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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. The practice of bundling several different products together and selling them at a single "bundle" price
Basis for Product Differentiation
Pure monopoly
Commodity bundling
Monopolistic Competition
2. The exclusive right to a product for a period of 20 years from the date the product is invented
Barrier to entry
Patent
Price matching
Product Differentiation
3. Involves price-fixing
Normal-form game
Covert Collusion
Perfect Competition (characteristics)
Nonprime competition
4. Marginal cost curve above average variable cost - P* = SRMC
No cooperative equilibrium
Mixed (randomized) strategy
Perfect Competition Short Run Supply
Cutthroat Competition
5. 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
Herfindahl-Hirschman index (HHI)
Ownership of a Key Input
Tacit collusion
6. An establishment firm commits to setting price below the profit-maximizing level to prevent entry
Herfindahl-Hirschman index (HHI)
Stackelberg oligopoly
Limit pricing
Sweezy oligopoly
7. Physical differences - Convenience - Ambience - Reputations - Appeals to vanity - Unconscious fears and desires - Snob appeal - Customized products
Basis for Product Differentiation
Cheating
Kinked-demand curve
Brand Multiplication
8. When the decisions of two or more firms significantly affect each others' profits
Bargaining Power of Buyers
Payoff matrix
Homogenous oligopoly
Interdependence
9. Multiple firms make the same pricing decisions even though they have not explicitly consulted with each other
Implicit Collusion
Tacit collusion
Nash equilibrium
Four-firm concentration ratio
10. If buyers have enough bargaining power - they can insist on lower prices - higher-quality products - or additional services
Bargaining Power of Buyers
Price war
Normal-form game
Prisoners' dilemma
11. Rules - strategies - payoffs - outcomes
Primary Sources of Monopolistic Power
The Threat from Potential Entrants Firms
No cooperative equilibrium
What is game?
12. Face competition from companies that currently are not in the market but might enter
Dansby-Willig performance index
The Threat from Potential Entrants Firms
Brand Multiplication
Mixed (randomized) strategy
13. A pricing strategy in which profits gained from the sale of one product are used to subsidize sales of a related product
Fair return price
Differentiated oligopoly
Mutual Interdependence
Cross-subsidy pricing
14. Game in which each player makes decisions without knowledge of the other player's decisions
Strategic behavior
Open Collusion
Payoff matrix
Simultaneous-move game
15. Takes Place inside the Mind of the consumer
Product Differentiation
Market
Payoff table
Trigger strategy
16. Different units of a product are sold at different prices. Examples are buying in bulk - or - commodity-bundling
Economies of scale
Second-Degree Price Discrimination
Two-part Tariff Method of Pricing
Dansby-Willig performance index
17. An agreement among firms in a market about quantities to produce or prices to charge in attempts to limit competition
Herfindahl-Hirschman index (HHI)
Four-firm concentration ratio
Follower
Collusion
18. When firms limit production and raise prices in a way that raises each others' profits - even though they have not made any formal agreement
Brand Multiplication
Cooperative equilibrium
Economies of scale
Tacit collusion
19. Ranks industries according to how much social welfare would improve if the output in an industry were increased by a small amount
Dansby-Willig performance index
Concentration Ratio
Patent
Nash equilibrium
20. 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
Product differentiation
Kinked demand curve model
Network effects
Payoff table
21. 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)
Rothschild index
Transfer pricing
Import competition
Stackelberg oligopoly
22. The competition for sales between the products of one industry and the products of another industry
Kinked demand curve model
First-Degree Price Discrimination (Perfect)
Inter-industry competition
Bargaining Power of Suppliers
23. 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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24. Rival who sets its output after the leader (Stackelberg's model)
Perfect Competitor Making a Profit
Credible threat
Follower
Duopoly
25. An attempt by a firm to convince buyers that its product is different from the products of other firms in the industry
