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






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






3. When firms limit production and raise prices in a way that raises each others' profits - even though they have not made any formal agreement






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






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






6. A strategy whereby a player randomizes over two or more available actions in order to keep rivals from being able to predict his action






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






8. 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






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






10. 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






11. Both players have dominant strategies and play them






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






13. In game theory - a game that is played again sometime after the previous game ends






14. 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.)






15. A measure of the sensitivity to price of a product group as a whole relative to the sensitivity of the quantity demanded of a single firm to a change in its price. R=Et/Ef






16. When something can be consumed without reducing the benefits available for subsequent consumption; can be consumed without supporting rivalry between consumers






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






18. Intense competition in which competitors cut retail prices to gain business--oligopolistic competition






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






20. 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






21. 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






22. 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






23. When firms make decisions that make every firm better off than in a noncooperative Nash equilibrium






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






25. A situation in which neither firm has incentive to change its output given the other firm's output






26. Multiple firms make the same pricing decisions even though they have not explicitly consulted with each other






27. Pricing strategy in which a firm intentionally varies its price in an attempt to "hide" price information from consumers and rivals






28. Price Sensitive






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






30. Rules - strategies - payoffs - outcomes






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






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






33. 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)






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






35. Marginal cost curve above average variable cost - P* = SRMC






36. An equilibrium in a game in which players do not cooperate but pursue their own self-interest






37. Ignoring the effects of their actions on each others' profits






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






39. Variations on one good so that a firm can increase market sharea






40. An oligopoly in which the firms produce a differentiated product






41. 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






42. 2 firms - simplest case in an oligopoly. Profits higher if limiting their production






43. 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






44. The rules describe the setting of the game - the actions the players may take - and the consequences of those actions; -Advertising and R&D are also prisoners' dilemmas

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






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






47. Demand line is above ATC curve






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






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






50. Occurs when a firm produces output - whatever its level - at a higher cost than is necessary to produce it