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






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






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






5. 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)






6. When a manager makes a noncooperative decision






7. Actions taken by firms to plan for and react to competition from rival firms






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






9. 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






10. Toothpaste - shampoo - restaurants - banks






11. If production of a good requires a particular input - then control of that input can be a barrier to entry






12. Specific assets - Economies of scale - Excess capacity - Reputation effects






13. 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






14. The situation that exists when two or more groups need each other and must depend on each other to accomplish a goal that is important to each of them






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






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






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






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






19. 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






20. Steel - autos - colas - airlines






21. 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






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






23. A simpler way to operationalize first-degree price discrimination






24. In game theory - benefit obtained by party that moves first in a sequential game






25. If buyers have enough bargaining power - they can insist on lower prices - higher-quality products - or additional services






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






27. Demand line is above ATC curve






28. Intense competition in which competitors cut retail prices to gain business--oligopolistic competition






29. The derivative of total revenue






30. 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)






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






32. 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






33. 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






34. When something can be consumed without reducing the benefits available for subsequent consumption; can be consumed without supporting rivalry between consumers






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






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






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






38. Competition based on factors that are not related to price - such as product quality - service and financing - business location - and reputation






39. 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






40. 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






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






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






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






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






45. 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






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






47. 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






48. An equilibrium in a game in which players do not cooperate but pursue their own self-interest






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






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