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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. Takes Place inside the Mind of the consumer
Product Differentiation
Open Collusion
Price discrimination
Cournot equilibrium
2. In game theory - game where parties make their moves in turn - one party making the first move followed by the other
Dominant firm oligopoly
Minimum efficient scale (full capacity)
Rothschild index
Sequential game
3. A strategy or action that always provides the best outcome no matter what decisions rivals make
Bargaining Power of Suppliers
Dominant strategy
Cournot oligopoly
Implicit Collusion
4. Game in which each player makes decisions without knowledge of the other player's decisions
Oligopoly
Secure strategy
Simultaneous-move game
Payoff table
5. 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
Subgame perfect equilibrium
Monopolistic Competition
First-Degree Price Discrimination (Perfect)
Examples of Monopolistic Competition
6. An agreement among firms in a market about quantities to produce or prices to charge in attempts to limit competition
Collusion
Mixed (randomized) strategy
Mutual interdependence
High Price Elasticity
7. Produce identical products
Mutual Interdependence
Disappearing invisible hand
Cournot oligopoly
Perfect Competitor Characteristics
8. Maximize economic profit by producing the quantity at which MC=MR
Bargaining Power of Suppliers
Pure monopoly
Maximizing profit in Oligopoly games
Sweezy oligopoly
9. Price of a product that enables its producer to obtain a normal profit & that is equal to the ATC of producing it
Fair return price
Non-price competition
Tacit collusion
Homogenous oligopoly
10. (1) Economies of Scale; (2) Economies of Scope; (3) Cost Complementarity; and (4)Patents & Other Legal Barriers
Limit pricing
Oligopoly
Profit
Primary Sources of Monopolistic Power
11. 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
Kinked-demand curve
Primary Sources of Monopolistic Power
Profit
Trigger strategy
12. 2 firms - simplest case in an oligopoly. Profits higher if limiting their production
Non-cooperative equilibrium
Rothschild index
Import competition
Duopoly
13. 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
Perfect Competition (characteristics)
Normal-form game
Reservation Price
Bertrand oligopoly
14. An oligopoly in which the firms produce a standardized product
Homogenous oligopoly
Commodity bundling
Dominant firm oligopoly
Payoff matrix
15. Cooperation among firms that does not involve an explicit agreement
Rothschild index
Tacit collusion
Unbalanced Oligopoly
Ownership of a Key Input
16. If many firms can supply an input and the input is not specialized - the suppliers are unlikely to have the bargaining power to limit a firm's profits
Kinked demand curve model
Herfindahl-Hirschman index (HHI)
Bargaining Power of Suppliers
Dansby-Willig performance index
17. In game theory - a decision rule that describes the actions a player will take at each decision point
Strategy
Concentration Ratio
Double marginalization
Empty threat
18. Marginal cost curve above average variable cost - P* = SRMC
Ownership of a Key Input
Secure strategy
Merger
Perfect Competition Short Run Supply
19. 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
Strategy
Cournot oligopoly
Normal-form game
Non-cooperative equilibrium
20. 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
What is game?
Conglomerate Merger
Product differentiation
Contestable market
21. Ignoring the effects of their actions on each others' profits
Differentiated oligopoly
Rent-seeking behavior
Non-cooperative behavior
Contestable market
22. 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
Limit pricing
Follower
Sweezy oligopoly
23. When firms make decisions that make every firm better off than in a noncooperative Nash equilibrium
Cooperation
Nash equilibrium
Block pricing
Secure strategy
24. Using advertising and other means to try to increase a firm's sales
Two-part Tariff Method of Pricing
Bargaining Power of Suppliers
Non-price competition
Lerner index
25. Keeps the price just where it is to maximize profit
Non-cooperative equilibrium
Cutthroat Competition
Limit pricing
Price Leadership
26. A merger of firms in unrelated industries. Example: If Purina Dow Chow merged with Pampers Diaper Company
Conglomerate Merger
Normal-form game
Product differentiation
Import competition
27. A table that shows the payoffs for every possible action by each player for every possible action by the other player
Tit-for-tat strategy
Minimum efficient scale (full capacity)
Payoff matrix
Basis for Product Differentiation
28. If buyers have enough bargaining power - they can insist on lower prices - higher-quality products - or additional services
Joint Venture
Duopoly
Strategic behavior
Bargaining Power of Buyers
29. An equilibrium in a game in which players do not cooperate but pursue their own self-interest
No cooperative equilibrium
Nonprime competition
Cross-subsidy pricing
Duopoly
30. In game theory - a statement of harmful intent easily dismissed by recipient because threat not considered believable
Monopolistic Characteristics:
Nash equilibrium
Profit
Empty threat
31. Steel - autos - colas - airlines
Dominant strategy equilibrium
Collusion
Extensive-form game
Examples of Oligopoly
32. Revenue-Costs
Perfect Competition Barriers to Entry
Cooperative equilibrium
Primary Sources of Monopolistic Power
Profit
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
Bertrand oligopoly
Monopolistic Characteristics:
Inter-industry competition
Mutual Interdependence
34. 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
Dominant strategy
Socially optimal price
Tit-for-tat strategy
Block pricing
35. A measure of market power - the percentage of all sales that is accounted for by the four or eight largest firms in the market
Economies of scale
Normal-form game
Concentration Ratio
Maximizing profit in Oligopoly games
36. The actions by persons - firms - or unions to gain special benefits from government at taxpayer's or someone else's expense
Mixed (randomized) strategy
Non-cooperative equilibrium
Trigger strategy
Rent-seeking behavior
37. The competition that domestic firms encounter from the products and services of foreign producers
Profit
Rothschild index
Import competition
Sweezy oligopoly
38. Many buyers and sellers - product homogeneity - low cost and accurate information - free entry and exit - best regarded as a benchmark
Horizontal Merger/Integration
Implicit Collusion
Kinked-demand curve
Perfect Competition (characteristics)
39. An establishment firm commits to setting price below the profit-maximizing level to prevent entry
No cooperative equilibrium
Limit pricing
Secure strategy
One-shot game
40. Pricing strategy in which a firm optimally sets the internal price at which an upstream division wells an input to a downstream division
Perfect Competition Long Run Supply
No cooperative equilibrium
Transfer pricing
Kinked-demand curve
41. Pricing strategy in which higher prices are charged during peak hours than during off-peak hours
Tacit collusion
Commodity bundling
Peak-load pricing
Rothschild index
42. A strategy that guarantees the highest payoff given the worst possible scenario
Equilibrium
Sequential game
Secure strategy
No cooperative equilibrium
43. First firm to set its output (Stackelberg's model)
Block pricing
Minimum efficient scale (full capacity)
Leader
Herfindahl-Hirschman index (HHI)
44. The price that is low enough to deter entry
Price war
Credible threat
Two-part pricing
Limit price
45. 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.)
Payoff
Perfect Competition Barriers to Entry
Monopolistic Characteristics:
Economies of scale
46. When a manager makes a noncooperative decision
Competitive market
Business strategy
Nash equilibrium
Cheating
47. 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"
Competitive market
Examples of Oligopoly
Covert Collusion
Credible threat
48. A condition describing a set of strategies in which no player can improve their payoff by unilaterally changing their own strategy given the other player's strategy
Nash equilibrium
Kinked demand curve model
Payoff
Simultaneous-move game
49. An attempt by a firm to convince buyers that its product is different from the products of other firms in the industry
Equilibrium
Sequential game
Business strategy
Product differentiation
50. A situation in which neither firm has incentive to change its output given the other firm's output
Fair return price
Price war
Cournot equilibrium
Dominant strategy equilibrium