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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. A representation of a game indicating the players - their possible strategies - and the payoffs resulting from alternative strategies
Empty threat
Horizontal Merger/Integration
Sequential game
Normal-form game
2. All firms and individuals willing and able to buy or sell a particular product
Simultaneous-move game
Examples of Oligopoly
Commodity bundling
Market
3. Specific assets - Economies of scale - Excess capacity - Reputation effects
Contestable market
First-Degree Price Discrimination (Perfect)
Perfect Competition Barriers to Entry
Inter-industry competition
4. A table that shows the payoffs that each firm earns from every combination of strategies by the firms
Payoff matrix
Tit-for-tat strategy
Two-part Tariff Method of Pricing
Dominant strategy
5. Increases in the value of a product to each user - including existing users - as the total number of users rises
Sweezy oligopoly
Network effects
Equilibrium
Nonprime competition
6. Occurs when a firm produces output - whatever its level - at a higher cost than is necessary to produce it
Pure monopoly
Undifferentiated
Inefficiency
Price discrimination
7. In game theory - a statement of harmful intent easily dismissed by recipient because threat not considered believable
Lerner index
Payoff table
Empty threat
Repeated game
8. 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
Inefficiency
Double marginalization
Lerner index
Non-price competition
9. 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
Duopoly
Simultaneous consumption
Sequential game
10. When managers are able to charge each consumer their reservation price. Examples are car and home sales
First-Degree Price Discrimination (Perfect)
Dominant strategy equilibrium
Dansby-Willig performance index
Perfect Competition (characteristics)
11. Produce identical products
Subgame perfect equilibrium
Tit-for-tat strategy
Dansby-Willig performance index
Perfect Competitor Characteristics
12. In game theory - game where parties make their moves in turn - one party making the first move followed by the other
Sequential game
Competitive market
Oligopoly
Interdependence
13. Single firm is sole producer of a product for which there are no close substitutes
Tacit collusion
Primary Sources of Monopolistic Power
Pure monopoly
Payoff matrix
14. A game that is played over and over again forever and in which players receive payoffs during each play of the game
Duopoly
Indefinitely repeated game
Nonprime competition
Peak-load pricing
15. 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
Tit-for-tat strategy
Bargaining Power of Suppliers
Conglomerate Merger
Limit pricing
16. Sellers can identify different types of customers and offer each a different price. Examples are special prices for students or the elderly
Empty threat
Third-Degree Price Discrimination
Merger
Open Collusion
17. An establishment firm commits to setting price below the profit-maximizing level to prevent entry
Limit pricing
Covert Collusion
Stackelberg oligopoly
Product differentiation
18. 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
Empty threat
Competitive market
Mutual interdependence
Price discrimination
19. An oligopoly in which the sales of the leading (top four) firms are distributed unevenly among them
Bargaining Power of Suppliers
Kinked-demand curve
Examples of Oligopoly
Unbalanced Oligopoly
20. A condition describing a set of strategies in which no player can improve their payoff by unilaterally changing their own strategy given the other player's strategy
Product Differentiation
Nash equilibrium
Payoff matrix
Dominant strategy equilibrium
21. When no one firm has a monopoly - but producers nonetheless realize that they can affect market prices. Firms compete but possess market power
Imperfect competition
Inefficiency
Examples of Oligopoly
Minimum efficient scale (full capacity)
22. The situation when a firm's long-run average costs fall as it increases output
Mixed (randomized) strategy
Dansby-Willig performance index
Rent-seeking behavior
Economies of scale
23. Variations on one good so that a firm can increase market sharea
Brand Multiplication
Business strategy
Market Structure
Simultaneous decision games
24. A condition describing a set of strategies that constitutes a Nash equilibrium and allows no player to improve their own payoff at any stage of the game by changing strategies
Subgame perfect equilibrium
Lerner index
Unbalanced Oligopoly
Concentration Ratio
25. The derivative of total revenue
Marginal Revenue
Perfect Competition Short Run Supply
Interdependence
Network effects
26. 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
Profit
Monopolistic Characteristics:
Payoff matrix
27. Ranks industries according to how much social welfare would improve if the output in an industry were increased by a small amount
Dominant strategy equilibrium
Third-degree price discrimination
Dansby-Willig performance index
Follower
28. Keeps the price just where it is to maximize profit
Cutthroat Competition
Perfect Competition (characteristics)
Finding profit for oligopoly games
Two-part Tariff Method of Pricing
29. 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)
Barrier to entry
Repeated game
Credible threat
Homogenous oligopoly
30. 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
Prisoner's dilemma
Two-part pricing
Equilibrium
Contestable market
31. A table that shows the payoffs for every possible action by each player for every possible action by the other player
Third-Degree Price Discrimination
Payoff matrix
Transfer pricing
Interdependence
32. An index of market concentration. Sum of squared market shares of all the firms in the industry times 10K HHI=10 - 000Σwi2
Dominant firm oligopoly
Rothschild index
What is game?
