Test your basic knowledge |

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. Actions taken by a firm to achieve a goal - such as maximizing profits






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






3. Ranks industries according to how much social welfare would improve if the output in an industry were increased by a small amount






4. Physical differences - Convenience - Ambience - Reputations - Appeals to vanity - Unconscious fears and desires - Snob appeal - Customized products






5. A merger of firms in unrelated industries. Example: If Purina Dow Chow merged with Pampers Diaper Company






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






7. A situation where one firm is able to provide a service at a lower cost than could several competing firms






8. 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)






9. The practice of charging different prices to consumers for the same good or service






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






11. In game theory - a decision rule that describes the actions a player will take at each decision point






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






13. 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






14. Toothpaste - shampoo - restaurants - banks






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






16. Where a firm can charge different groups of consumers different prices for the same product. Example: student or senior discounts






17. 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






18. A simpler way to operationalize first-degree price discrimination






19. 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






20. 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






21. The reward received by a player in a game - such as the profit earned by an oligopolist






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






24. Rules - strategies - payoffs - outcomes






25. Produce identical products






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






27. When the decisions of two or more firms significantly affect each others' profits






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






29. A strategy in which a firm advertises a price and a promise to match any lower prices offered by a competitor






30. Demand line is above ATC curve






31. Maximize economic profit by producing the quantity at which MC=MR






32. The exclusive right to a product for a period of 20 years from the date the product is invented






33. 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






34. Takes Place inside the Mind of the consumer






35. Actions taken by firms to plan for and react to competition from rival firms






36. A situation in which all decision makers know the payoff table - and they believe all other decision makers also know the payoff table






37. A representation of a game that summarizes the players - the information available to them at each stage - the strategies available to them - the sequence of moves - and the payoffs resulting from alternative strategies






38. 2 firms - simplest case in an oligopoly. Profits higher if limiting their production






39. 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






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






41. When a manager makes a noncooperative decision






42. Many buyers and sellers - product homogeneity - low cost and accurate information - free entry and exit - best regarded as a benchmark






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






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






45. A merger between two firms in the same industry. Example: 2004 K-Mart merged with Sears






46. The competition for sales between the products of one industry and the products of another industry






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






48. A merger between firms who have a buyer/supplier relationship. Example: BF Goodrich merging with rubber plantations






49. Pricing strategy in which higher prices are charged during peak hours than during off-peak hours






50. A situation in which a change in price strategy by one firm affects sales and profits of another