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Business Competition
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Subject
:
business-skills
Instructions:
Answer 50 questions in 15 minutes.
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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 pricing strategy in which profits gained from the sale of one product are used to subsidize sales of a related product
Limit pricing
Simultaneous decision games
Repeated game
Cross-subsidy pricing
2. Both players have dominant strategies and play them
Dominant strategy equilibrium
Four-firm concentration ratio
Economies of scale
Peak-load pricing
3. When no one firm has a monopoly - but producers nonetheless realize that they can affect market prices. Firms compete but possess market power
Third-Degree Price Discrimination
Imperfect competition
Examples of Oligopoly
Cross-subsidy pricing
4. An oligopoly in which the firms produce a differentiated product
Product Differentiation
Price Leadership
Nash equilibrium
Differentiated oligopoly
5. 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
Basis for Product Differentiation
Lerner index
Non-cooperative equilibrium
Joint Venture
6. The actions by persons - firms - or unions to gain special benefits from government at taxpayer's or someone else's expense
Product Differentiation
Non-price competition
Rent-seeking behavior
Cooperation
7. A table that shows the payoffs that each firm earns from every combination of strategies by the firms
Simultaneous consumption
Finding profit for oligopoly games
Payoff matrix
Basis for Product Differentiation
8. The physical characteristics of the market within which firms interact
Cournot equilibrium
Market Structure
Covert Collusion
Cournot oligopoly
9. Single firm is sole producer of a product for which there are no close substitutes
Price war
Common knowledge
Pure monopoly
Prisoner's dilemma
10. Using advertising and other means to try to increase a firm's sales
Non-price competition
Transfer pricing
Undifferentiated
Sequential-move game
11. 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
Tacit collusion
Dominant firm oligopoly
Barrier to entry
Profit
12. 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
Patent
Transfer pricing
Natural Monopoly (local phone or electric company)
Block pricing
13. Demand line is above ATC curve
Marginal Revenue
Perfect Competitor Making a Profit
Secure strategy
Network effects
14. All firms and individuals willing and able to buy or sell a particular product
Market
Monopolistic Competition
Price Leadership
Price matching
15. Pricing strategy in which a firm optimally sets the internal price at which an upstream division wells an input to a downstream division
Examples of Monopolistic Competition
Follower
Monopolistic Competition
Transfer pricing
16. 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
Unbalanced Oligopoly
One-shot game
Kinked demand curve model
Third-Degree Price Discrimination
17. An equilibrium in a game in which players do not cooperate but pursue their own self-interest
Secure strategy
Marginal Revenue
No cooperative equilibrium
Common knowledge
18. Maximize economic profit by producing the quantity at which MC=MR
Maximizing profit in Oligopoly games
Lerner index
Peak-load pricing
Finding profit for oligopoly games
19. A merger of firms in unrelated industries. Example: If Purina Dow Chow merged with Pampers Diaper Company
Third-degree price discrimination
Unbalanced Oligopoly
Conglomerate Merger
First-Degree Price Discrimination (Perfect)
20. Occurs when a firm produces output - whatever its level - at a higher cost than is necessary to produce it
Conglomerate Merger
Inefficiency
Cournot equilibrium
Vertical Merger
21. 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
Mutual Interdependence
Non-cooperative behavior
Perfect Competition Barriers to Entry
Credible threat
22. 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"
Patent
Imperfect competition
Credible threat
Commodity bundling
23. The practice of charging different prices to consumers for the same good or service
Patent
Price Leadership
Price discrimination
Monopolistic Characteristics:
24. A merger between firms who have a buyer/supplier relationship. Example: BF Goodrich merging with rubber plantations
What is game?
