Test your basic knowledge |

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. 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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2. A table that shows the payoffs that each firm earns from every combination of strategies by the firms






3. A situation in which neither firm has incentive to change its output given the other firm's output






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






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






6. Demand line is above ATC curve






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






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






9. Takes Place inside the Mind of the consumer






10. A representation of a game indicating the players - their possible strategies - and the payoffs resulting from alternative strategies






11. 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






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






13. 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






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






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






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






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






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






20. The derivative of total revenue






21. Rules - strategies - payoffs - outcomes






22. Face competition from companies that currently are not in the market but might enter






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






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






26. 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






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






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






29. 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






30. 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






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






32. 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)






33. 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






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






35. A strategy in which a firm advertises a price and a promise to match any lower prices offered by a competitor






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






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






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






39. Toothpaste - shampoo - restaurants - banks






40. Both players have dominant strategies and play them






41. A measure of market power - the percentage of all sales that is accounted for by the four or eight largest firms in the market






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. When managers are able to charge each consumer their reservation price. Examples are car and home sales






44. 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






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






46. Sellers can identify different types of customers and offer each a different price. Examples are special prices for students or the elderly






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






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






49. The price that is low enough to deter entry






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