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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 situation in which competing firms must make their individual decisions without knowing the decisions of their rivals
Product differentiation
Simultaneous decision games
Ownership of a Key Input
Limit price
2. 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.)
Business strategy
Block pricing
Profit
Monopolistic Characteristics:
3. Using advertising and other means to try to increase a firm's sales
Cooperation
Non-price competition
Two-part pricing
Profit
4. 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
Minimum efficient scale (full capacity)
Lerner index
Vertical Merger
Dominant strategy
5. Rules - strategies - payoffs - outcomes
Non-rivalrous consumption
Vertical Merger
Simultaneous decision games
What is game?
6. Long-run marginal cost curve above long-run average cost
Economies of scale
Credible threat
Perfect Competition Long Run Supply
Third-Degree Price Discrimination
7. 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
Transfer pricing
Bargaining Power of Buyers
Inter-industry competition
Limit pricing
8. An oligopoly in which the sales of the leading (top four) firms are distributed unevenly among them
Unbalanced Oligopoly
Monopolistic Characteristics:
Inter-industry competition
Natural Monopoly (local phone or electric company)
9. The rules describe the setting of the game - the actions the players may take - and the consequences of those actions; -Advertising and R&D are also prisoners' dilemmas
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10. A table that shows the payoffs for every possible action by each player for every possible action by the other player
Perfect Competition Barriers to Entry
Profit
Payoff matrix
Implicit Collusion
11. Revenue-Costs
Cooperative equilibrium
The Threat from Potential Entrants Firms
Monopolistic Competition
Profit
12. First firm to set its output (Stackelberg's model)
Reservation Price
Monopolistic Competition
Leader
Dominant firm oligopoly
13. 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
Differentiated oligopoly
Present Value (PV)
Perfect Competition Short Run Supply
Disappearing invisible hand
14. The competition for sales between the products of one industry and the products of another industry
Inter-industry competition
Product differentiation
Perfect Competitor Making a Profit
Pure monopoly
15. Industry in which (1) there are few firms serving many customers; (2) firms produce either differentiated or homogenous products; (3) a single (leader) firm chooses an output quantity before their rivals select their outputs; (4) all other (follower)
Credible threat
Stackelberg oligopoly
Duopoly
Fair return price
16. A game that is played over and over again forever and in which players receive payoffs during each play of the game
Stackelberg oligopoly
Indefinitely repeated game
Economies of scale
Payoff matrix
17. When firms limit production and raise prices in a way that raises each others' profits - even though they have not made any formal agreement
Contestable market
Limit pricing
Tacit collusion
Interdependence
18. 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
Cooperation
Oligopoly
Bargaining Power of Buyers
Homogenous oligopoly
19. An oligopoly in which the firms produce a standardized product
Dansby-Willig performance index
Third-Degree Price Discrimination
Homogenous oligopoly
Trigger strategy
20. 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
Patent
Cournot oligopoly
Ownership of a Key Input
Extensive-form game
21. A situation in which neither firm has incentive to change its output given the other firm's output
Covert Collusion
Cournot equilibrium
Dansby-Willig performance index
Transfer pricing
22. A situation in which no one wants to change his or her behavior
Barrier to entry
First-mover advantage
Equilibrium
Marginal Revenue
23. Intense competition in which competitors cut retail prices to gain business--oligopolistic competition
Price war
Non-cooperative equilibrium
Import competition
Perfect Competition (characteristics)
24. Sellers can identify different types of customers and offer each a different price. Examples are special prices for students or the elderly
Basis for Product Differentiation
Merger
Third-Degree Price Discrimination
Transfer pricing
25. 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
Bargaining Power of Suppliers
Patent
Perfect Competition (characteristics)
Network effects
26. 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
Covert Collusion
Cournot equilibrium
Block pricing
Nonprime competition
27. Actions taken by a firm to achieve a goal - such as maximizing profits
Business strategy
Mutual Interdependence
Covert Collusion
Bargaining Power of Suppliers
28. When an upstream divisions leverages "monopoly like" power to charge higher marginal cost to a downstream division - resulting in failure of the firm to optimize profits based on the wrong quantity decision at the firms level
Inter-industry competition
Double marginalization
Maximizing profit in Oligopoly games
Sequential-move game
29. Pricing strategy in which higher prices are charged during peak hours than during off-peak hours
Product Differentiation
The Threat from Potential Entrants Firms
Conglomerate Merger
Peak-load pricing
30. The derivative of total revenue
Network effects
Four-firm concentration ratio
Marginal Revenue
Tacit collusion
31. The maximum price that a buyer is willing to pay for a good - or the minimum price that a seller will accept
Examples of Monopolistic Competition
Kinked-demand curve
Rothschild index
Reservation Price
32. The competition that domestic firms encounter from the products and services of foreign producers
Dansby-Willig performance index
Sequential game
Import competition
Secure strategy
33. Both players have dominant strategies and play them
Joint Venture
Nash equilibrium
Dominant strategy equilibrium
Third-Degree Price Discrimination
34. Face competition from companies that currently are not in the market but might enter
Limit pricing
The Threat from Potential Entrants Firms
Price discrimination
Non-rivalrous consumption
35. Many buyers and sellers - product homogeneity - low cost and accurate information - free entry and exit - best regarded as a benchmark
Perfect Competition Long Run Supply
Simultaneous consumption
Prisoner's dilemma
Perfect Competition (characteristics)
36. Keeps the price just where it is to maximize profit
Cournot equilibrium
Cutthroat Competition
Secure strategy
First-mover advantage
37. (1) Economies of Scale; (2) Economies of Scope; (3) Cost Complementarity; and (4)Patents & Other Legal Barriers
Product differentiation
Leader
Primary Sources of Monopolistic Power
Vertical Merger
38. 2 firms - simplest case in an oligopoly. Profits higher if limiting their production
Simultaneous consumption
Monopoly (characteristics)
Business strategy
Duopoly
39. Pricing strategy in which a firm intentionally varies its price in an attempt to "hide" price information from consumers and rivals
Inter-industry competition
Secure strategy
Randomized pricing
Collusion
40. A product's ability to satisfy a large number of consumers at the same time
Simultaneous consumption
Imperfect competition
Third-degree price discrimination
Rent-seeking behavior
41. Involves price-fixing
Stackelberg oligopoly
Covert Collusion
Monopoly (characteristics)
Cooperative equilibrium
42. 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
Barrier to entry
Cooperation
Rent-seeking behavior
Trigger strategy
43. 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
Cournot equilibrium
Sequential-move game
Joint Venture
44. 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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45. A firm whose price decisions are tacitly accepted and followed by others in the industry
Credible threat
Price Leadership
Monopolistic Characteristics:
Peak-load pricing
46. Ignoring the effects of their actions on each others' profits
Non-cooperative behavior
Leader
Transfer pricing
Open Collusion
47. 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
Competitive market
Finding profit for oligopoly games
Rothschild index
Minimum efficient scale (full capacity)
48. When something can be consumed without reducing the benefits available for subsequent consumption; can be consumed without supporting rivalry between consumers
Herfindahl-Hirschman index (HHI)
Non-rivalrous consumption
Price war
Simultaneous-move game
49. If buyers have enough bargaining power - they can insist on lower prices - higher-quality products - or additional services
Interdependence
Conglomerate Merger
Bargaining Power of Buyers
Cutthroat Competition
50. When no one firm has a monopoly - but producers nonetheless realize that they can affect market prices. Firms compete but possess market power
Extensive-form game
Cournot equilibrium
Imperfect competition
First-mover advantage