultaneous-move game
Cutthroat Competition
42. A situation in which all decision makers know the payoff table - and they believe all other decision makers also know the payoff table
Perfect Competitor Characteristics
Monopolistic Characteristics:
Covert Collusion
Common knowledge
43. When the decisions of two or more firms significantly affect each others' profits
Business strategy
Interdependence
Perfect Competition Short Run Supply
Pure monopoly
44. 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
Open Collusion
Perfect Competition (characteristics)
Transfer pricing
Dominant firm oligopoly
45. Where a firm can charge different groups of consumers different prices for the same product. Example: student or senior discounts
Cross-subsidy pricing
Third-degree price discrimination
Dominant strategy equilibrium
Minimum efficient scale (full capacity)
46. 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
Rothschild index
Business strategy
Patent
Pure monopoly
47. 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
One-shot game
Bargaining Power of Buyers
Limit pricing
Tacit collusion
48. When a manager makes a noncooperative decision
Cheating
Perfect Competition Long Run Supply
Limit pricing
Non-cooperative equilibrium
49. Variations on one good so that a firm can increase market sharea
Inter-industry competition
Prisoners' dilemma
Fair return price
Brand Multiplication
50. When managers are able to charge each consumer their reservation price. Examples are car and home sales
Limit pricing
First-Degree Price Discrimination (Perfect)
Perfect Competitor Making a Profit
Four-firm concentration ratio