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






2. Demand line is above ATC curve






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






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






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






6. An equilibrium in a game in which players cooperate to increase their mutual payoff






7. 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






8. 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






9. Industry in which (1) few firms serving many customers; (2) firms produce identical products t constant marginal cost; (3) firms compete in price and react optimally to competitor's prices; (4) consumers have perfect information and here are no trans






10. 2 firms - simplest case in an oligopoly. Profits higher if limiting their production






11. 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






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






13. The percentage of the total industry sales accounted for by the four largest firms in the industry. OUTPUT of 4 largest firms over TOTAL output in industry. C4=(S1+...+S4)/St or (w1+...+w4)






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






15. When no one firm has a monopoly - but producers nonetheless realize that they can affect market prices. Firms compete but possess market power






16. In game theory - game where parties make their moves in turn - one party making the first move followed by the other






17. A strategy or action that always provides the best outcome no matter what decisions rivals make






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






19. 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"






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






21. 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






22. 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






23. When a manager makes a noncooperative decision






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






25. The maximum price that a buyer is willing to pay for a good - or the minimum price that a seller will accept






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






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






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






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






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






31. The smallest quantity at which the average cost curve reaches its minimum






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






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






34. 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






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






36. 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






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






38. 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






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






40. 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)






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






42. A firm whose price decisions are tacitly accepted and followed by others in the industry






43. Toothpaste - shampoo - restaurants - banks






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






45. The situation when a firm's long-run average costs fall as it increases output






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






47. First firm to set its output (Stackelberg's model)






48. 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






49. In game theory - a statement of harmful intent easily dismissed by recipient because threat not considered believable






50. A situation in which competing firms must make their individual decisions without knowing the decisions of their rivals