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Test your basic knowledge |
Business Competition
Start Test
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. A situation in which all decision makers know the payoff table - and they believe all other decision makers also know the payoff table
Patent
Common knowledge
Repeated game
Non-cooperative equilibrium
2. 1/(1+i)n
Present Value (PV)
Empty threat
Indefinitely repeated game
Dominant strategy
3. A situation in which no one wants to change his or her behavior
Interdependence
Equilibrium
Patent
Primary Sources of Monopolistic Power
4. Many buyers and sellers - product homogeneity - low cost and accurate information - free entry and exit - best regarded as a benchmark
Sequential game
Perfect Competition (characteristics)
Primary Sources of Monopolistic Power
Joint Venture
5. A pricing strategy in which profits gained from the sale of one product are used to subsidize sales of a related product
Homogenous oligopoly
Commodity bundling
Patent
Cross-subsidy pricing
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
What is game?
First-Degree Price Discrimination (Perfect)
Competitive market
Cournot oligopoly
7. Price of a product that enables its producer to obtain a normal profit & that is equal to the ATC of producing it
Fair return price
Perfect Competition Barriers to Entry
Undifferentiated
Perfect Competition Long Run Supply
8. In game theory - game where parties make their moves in turn - one party making the first move followed by the other
Natural Monopoly (local phone or electric company)
Sequential game
Empty threat
Equilibrium
9. Toothpaste - shampoo - restaurants - banks
Two-part Tariff Method of Pricing
Contestable market
Herfindahl-Hirschman index (HHI)
Examples of Monopolistic Competition
10. A strategy whereby a player randomizes over two or more available actions in order to keep rivals from being able to predict his action
Conglomerate Merger
Mixed (randomized) strategy
Primary Sources of Monopolistic Power
Covert Collusion
11. Takes Place inside the Mind of the consumer
Product Differentiation
Monopoly (characteristics)
Ownership of a Key Input
Homogenous oligopoly
12. 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
Kinked demand curve model
Four-firm concentration ratio
Mutual Interdependence
Second-Degree Price Discrimination
13. 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
Limit price
Strategic behavior
Finding profit for oligopoly games
Prisoner's dilemma
14. A situation in which competing firms must make their individual decisions without knowing the decisions of their rivals
Inefficiency
Simultaneous decision games
Two-part Tariff Method of Pricing
What is game?
15. Rival who sets its output after the leader (Stackelberg's model)
Double marginalization
Import competition
Basis for Product Differentiation
Follower
16. 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
Payoff matrix
Implicit Collusion
Payoff table
Second-Degree Price Discrimination
17. 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
First-mover advantage
Follower
Four-firm concentration ratio
Double marginalization
18. Face competition from companies that currently are not in the market but might enter
Implicit Collusion
Perfect Competitor Making a Profit
Tacit collusion
The Threat from Potential Entrants Firms
19. An oligopoly in which the firms produce a standardized product
Homogenous oligopoly
Cross-subsidy pricing
Socially optimal price
Maximizing profit in Oligopoly games
20. 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
Payoff table
Dominant strategy equilibrium
Normal-form game
Kinked demand curve model
21. Where a firm can charge different groups of consumers different prices for the same product. Example: student or senior discounts
Third-degree price discrimination
Fair return price
Dominant strategy equilibrium
Credible threat
22. A strategy that guarantees the highest payoff given the worst possible scenario
Marginal Revenue
Mutual interdependence
Secure strategy
Perfect Competition Short Run Supply
23. A trigger strategy that punishes after an episode of cheating and returns to cooperation if cheating ends
Tit-for-tat strategy
Marginal Revenue
Conglomerate Merger
Maximizing profit in Oligopoly games
24. Multiple firms make the same pricing decisions even though they have not explicitly consulted with each other
Implicit Collusion
Herfindahl-Hirschman index (HHI)
Non-rivalrous consumption
Maximizing profit in Oligopoly games
