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Business Competition

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. 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






2. An equilibrium in a game in which players do not cooperate but pursue their own self-interest






3. An index of market concentration. Sum of squared market shares of all the firms in the industry times 10K HHI=10 - 000Σwi2






4. Game in which each player makes decisions without knowledge of the other player's decisions






5. All firms and individuals willing and able to buy or sell a particular product






6. A strategy whereby a player randomizes over two or more available actions in order to keep rivals from being able to predict his action






7. The percentage of the total industry sales accounted for by the four largest firms in the industry. OUTPUT of 4 largest firms over TOTAL output in industry. C4=(S1+...+S4)/St or (w1+...+w4)






8. In game theory - a game that is played again sometime after the previous game ends






9. 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






10. A trigger strategy that punishes after an episode of cheating and returns to cooperation if cheating ends






11. Actions taken by a firm to achieve a goal - such as maximizing profits






12. Keeps the price just where it is to maximize profit






13. 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






14. Single seller in an industry - Strong barriers to entry - Profit maximization - faces market demand and sets MR=MC - Unexploited gains from trade






15. 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






16. The competition for sales between the products of one industry and the products of another industry






17. Pricing strategy in which higher prices are charged during peak hours than during off-peak hours






18. An oligopoly in which the sales of the leading (top four) firms are distributed unevenly among them






19. 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






20. When firms make decisions that make every firm better off than in a noncooperative Nash equilibrium






21. The physical characteristics of the market within which firms interact






22. 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






23. An establishment firm commits to setting price below the profit-maximizing level to prevent entry






24. 2 firms - simplest case in an oligopoly. Profits higher if limiting their production






25. The reward received by a player in a game - such as the profit earned by an oligopolist






26. A merger of firms in unrelated industries. Example: If Purina Dow Chow merged with Pampers Diaper Company






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






28. A product's ability to satisfy a large number of consumers at the same time






29. A combination of two or more companies into one company






30. In game theory - game where parties make their moves in turn - one party making the first move followed by the other






31. Pricing strategy in which a firm optimally sets the internal price at which an upstream division wells an input to a downstream division






32. 1/(1+i)n






33. An oligopoly in which the firms produce a differentiated product






34. The maximum price that a buyer is willing to pay for a good - or the minimum price that a seller will accept






35. Ranks industries according to how much social welfare would improve if the output in an industry were increased by a small amount






36. Variations on one good so that a firm can increase market sharea






37. A merger between firms who have a buyer/supplier relationship. Example: BF Goodrich merging with rubber plantations






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






39. 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






40. When firms limit production and raise prices in a way that raises each others' profits - even though they have not made any formal agreement






41. 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






42. The practice of bundling several different products together and selling them at a single "bundle" price






43. Physical differences - Convenience - Ambience - Reputations - Appeals to vanity - Unconscious fears and desires - Snob appeal - Customized products






44. A firm whose price decisions are tacitly accepted and followed by others in the industry






45. Occurs when a firm produces output - whatever its level - at a higher cost than is necessary to produce it






46. 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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47. Game in which one player makes a move after observing the other player's move






48. Many buyers and sellers - product homogeneity - low cost and accurate information - free entry and exit - best regarded as a benchmark






49. The exclusive right to a product for a period of 20 years from the date the product is invented






50. A pricing strategy in which profits gained from the sale of one product are used to subsidize sales of a related product