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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. Toothpaste - shampoo - restaurants - banks






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






3. When firms make decisions that make every firm better off than in a noncooperative Nash equilibrium






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






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






6. 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






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






8. 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






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






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






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






12. 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






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






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






15. 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






16. A market in which: (1) all have access to the same technology; (2) consumers respond quickly to price changes; (3) existing firms cannot respond quickly to entry by lowering their prices; and (4) there are no sunk costs






17. 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)






18. 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.)






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






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






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






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






23. The price that is low enough to deter entry






24. 2 firms - simplest case in an oligopoly. Profits higher if limiting their production






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






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






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






28. The players end up worse off than they would if they were able to cooperate; -the pursuit of self-interest does not promote the social interest in these games






29. 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






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






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






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






33. Many buyers and sellers - product homogeneity - low cost and accurate information - free entry and exit - best regarded as a benchmark






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






35. 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


36. 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"






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






38. Both players have dominant strategies and play them






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






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






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






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






43. Price of a product that enables its producer to obtain a normal profit & that is equal to the ATC of producing it






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






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






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






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






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






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






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