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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. A combination of two or more companies into one company
Merger
Patent
Subgame perfect equilibrium
Present Value (PV)
2. A strategy that guarantees the highest payoff given the worst possible scenario
Secure strategy
Rothschild index
Mixed (randomized) strategy
High Price Elasticity
3. Ignoring the effects of their actions on each others' profits
Cournot equilibrium
Herfindahl-Hirschman index (HHI)
Market Structure
Non-cooperative behavior
4. The reward received by a player in a game - such as the profit earned by an oligopolist
Bertrand oligopoly
Competitive market
Payoff
Limit pricing
5. Pricing strategy in which higher prices are charged during peak hours than during off-peak hours
Homogenous oligopoly
Peak-load pricing
Market
Dominant firm oligopoly
6. A situation where one firm is able to provide a service at a lower cost than could several competing firms
Basis for Product Differentiation
Duopoly
Cross-subsidy pricing
Natural Monopoly (local phone or electric company)
7. Long-run marginal cost curve above long-run average cost
Perfect Competitor Making a Profit
Examples of Oligopoly
Perfect Competition Long Run Supply
Monopolistic Characteristics:
8. The maximum price that a buyer is willing to pay for a good - or the minimum price that a seller will accept
Third-Degree Price Discrimination
Prisoners' dilemma
Economies of scale
Reservation Price
9. When managers are able to charge each consumer their reservation price. Examples are car and home sales
Non-cooperative behavior
First-Degree Price Discrimination (Perfect)
Perfect Competition Barriers to Entry
Perfect Competition Short Run Supply
10. An establishment firm commits to setting price below the profit-maximizing level to prevent entry
Limit pricing
Simultaneous consumption
Payoff matrix
Ownership of a Key Input
11. When a manager makes a noncooperative decision
Natural Monopoly (local phone or electric company)
Cheating
Duopoly
Herfindahl-Hirschman index (HHI)
12. A trigger strategy that punishes after an episode of cheating and returns to cooperation if cheating ends
Secure strategy
Pure monopoly
Limit pricing
Tit-for-tat strategy
13. Pricing strategy in which a firm intentionally varies its price in an attempt to "hide" price information from consumers and rivals
Herfindahl-Hirschman index (HHI)
Limit price
Unbalanced Oligopoly
Randomized pricing
14. 1/(1+i)n
Extensive-form game
Unbalanced Oligopoly
Pure monopoly
Present Value (PV)
15. The exclusive right to a product for a period of 20 years from the date the product is invented
Import competition
Patent
Randomized pricing
Implicit Collusion
16. A strategy or action that always provides the best outcome no matter what decisions rivals make
Prisoner's dilemma
Dominant strategy
Transfer pricing
Duopoly
17. Takes Place inside the Mind of the consumer
Product Differentiation
Vertical Merger
Credible threat
Sequential-move game
18. The practice of charging different prices to consumers for the same good or service
Contestable market
Barrier to entry
Price discrimination
Leader
19. In game theory - game where parties make their moves in turn - one party making the first move followed by the other
Cheating
Sequential game
Transfer pricing
Two-part pricing
20. An oligopoly in which the firms produce a differentiated product
Third-degree price discrimination
Credible threat
Differentiated oligopoly
Prisoner's dilemma
21. Set marginal cost for the cartel equal to marginal revenue for the cartel; -cartel's marginal cost curve is the horizontal sum of the MC curves of the two firms; -Marginal revenue curve is like that of a monopoly
Finding profit for oligopoly games
Sequential-move game
Price matching
Non-cooperative equilibrium
22. 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
Unbalanced Oligopoly
Joint Venture
Dominant firm oligopoly
Maximizing profit in Oligopoly games
23. Rules - strategies - payoffs - outcomes
High Price Elasticity
Two-part Tariff Method of Pricing
Simultaneous-move game
What is game?