25. Physical differences - Convenience - Ambience - Reputations - Appeals to vanity - Unconscious fears and desires - Snob appeal - Customized products
Basis for Product Differentiation
Maximizing profit in Oligopoly games
Price matching
Perfect Competitor Making a Profit
26. 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
Import competition
First-mover advantage
Brand Multiplication
Lerner index
27. Simultaneous move game that is not repeated
Payoff
Joint Venture
One-shot game
Barrier to entry
28. A representation of a game indicating the players - their possible strategies - and the payoffs resulting from alternative strategies
Normal-form game
Import competition
Oligopoly
Common knowledge
29. An equilibrium in a game in which players do not cooperate but pursue their own self-interest
The Threat from Potential Entrants Firms
Implicit Collusion
No cooperative equilibrium
Subgame perfect equilibrium
30. First firm to set its output (Stackelberg's model)
Homogenous oligopoly
Prisoner's dilemma
Leader
The Threat from Potential Entrants Firms
31. 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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32. Occurs when a firm produces output - whatever its level - at a higher cost than is necessary to produce it
Second-Degree Price Discrimination
Perfect Competition Long Run Supply
Inefficiency
Contestable market
33. In game theory - benefit obtained by party that moves first in a sequential game
Finding profit for oligopoly games
Randomized pricing
Non-price competition
First-mover advantage
34. (1) Economies of Scale; (2) Economies of Scope; (3) Cost Complementarity; and (4)Patents & Other Legal Barriers
Primary Sources of Monopolistic Power
Merger
Ownership of a Key Input
Network effects
35. Identical or substitutable
Perfect Competition Short Run Supply
Secure strategy
Horizontal Merger/Integration
Undifferentiated
36. An attempt by a firm to convince buyers that its product is different from the products of other firms in the industry
Dominant strategy equilibrium
Product differentiation
Profit
Equilibrium
37. The price that is low enough to deter entry
Bargaining Power of Suppliers
Double marginalization
Minimum efficient scale (full capacity)
Limit price
38. A merger between firms who have a buyer/supplier relationship. Example: BF Goodrich merging with rubber plantations
Extensive-form game
Dansby-Willig performance index
Vertical Merger
Perfect Competition Short Run Supply
39. A game that is played over and over again forever and in which players receive payoffs during each play of the game
Product differentiation
Indefinitely repeated game
Bargaining Power of Buyers
Payoff matrix
40. When no one firm has a monopoly - but producers nonetheless realize that they can affect market prices. Firms compete but possess market power
Cutthroat Competition
Economies of scale
Imperfect competition
Product Differentiation
41. Pricing strategy in which higher prices are charged during peak hours than during off-peak hours
Peak-load pricing
Cooperative equilibrium
Trigger strategy
Herfindahl-Hirschman index (HHI)
42. When managers are able to charge each consumer their reservation price. Examples are car and home sales
Monopolistic Characteristics:
Merger
Disappearing invisible hand
First-Degree Price Discrimination (Perfect)
43. 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
Import competition
Minimum efficient scale (full capacity)
Price matching
44. Marginal cost curve above average variable cost - P* = SRMC
Normal-form game
Cross-subsidy pricing
Perfect Competition Short Run Supply
Randomized pricing
45. Sellers can identify different types of customers and offer each a different price. Examples are special prices for students or the elderly
Third-Degree Price Discrimination
Undifferentiated
First-Degree Price Discrimination (Perfect)
Minimum efficient scale (full capacity)
46. The smallest quantity at which the average cost curve reaches its minimum
Minimum efficient scale (full capacity)
Mutual interdependence
Kinked-demand curve
Secure strategy
47. When firms make decisions that make every firm better off than in a noncooperative Nash equilibrium
Commodity bundling
Leader
Inefficiency
Cooperation
48. Steel - autos - colas - airlines
First-Degree Price Discrimination (Perfect)
Examples of Oligopoly
Maximizing profit in Oligopoly games
Undifferentiated
49. 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
Simultaneous-move game
Vertical Merger
Simultaneous decision games
Competitive market
50. 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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