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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. 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
Lerner index
Socially optimal price
Kinked-demand curve
Monopoly (characteristics)
2. The price that is low enough to deter entry
Limit price
Sequential game
Mutual Interdependence
What is game?
3. Physical differences - Convenience - Ambience - Reputations - Appeals to vanity - Unconscious fears and desires - Snob appeal - Customized products
Commodity bundling
Basis for Product Differentiation
Primary Sources of Monopolistic Power
Price war
4. Simultaneous move game that is not repeated
Competitive market
One-shot game
Patent
Credible threat
5. Single seller in an industry - Strong barriers to entry - Profit maximization - faces market demand and sets MR=MC - Unexploited gains from trade
Monopoly (characteristics)
Non-rivalrous consumption
Mixed (randomized) strategy
Commodity bundling
6. Intense competition in which competitors cut retail prices to gain business--oligopolistic competition
Price war
Cheating
Perfect Competition Long Run Supply
Extensive-form game
7. Specific assets - Economies of scale - Excess capacity - Reputation effects
Dominant firm oligopoly
Minimum efficient scale (full capacity)
Pure monopoly
Perfect Competition Barriers to Entry
8. A product's ability to satisfy a large number of consumers at the same time
Market Structure
Price matching
Pure monopoly
Simultaneous consumption
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
Kinked-demand curve
Peak-load pricing
Marginal Revenue
Brand Multiplication
10. Actions taken by firms to plan for and react to competition from rival firms
Strategic behavior
Nash equilibrium
Duopoly
Payoff table
11. An oligopoly in which the firms produce a differentiated product
Tacit collusion
Dansby-Willig performance index
Differentiated oligopoly
Non-cooperative equilibrium
12. A firm whose price decisions are tacitly accepted and followed by others in the industry
Cooperative equilibrium
Price Leadership
Peak-load pricing
Prisoner's dilemma
13. In game theory - benefit obtained by party that moves first in a sequential game
First-mover advantage
Cournot equilibrium
First-Degree Price Discrimination (Perfect)
Basis for Product Differentiation
14. Takes Place inside the Mind of the consumer
Non-rivalrous consumption
Product Differentiation
Simultaneous consumption
Unbalanced Oligopoly
15. 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)
Examples of Monopolistic Competition
Kinked-demand curve
Barrier to entry
Inter-industry competition
16. A simpler way to operationalize first-degree price discrimination
First-mover advantage
Two-part Tariff Method of Pricing
Inefficiency
Simultaneous consumption
17. Sellers can identify different types of customers and offer each a different price. Examples are special prices for students or the elderly
Dansby-Willig performance index
Third-Degree Price Discrimination
Cross-subsidy pricing
Cheating
18. A table that shows the payoffs for every possible action by each player for every possible action by the other player
Herfindahl-Hirschman index (HHI)
Rothschild index
Payoff matrix
Business strategy
19. Pricing strategy in which a firm optimally sets the internal price at which an upstream division wells an input to a downstream division
Collusion
Sweezy oligopoly
Transfer pricing
Credible threat
20. 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
Monopolistic Competition
Covert Collusion
Indefinitely repeated game
Subgame perfect equilibrium
21. 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
Nash equilibrium
Perfect Competition Barriers to Entry
Block pricing
Mixed (randomized) strategy
22. An establishment firm commits to setting price below the profit-maximizing level to prevent entry
Bargaining Power of Buyers
Limit pricing
Duopoly
Minimum efficient scale (full capacity)
23. 1/(1+i)n
Non-cooperative behavior
Network effects
Profit
Present Value (PV)
24. 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.)
Monopolistic Characteristics:
Strategic behavior
Patent
Merger
25. Ignoring the effects of their actions on each others' profits
Maximizing profit in Oligopoly games
Non-cooperative behavior
Double marginalization
Minimum efficient scale (full capacity)
26. Occurs when a firm produces output - whatever its level - at a higher cost than is necessary to produce it
Inefficiency
Network effects
Monopolistic Characteristics:
Peak-load pricing
27. Where a firm can charge different groups of consumers different prices for the same product. Example: student or senior discounts
Third-degree price discrimination
Four-firm concentration ratio
Barrier to entry
Dansby-Willig performance index
28. When managers are able to charge each consumer their reservation price. Examples are car and home sales
Business strategy
First-Degree Price Discrimination (Perfect)
Maximizing profit in Oligopoly games
Product Differentiation
29. 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)
Product Differentiation
Stackelberg oligopoly
Ownership of a Key Input
Price matching
30. 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
Patent
Mutual interdependence
Bargaining Power of Buyers
31. Involves price-fixing
Rent-seeking behavior
Covert Collusion
Inter-industry competition
Perfect Competition (characteristics)
32. Both players have dominant strategies and play them
Repeated game
Kinked-demand curve
Non-cooperative behavior
Dominant strategy equilibrium
33. Pricing strategy in which higher prices are charged during peak hours than during off-peak hours
Peak-load pricing
Collusion
Perfect Competition (characteristics)
Economies of scale
34. A strategy or action that always provides the best outcome no matter what decisions rivals make
Differentiated oligopoly
Dominant strategy
Contestable market
Perfect Competition Short Run Supply
35. The situation when a firm's long-run average costs fall as it increases output
Cooperation
Economies of scale
Kinked demand curve model
Ownership of a Key Input
36. 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
Transfer pricing
Rothschild index
Payoff
Contestable market
37. Competition based on factors that are not related to price - such as product quality - service and financing - business location - and reputation
Third-Degree Price Discrimination
Natural Monopoly (local phone or electric company)
Oligopoly
Nonprime competition
38. When something can be consumed without reducing the benefits available for subsequent consumption; can be consumed without supporting rivalry between consumers
Third-degree price discrimination
Cheating
Non-rivalrous consumption
Follower
39. 2 firms - simplest case in an oligopoly. Profits higher if limiting their production
Duopoly
Socially optimal price
Cournot oligopoly
No cooperative equilibrium
40. 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
Transfer pricing
Examples of Oligopoly
Mutual Interdependence
Cournot oligopoly
41. Long-run marginal cost curve above long-run average cost
Two-part Tariff Method of Pricing
Strategy
Contestable market
Perfect Competition Long Run Supply
42. The exclusive right to a product for a period of 20 years from the date the product is invented
Tacit collusion
Patent
Peak-load pricing
Undifferentiated
43. A situation in which competing firms must make their individual decisions without knowing the decisions of their rivals
Simultaneous decision games
Mutual interdependence
Tacit collusion
Monopolistic Competition
44. When the decisions of two or more firms significantly affect each others' profits
Implicit Collusion
Price matching
Interdependence
Non-cooperative equilibrium
45. Increases in the value of a product to each user - including existing users - as the total number of users rises
Third-Degree Price Discrimination
Product differentiation
Network effects
Contestable market
46. 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
Market Structure
Homogenous oligopoly
Disappearing invisible hand
Bertrand oligopoly
47. Keeps the price just where it is to maximize profit
Two-part pricing
Leader
Tacit collusion
Cutthroat Competition
48. An agreement among firms in a market about quantities to produce or prices to charge in attempts to limit competition
Unbalanced Oligopoly
Monopoly (characteristics)
Oligopoly
Collusion
49. Demand line is above ATC curve
Monopolistic Competition
Indefinitely repeated game
Perfect Competitor Making a Profit
Simultaneous-move game
50. The practice of bundling several different products together and selling them at a single "bundle" price
Brand Multiplication
Rothschild index
Commodity bundling
Strategy