Herfindahl-Hirschman index (HHI)
33. A trigger strategy that punishes after an episode of cheating and returns to cooperation if cheating ends
Maximizing profit in Oligopoly games
Bargaining Power of Buyers
Tit-for-tat strategy
Perfect Competition (characteristics)
34. Actions taken by firms to plan for and react to competition from rival firms
Disappearing invisible hand
Strategic behavior
Monopoly (characteristics)
Price Leadership
35. Cooperation among firms that does not involve an explicit agreement
Tacit collusion
Bertrand oligopoly
Marginal Revenue
Herfindahl-Hirschman index (HHI)
36. 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
Block pricing
Price Leadership
Bertrand oligopoly
Limit pricing
37. A strategy or action that always provides the best outcome no matter what decisions rivals make
Dominant strategy
Tacit collusion
Vertical Merger
Collusion
38. Different units of a product are sold at different prices. Examples are buying in bulk - or - commodity-bundling
Prisoners' dilemma
Vertical Merger
Second-Degree Price Discrimination
Limit price
39. An oligopoly in which the firms produce a differentiated product
Cooperative equilibrium
Two-part pricing
Differentiated oligopoly
Covert Collusion
40. Multiple firms make the same pricing decisions even though they have not explicitly consulted with each other
Non-cooperative equilibrium
Disappearing invisible hand
Price Leadership
Implicit Collusion
41. A situation where one firm is able to provide a service at a lower cost than could several competing firms
Monopoly (characteristics)
Natural Monopoly (local phone or electric company)
Second-Degree Price Discrimination
Dominant strategy equilibrium
42. A simpler way to operationalize first-degree price discrimination
Transfer pricing
Two-part Tariff Method of Pricing
Implicit Collusion
Conglomerate Merger
43. Face competition from companies that currently are not in the market but might enter
Perfect Competitor Characteristics
The Threat from Potential Entrants Firms
Price matching
Perfect Competition (characteristics)
44. 1/(1+i)n
Present Value (PV)
Cournot oligopoly
Unbalanced Oligopoly
Covert Collusion
45. Demand line is above ATC curve
Horizontal Merger/Integration
Cross-subsidy pricing
Perfect Competitor Making a Profit
Interdependence
46. The reward received by a player in a game - such as the profit earned by an oligopolist
Sequential game
Payoff
Business strategy
Cooperative equilibrium
47. The maximum price that a buyer is willing to pay for a good - or the minimum price that a seller will accept
Reservation Price
Profit
Price war
Cross-subsidy pricing
48. A strategy whereby a player randomizes over two or more available actions in order to keep rivals from being able to predict his action
Repeated game
Primary Sources of Monopolistic Power
Mixed (randomized) strategy
Profit
49. A situation in which a change in price strategy by one firm affects sales and profits of another
Mutual interdependence
Kinked-demand curve
Product Differentiation
Common knowledge
50. An equilibrium in a game in which players do not cooperate but pursue their own self-interest
No cooperative equilibrium
Natural Monopoly (local phone or electric company)
Covert Collusion
Rothschild index
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