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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. 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
Conglomerate Merger
Kinked demand curve model
Dominant firm oligopoly
Dominant strategy equilibrium
2. One large firm that has a significant cost advantage over many other - smaller competing firms; -the large firm operates as a monopoly: setting price and output to maximize profit; -the small firms act as perfect competitors: taking as given the mar
Barrier to entry
What is game?
No cooperative equilibrium
Dominant firm oligopoly
3. 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 table
Socially optimal price
Primary Sources of Monopolistic Power
Network effects
4. A strategy in which a firm advertises a price and a promise to match any lower prices offered by a competitor
Price matching
Lerner index
Stackelberg oligopoly
Conglomerate Merger
5. 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
Secure strategy
Socially optimal price
Finding profit for oligopoly games
No cooperative equilibrium
6. An attempt by a firm to convince buyers that its product is different from the products of other firms in the industry
Differentiated oligopoly
Natural Monopoly (local phone or electric company)
Product differentiation
Cournot equilibrium
7. The competition that domestic firms encounter from the products and services of foreign producers
Perfect Competition Long Run Supply
Import competition
First-mover advantage
Covert Collusion
8. Toothpaste - shampoo - restaurants - banks
Examples of Monopolistic Competition
Non-price competition
Strategy
Ownership of a Key Input
9. Price of a product that enables its producer to obtain a normal profit & that is equal to the ATC of producing it
Sequential-move game
Third-Degree Price Discrimination
Perfect Competition Short Run Supply
Fair return price
10. Involves price-fixing
Implicit Collusion
Marginal Revenue
Covert Collusion
Normal-form game
11. The maximum price that a buyer is willing to pay for a good - or the minimum price that a seller will accept
Non-cooperative behavior
Reservation Price
Concentration Ratio
Sweezy oligopoly
12. Maximize economic profit by producing the quantity at which MC=MR
Indefinitely repeated game
Maximizing profit in Oligopoly games
Second-Degree Price Discrimination
Non-rivalrous consumption
13. A measure of market power - the percentage of all sales that is accounted for by the four or eight largest firms in the market
Concentration Ratio
Strategy
Primary Sources of Monopolistic Power
Kinked demand curve model
14. When managers are able to charge each consumer their reservation price. Examples are car and home sales
Simultaneous decision games
First-Degree Price Discrimination (Perfect)
Payoff table
Examples of Oligopoly
15. If buyers have enough bargaining power - they can insist on lower prices - higher-quality products - or additional services
The Threat from Potential Entrants Firms
Bargaining Power of Buyers
Tit-for-tat strategy
Import competition
16. 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
Commodity bundling
Repeated game
Disappearing invisible hand
Leader
17. (1) Economies of Scale; (2) Economies of Scope; (3) Cost Complementarity; and (4)Patents & Other Legal Barriers
Common knowledge
Monopolistic Competition
Perfect Competition Barriers to Entry
Primary Sources of Monopolistic Power
18. A situation in which all decision makers know the payoff table - and they believe all other decision makers also know the payoff table
Common knowledge
Cross-subsidy pricing
Oligopoly
Concentration Ratio
19. The actions by persons - firms - or unions to gain special benefits from government at taxpayer's or someone else's expense
High Price Elasticity
Double marginalization
Rent-seeking behavior
Bargaining Power of Suppliers
20. Both players have dominant strategies and play them
Leader
Cournot equilibrium
Dominant strategy equilibrium
Mutual Interdependence
21. If production of a good requires a particular input - then control of that input can be a barrier to entry
Horizontal Merger/Integration
Bargaining Power of Buyers
Examples of Monopolistic Competition
Ownership of a Key Input
22. An oligopoly in which the firms produce a standardized product
Homogenous oligopoly
Profit
Examples of Monopolistic Competition
Payoff
23. A table that shows the payoffs for every possible action by each player for every possible action by the other player
Product differentiation
Brand Multiplication
Payoff matrix
Sequential-move game
24. 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
Bargaining Power of Buyers
Peak-load pricing