Prisoner's dilemma
Rent-seeking behavior
Product differentiation
Finding profit for oligopoly games
26. The smallest quantity at which the average cost curve reaches its minimum
Barrier to entry
Minimum efficient scale (full capacity)
Interdependence
Tit-for-tat strategy
27. In game theory - a game that is played again sometime after the previous game ends
Cheating
Repeated game
Monopoly (characteristics)
Two-part pricing
28. Actions taken by firms to plan for and react to competition from rival firms
Natural Monopoly (local phone or electric company)
Homogenous oligopoly
Strategic behavior
Price war
29. Occurs when a firm produces output - whatever its level - at a higher cost than is necessary to produce it
Import competition
Price war
Inefficiency
Limit pricing
30. Single seller in an industry - Strong barriers to entry - Profit maximization - faces market demand and sets MR=MC - Unexploited gains from trade
Interdependence
Monopoly (characteristics)
Present Value (PV)
Secure strategy
31. When managers are able to charge each consumer their reservation price. Examples are car and home sales
Competitive market
Secure strategy
Dansby-Willig performance index
First-Degree Price Discrimination (Perfect)
32. 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
Bertrand oligopoly
Non-cooperative behavior
Minimum efficient scale (full capacity)
Oligopoly
33. 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
Monopolistic Competition
Prisoner's dilemma
Market Structure
Block pricing
34. Toothpaste - shampoo - restaurants - banks
Reservation Price
Examples of Monopolistic Competition
Patent
Cross-subsidy pricing
35. A game that is played over and over again forever and in which players receive payoffs during each play of the game
Perfect Competitor Making a Profit
Indefinitely repeated game
Reservation Price
Common knowledge
36. 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
Tacit collusion
Maximizing profit in Oligopoly games
Payoff matrix
Bargaining Power of Suppliers
37. Pricing strategy in which a firm intentionally varies its price in an attempt to "hide" price information from consumers and rivals
Common knowledge
Implicit Collusion
Examples of Oligopoly
Randomized pricing
38. Actions taken by a firm to achieve a goal - such as maximizing profits
Horizontal Merger/Integration
Product Differentiation
Block pricing
Business strategy
39. Many buyers and sellers - product homogeneity - low cost and accurate information - free entry and exit - best regarded as a benchmark
Perfect Competition (characteristics)
Barrier to entry
Finding profit for oligopoly games
Perfect Competition Barriers to Entry
40. A situation where one firm is able to provide a service at a lower cost than could several competing firms
Non-cooperative behavior
Implicit Collusion
Monopolistic Characteristics:
Natural Monopoly (local phone or electric company)
41. A strategy that guarantees the highest payoff given the worst possible scenario
Sequential-move game
Oligopoly
Secure strategy
Limit pricing
42. 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
Maximizing profit in Oligopoly games
Rothschild index
Dominant strategy equilibrium
Mutual interdependence
43. A merger between two firms in the same industry. Example: 2004 K-Mart merged with Sears
Horizontal Merger/Integration
Cournot oligopoly
Imperfect competition
Non-rivalrous consumption
44. 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
Oligopoly
Prisoners' dilemma
Profit
Nonprime competition
45. In game theory - benefit obtained by party that moves first in a sequential game
Perfect Competition Short Run Supply
First-mover advantage
Primary Sources of Monopolistic Power
No cooperative equilibrium
46. 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
Follower
Extensive-form game
Dominant firm oligopoly
Perfect Competition (characteristics)
47. 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
Examples of Oligopoly
Cournot oligopoly
Minimum efficient scale (full capacity)
Sweezy oligopoly
48. The situation when a firm's long-run average costs fall as it increases output
Economies of scale
Present Value (PV)
No cooperative equilibrium
Payoff
49. A firm whose price decisions are tacitly accepted and followed by others in the industry
Price Leadership
Disappearing invisible hand
Nash equilibrium
Reservation Price
50. Single firm is sole producer of a product for which there are no close substitutes
Indefinitely repeated game
Oligopoly
Pure monopoly
Vertical Merger