Present Value (PV)
Vertical Merger
Monopolistic Competition
25. When firms make decisions that make every firm better off than in a noncooperative Nash equilibrium
Present Value (PV)
Cooperation
Non-cooperative equilibrium
Collusion
26. If buyers have enough bargaining power - they can insist on lower prices - higher-quality products - or additional services
Mutual interdependence
Present Value (PV)
High Price Elasticity
Bargaining Power of Buyers
27. An oligopoly in which the sales of the leading (top four) firms are distributed unevenly among them
Unbalanced Oligopoly
Repeated game
Four-firm concentration ratio
Cournot equilibrium
28. A simpler way to operationalize first-degree price discrimination
Two-part Tariff Method of Pricing
Credible threat
Finding profit for oligopoly games
Cooperative equilibrium
29. Ranks industries according to how much social welfare would improve if the output in an industry were increased by a small amount
Repeated game
Dansby-Willig performance index
Minimum efficient scale (full capacity)
Open Collusion
30. 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
Imperfect competition
The Threat from Potential Entrants Firms
Cournot oligopoly
Subgame perfect equilibrium
31. Simultaneous move game that is not repeated
Brand Multiplication
One-shot game
Reservation Price
Simultaneous consumption
32. Single seller in an industry - Strong barriers to entry - Profit maximization - faces market demand and sets MR=MC - Unexploited gains from trade
Dansby-Willig performance index
Monopoly (characteristics)
Economies of scale
Perfect Competition Long Run Supply
33. Actions taken by a firm to achieve a goal - such as maximizing profits
Prisoners' dilemma
Inefficiency
Fair return price
Business strategy
34. Increases in the value of a product to each user - including existing users - as the total number of users rises
Bertrand oligopoly
Credible threat
Block pricing
Network effects
35. 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
Differentiated oligopoly
Monopolistic Characteristics:
Peak-load pricing
36. A trigger strategy that punishes after an episode of cheating and returns to cooperation if cheating ends
Tit-for-tat strategy
Strategy
Perfect Competition (characteristics)
Commodity bundling
37. Takes Place inside the Mind of the consumer
Minimum efficient scale (full capacity)
Product Differentiation
Patent
Price matching
38. A representation of a game indicating the players - their possible strategies - and the payoffs resulting from alternative strategies
Mutual interdependence
Normal-form game
Price matching
Rent-seeking behavior
39. 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
Two-part pricing
Equilibrium
Cournot equilibrium
Brand Multiplication
40. A merger between two firms in the same industry. Example: 2004 K-Mart merged with Sears
Perfect Competitor Characteristics
Horizontal Merger/Integration
Cutthroat Competition
Bertrand oligopoly
41. 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
Dominant strategy equilibrium
Block pricing
Mutual Interdependence
Monopolistic Competition
42. An index of market concentration. Sum of squared market shares of all the firms in the industry times 10K HHI=10 - 000Σwi2
Repeated game
Herfindahl-Hirschman index (HHI)
Natural Monopoly (local phone or electric company)
Patent
43. 1/(1+i)n
Present Value (PV)
Perfect Competition Barriers to Entry
Homogenous oligopoly
Kinked demand curve model
44. A measure of market power - the percentage of all sales that is accounted for by the four or eight largest firms in the market
Concentration Ratio
Import competition
Tacit collusion
Prisoner's dilemma
45. 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
Bargaining Power of Buyers
Tacit collusion
Payoff table
Limit pricing
46. Toothpaste - shampoo - restaurants - banks
Open Collusion
Bargaining Power of Suppliers
Monopolistic Competition
Examples of Monopolistic Competition
47. A combination of two or more companies into one company
Merger
Cournot equilibrium
First-mover advantage
Equilibrium
48. Identical or substitutable
Limit pricing
Undifferentiated
Minimum efficient scale (full capacity)
Cournot oligopoly
49. The smallest quantity at which the average cost curve reaches its minimum
Strategy
Open Collusion
Minimum efficient scale (full capacity)
Herfindahl-Hirschman index (HHI)
50. A situation in which a change in price strategy by one firm affects sales and profits of another
Mutual interdependence
Socially optimal price
Four-firm concentration ratio
Market
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