Double marginalization
Monopoly (characteristics)
25. Sellers can identify different types of customers and offer each a different price. Examples are special prices for students or the elderly
Ownership of a Key Input
Peak-load pricing
Stackelberg oligopoly
Third-Degree Price Discrimination
26. Keeps the price just where it is to maximize profit
Cutthroat Competition
Fair return price
Implicit Collusion
Sequential game
27. 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
Payoff
Business strategy
Lerner index
Reservation Price
28. Pricing strategy in which a firm optimally sets the internal price at which an upstream division wells an input to a downstream division
Interdependence
Third-degree price discrimination
Transfer pricing
Mutual interdependence
29. All firms and individuals willing and able to buy or sell a particular product
Natural Monopoly (local phone or electric company)
Market
Dominant strategy equilibrium
Double marginalization
30. Actions taken by firms to plan for and react to competition from rival firms
Strategic behavior
Product differentiation
Basis for Product Differentiation
Cooperation
31. Marginal cost curve above average variable cost - P* = SRMC
Maximizing profit in Oligopoly games
High Price Elasticity
Open Collusion
Perfect Competition Short Run Supply
32. Competition based on factors that are not related to price - such as product quality - service and financing - business location - and reputation
Interdependence
Product Differentiation
Socially optimal price
Nonprime competition
33. Different units of a product are sold at different prices. Examples are buying in bulk - or - commodity-bundling
Second-Degree Price Discrimination
Transfer pricing
Bargaining Power of Suppliers
First-Degree Price Discrimination (Perfect)
34. 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
Monopoly (characteristics)
Bertrand oligopoly
Empty threat
Mutual Interdependence
35. In game theory - game where parties make their moves in turn - one party making the first move followed by the other
Oligopoly
Reservation Price
Randomized pricing
Sequential game
36. Produce identical products
Transfer pricing
Simultaneous-move game
Perfect Competitor Characteristics
Business strategy
37. An oligopoly in which the sales of the leading (top four) firms are distributed unevenly among them
Perfect Competition (characteristics)
Two-part Tariff Method of Pricing
Unbalanced Oligopoly
Third-Degree Price Discrimination
38. 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:
Equilibrium
Sweezy oligopoly
Four-firm concentration ratio
39. In game theory - a statement of harmful intent easily dismissed by recipient because threat not considered believable
Empty threat
Open Collusion
Differentiated oligopoly
Price matching
40. Single firm is sole producer of a product for which there are no close substitutes
Pure monopoly
Profit
Minimum efficient scale (full capacity)
Leader
41. 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
Tacit collusion
Mutual Interdependence
Monopolistic Competition
Pure monopoly
42. A simpler way to operationalize first-degree price discrimination
Horizontal Merger/Integration
Inter-industry competition
Two-part Tariff Method of Pricing
Concentration Ratio
43. Increases in the value of a product to each user - including existing users - as the total number of users rises
Two-part Tariff Method of Pricing
Network effects
Tacit collusion
Vertical Merger
44. 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
Peak-load pricing
Non-price competition
Bargaining Power of Suppliers
Open Collusion
45. In game theory - benefit obtained by party that moves first in a sequential game
Interdependence
Minimum efficient scale (full capacity)
Commodity bundling
First-mover advantage
46. Specific assets - Economies of scale - Excess capacity - Reputation effects
Perfect Competition Barriers to Entry
Third-degree price discrimination
Price Leadership
Perfect Competitor Making a Profit
47. When firms make decisions that make every firm better off than in a noncooperative Nash equilibrium
Non-price competition
Market Structure
Cooperation
Kinked demand curve model
48. Many buyers and sellers - product homogeneity - low cost and accurate information - free entry and exit - best regarded as a benchmark
Homogenous oligopoly
Perfect Competition (characteristics)
Kinked-demand curve
Mutual interdependence
49. Revenue-Costs
Cheating
Cross-subsidy pricing
Sequential-move game
Profit
50. The practice of charging different prices to consumers for the same good or service
Network effects
Price discrimination
Present Value (PV)
Prisoner's dilemma