24. Ranks industries according to how much social welfare would improve if the output in an industry were increased by a small amount
Four-firm concentration ratio
Dansby-Willig performance index
Fair return price
Normal-form game
25. Simultaneous move game that is not repeated
Concentration Ratio
Cross-subsidy pricing
Stackelberg oligopoly
One-shot game
26. Sellers can identify different types of customers and offer each a different price. Examples are special prices for students or the elderly
Leader
Third-Degree Price Discrimination
Primary Sources of Monopolistic Power
Bargaining Power of Buyers
27. 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
Cournot equilibrium
Leader
Rent-seeking behavior
Extensive-form game
28. An attempt by a firm to convince buyers that its product is different from the products of other firms in the industry
Tacit collusion
Product differentiation
Second-Degree Price Discrimination
Examples of Oligopoly
29. A table that shows the payoffs that each firm earns from every combination of strategies by the firms
Payoff matrix
Sequential game
Import competition
Equilibrium
30. Keeps the price just where it is to maximize profit
Cooperation
Business strategy
Tit-for-tat strategy
Cutthroat Competition
31. 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
Perfect Competition Barriers to Entry
Monopolistic Competition
Covert Collusion
Examples of Monopolistic Competition
32. Both players have dominant strategies and play them
Payoff matrix
Dominant strategy equilibrium
Price discrimination
Follower
33. An equilibrium in a game in which players cooperate to increase their mutual payoff
Cooperative equilibrium
Maximizing profit in Oligopoly games
Conglomerate Merger
Price discrimination
34. When the decisions of two or more firms significantly affect each others' profits
Rent-seeking behavior
Mutual interdependence
Interdependence
Bargaining Power of Suppliers
35. Increases in the value of a product to each user - including existing users - as the total number of users rises
Third-Degree Price Discrimination
Network effects
Non-price competition
Mixed (randomized) strategy
36. Many buyers and sellers - product homogeneity - low cost and accurate information - free entry and exit - best regarded as a benchmark
First-Degree Price Discrimination (Perfect)
Repeated game
Monopolistic Characteristics:
Perfect Competition (characteristics)
37. When firms limit production and raise prices in a way that raises each others' profits - even though they have not made any formal agreement
Two-part Tariff Method of Pricing
Tacit collusion
Socially optimal price
Equilibrium
38. The situation when a firm's long-run average costs fall as it increases output
Perfect Competition (characteristics)
High Price Elasticity
Economies of scale
Examples of Oligopoly
39. First firm to set its output (Stackelberg's model)
Prisoners' dilemma
Herfindahl-Hirschman index (HHI)
Leader
Examples of Monopolistic Competition
40. When firms make decisions that make every firm better off than in a noncooperative Nash equilibrium
Cooperation
Rent-seeking behavior
Payoff matrix
Differentiated oligopoly
41. 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
Rothschild index
Disappearing invisible hand
Interdependence
Competitive market
42. If buyers have enough bargaining power - they can insist on lower prices - higher-quality products - or additional services
Concentration Ratio
Open Collusion
Payoff table
Bargaining Power of Buyers
43. A firm whose price decisions are tacitly accepted and followed by others in the industry
Repeated game
Market
Perfect Competitor Making a Profit
Price Leadership
44. Face competition from companies that currently are not in the market but might enter
The Threat from Potential Entrants Firms
Minimum efficient scale (full capacity)
Trigger strategy
Dominant strategy equilibrium
45. 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
Socially optimal price
Tit-for-tat strategy
Rothschild index
Transfer pricing
46. An industry where (1) there are few firms serving many customers; (2) firms produce differentiated products; (3) each firm believes rivals will respond to price reductions but will not follow price increases; and (4) barriers to entry exist
Kinked-demand curve
Rent-seeking behavior
Sweezy oligopoly
Finding profit for oligopoly games
47. Rival who sets its output after the leader (Stackelberg's model)
Undifferentiated
Examples of Oligopoly
Homogenous oligopoly
Follower
48. A situation in which neither firm has incentive to change its output given the other firm's output
Common knowledge
Follower
Repeated game
Cournot equilibrium
49. 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
Simultaneous decision games
Sequential game
Lerner index
Disappearing invisible hand
50. 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
Bertrand oligopoly
Cutthroat Competition
Sweezy oligopoly
Non-cooperative equilibrium