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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. 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






2. Pricing strategy in which a firm intentionally varies its price in an attempt to "hide" price information from consumers and rivals






3. First firm to set its output (Stackelberg's model)






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






5. A condition describing a set of strategies that constitutes a Nash equilibrium and allows no player to improve their own payoff at any stage of the game by changing strategies






6. (1) Economies of Scale; (2) Economies of Scope; (3) Cost Complementarity; and (4)Patents & Other Legal Barriers






7. Different units of a product are sold at different prices. Examples are buying in bulk - or - commodity-bundling






8. 2 firms - simplest case in an oligopoly. Profits higher if limiting their production






9. An attempt by a firm to convince buyers that its product is different from the products of other firms in the industry






10. An agreement among firms in a market about quantities to produce or prices to charge in attempts to limit competition






11. 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






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






13. The smallest quantity at which the average cost curve reaches its minimum






14. A game that is played over and over again forever and in which players receive payoffs during each play of the game






15. 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"






16. 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






17. 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






18. Long-run marginal cost curve above long-run average cost






19. Involves price-fixing






20. 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






21. When the decisions of two or more firms significantly affect each others' profits






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






23. When no one firm has a monopoly - but producers nonetheless realize that they can affect market prices. Firms compete but possess market power






24. Marginal cost curve above average variable cost - P* = SRMC






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






26. Operates like the alleged Mafia. Region division of the market among the firms in the industry






27. A situation in which all decision makers know the payoff table - and they believe all other decision makers also know the payoff table






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






29. 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






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






31. A merger between two firms in the same industry. Example: 2004 K-Mart merged with Sears






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






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






34. 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






35. Single firm is sole producer of a product for which there are no close substitutes






36. 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






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






38. 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.)






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






40. In game theory - a decision rule that describes the actions a player will take at each decision point






41. Multiple firms make the same pricing decisions even though they have not explicitly consulted with each other






42. 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






43. 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)






44. An oligopoly in which the firms produce a standardized product






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






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






47. 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






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






49. 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






50. Cooperation among firms that does not involve an explicit agreement