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Test your basic knowledge |
Business Competition
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Study First
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. An agreement among firms in a market about quantities to produce or prices to charge in attempts to limit competition
Collusion
Third-degree price discrimination
Disappearing invisible hand
Double marginalization
2. 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
Kinked-demand curve
Horizontal Merger/Integration
Homogenous oligopoly
What is game?
3. 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)
Stackelberg oligopoly
Monopolistic Characteristics:
Inefficiency
Cooperative equilibrium
4. The exclusive right to a product for a period of 20 years from the date the product is invented
Merger
Inter-industry competition
Transfer pricing
Patent
5. Physical differences - Convenience - Ambience - Reputations - Appeals to vanity - Unconscious fears and desires - Snob appeal - Customized products
Basis for Product Differentiation
Kinked demand curve model
Reservation Price
High Price Elasticity
6. When firms make decisions that make every firm better off than in a noncooperative Nash equilibrium
Cooperation
Pure monopoly
Commodity bundling
Perfect Competition Long Run Supply
7. 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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8. Occurs when a firm produces output - whatever its level - at a higher cost than is necessary to produce it
Inefficiency
Product differentiation
Profit
Randomized pricing
9. Marginal cost curve above average variable cost - P* = SRMC
Third-Degree Price Discrimination
Perfect Competition Short Run Supply
Follower
Collusion
10. When managers are able to charge each consumer their reservation price. Examples are car and home sales
First-Degree Price Discrimination (Perfect)
Product differentiation
Monopoly (characteristics)
Dominant firm oligopoly
11. Cooperation among firms that does not involve an explicit agreement
Tacit collusion
Double marginalization
Cheating
Mixed (randomized) strategy
12. The competition for sales between the products of one industry and the products of another industry
Inter-industry competition
Strategic behavior
Mutual interdependence
Cheating
13. An oligopoly in which the firms produce a differentiated product
Differentiated oligopoly
Perfect Competition Long Run Supply
Dominant strategy
Cutthroat Competition
14. A firm whose price decisions are tacitly accepted and followed by others in the industry
Price Leadership
Mutual interdependence
Monopolistic Competition
Third-Degree Price Discrimination
15. 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
Cross-subsidy pricing
Equilibrium
Rothschild index
Tacit collusion
16. The actions by persons - firms - or unions to gain special benefits from government at taxpayer's or someone else's expense
Duopoly
Two-part Tariff Method of Pricing
Follower
Rent-seeking behavior
17. First firm to set its output (Stackelberg's model)
Monopolistic Characteristics:
Unbalanced Oligopoly
Market
Leader
18. Specific assets - Economies of scale - Excess capacity - Reputation effects
Perfect Competition Barriers to Entry
Dansby-Willig performance index
Limit price
One-shot game
19. 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
Block pricing
Oligopoly
Disappearing invisible hand
Common knowledge
20. Where a firm can charge different groups of consumers different prices for the same product. Example: student or senior discounts
Subgame perfect equilibrium
Perfect Competition Short Run Supply
Ownership of a Key Input
Third-degree price discrimination
21. Actions taken by firms to plan for and react to competition from rival firms
Ownership of a Key Input
Strategic behavior
Limit price
Kinked demand curve model
22. 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
Ownership of a Key Input
Perfect Competition Barriers to Entry
Inefficiency
Finding profit for oligopoly games
23. An equilibrium in a game in which players do not cooperate but pursue their own self-interest
Finding profit for oligopoly games
Monopolistic Characteristics:
No cooperative equilibrium
Limit price
24. When a manager makes a noncooperative decision
Limit price
Cross-subsidy pricing
Cheating
Indefinitely repeated game
25. 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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26. 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
Tit-for-tat strategy
Rothschild index
Limit pricing
Four-firm concentration ratio
27. Single seller in an industry - Strong barriers to entry - Profit maximization - faces market demand and sets MR=MC - Unexploited gains from trade
Homogenous oligopoly
Monopoly (characteristics)
Prisoners' dilemma
Duopoly
28. Maximize economic profit by producing the quantity at which MC=MR
Maximizing profit in Oligopoly games
Randomized pricing
Subgame perfect equilibrium
Brand Multiplication
29. Single firm is sole producer of a product for which there are no close substitutes
Four-firm concentration ratio
Bertrand oligopoly
Pure monopoly
Simultaneous consumption
30. Ignoring the effects of their actions on each others' profits
Present Value (PV)
Non-price competition
Sequential-move game
Non-cooperative behavior
31. 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
Empty threat
Brand Multiplication
Block pricing
Present Value (PV)
32. A strategy whereby a player randomizes over two or more available actions in order to keep rivals from being able to predict his action
Present Value (PV)
Non-price competition
Cournot oligopoly
Mixed (randomized) strategy
33. 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"
Credible threat
Secure strategy
Imperfect competition
Network effects
34. Demand line is above ATC curve
First-mover advantage
Tacit collusion
Dominant strategy
Perfect Competitor Making a Profit
35. Face competition from companies that currently are not in the market but might enter
Double marginalization
The Threat from Potential Entrants Firms
Payoff matrix
Cross-subsidy pricing
36. Different units of a product are sold at different prices. Examples are buying in bulk - or - commodity-bundling
Implicit Collusion
Dominant strategy equilibrium
Second-Degree Price Discrimination
Payoff matrix
37. Intense competition in which competitors cut retail prices to gain business--oligopolistic competition
Commodity bundling
Price war
Brand Multiplication
Strategy
38. Keeps the price just where it is to maximize profit
Kinked-demand curve
Cutthroat Competition
Finding profit for oligopoly games
Limit price
39. Pricing strategy in which higher prices are charged during peak hours than during off-peak hours
Peak-load pricing
Non-cooperative behavior
Price discrimination
Perfect Competition (characteristics)
40. Rival who sets its output after the leader (Stackelberg's model)
Price war
Horizontal Merger/Integration
Follower
Dominant strategy
41. A combination of two or more companies into one company
Lerner index
Market Structure
Merger
Third-degree price discrimination
42. If buyers have enough bargaining power - they can insist on lower prices - higher-quality products - or additional services
Dominant strategy
Finding profit for oligopoly games
Bargaining Power of Buyers
No cooperative equilibrium
43. When the decisions of two or more firms significantly affect each others' profits
Bargaining Power of Buyers
Product differentiation
Interdependence
Monopolistic Characteristics:
44. 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
Herfindahl-Hirschman index (HHI)
One-shot game
Nash equilibrium
Kinked demand curve model
45. 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
Socially optimal price
Tit-for-tat strategy
Lerner index
Commodity bundling
46. (1) Economies of Scale; (2) Economies of Scope; (3) Cost Complementarity; and (4)Patents & Other Legal Barriers
Inter-industry competition
Primary Sources of Monopolistic Power
Repeated game
Trigger strategy
47. A representation of a game indicating the players - their possible strategies - and the payoffs resulting from alternative strategies
Dominant strategy equilibrium
Examples of Monopolistic Competition
Normal-form game
Kinked-demand curve
48. A table that shows the payoffs that each firm earns from every combination of strategies by the firms
Homogenous oligopoly
Empty threat
Examples of Oligopoly
Payoff matrix
49. Using advertising and other means to try to increase a firm's sales
Simultaneous consumption
Non-price competition
Sweezy oligopoly
Four-firm concentration ratio
50. In game theory - a game that is played again sometime after the previous game ends
Non-cooperative equilibrium
Perfect Competition Short Run Supply
Repeated game
Disappearing invisible hand
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