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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. Each seller can sell all he wants to sell at the going price - Buyers and sellers are price takers - The goods offered by the different sellers are largely the same - The actions of any single buyer or seller will have a negligible impact on the m






2. Anything that keeps new firms from entering an industry in which firms are earning economic profits (e.g. Ownership of a Key Input - Capital - Patents - Economies of scale)






3. The price of a product that results in the most efficient allocation of an economy's resources and that is equal to the marginal cost of the product






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






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






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






7. 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






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






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






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






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






14. 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






15. Rival who sets its output after the leader (Stackelberg's model)






16. 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






17. A table that shows the payoffs for every possible action by each player for every possible action by the other player






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






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






20. 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.)






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






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






23. Takes Place inside the Mind of the consumer






24. 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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25. 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)






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






27. The practice of charging different prices to consumers for the same good or service






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






29. Revenue-Costs






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






31. Ignoring the effects of their actions on each others' profits






32. Using advertising and other means to try to increase a firm's sales






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






34. Price Sensitive






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






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






37. 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






38. A strategy that guarantees the highest payoff given the worst possible scenario






39. 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






40. A situation in which no one wants to change his or her behavior






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






42. 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






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






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






45. 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






46. 2 firms - simplest case in an oligopoly. Profits higher if limiting their production






47. A situation in which a change in price strategy by one firm affects sales and profits of another






48. 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






49. Rules - strategies - payoffs - outcomes






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