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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. An oligopoly in which the firms produce a differentiated product






2. An establishment firm commits to setting price below the profit-maximizing level to prevent entry






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






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






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






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






7. Pricing strategy in which consumers are charged a fixed fee for the right to purchase a product - plus a per-unit charge for each unit purchased






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






9. When each firm has an incentive to cheat - but both are worse off if both cheat -- illustrates why cooperation is difficult to maintain even when it is mutually beneficial to do so

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






11. 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)






12. 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






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






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






15. 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






16. Game in which each player makes decisions without knowledge of the other player's decisions






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






18. Sellers can identify different types of customers and offer each a different price. Examples are special prices for students or the elderly






19. A measure of market power - the percentage of all sales that is accounted for by the four or eight largest firms in the market






20. Operates like the alleged Mafia. Region division of the market among the firms in the industry






21. A situation in which no one wants to change his or her behavior






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






23. Both players have dominant strategies and play them






24. If production of a good requires a particular input - then control of that input can be a barrier to entry






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






26. 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






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






28. When a manager makes a noncooperative decision






29. Rival who sets its output after the leader (Stackelberg's model)






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






31. 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






32. 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






33. 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






34. 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






35. Using advertising and other means to try to increase a firm's sales






36. Price Sensitive






37. In game theory - benefit obtained by party that moves first in a sequential game






38. 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






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






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






41. The price that is low enough to deter entry






42. Single firm is sole producer of a product for which there are no close substitutes






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






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






45. 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.)






46. 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






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






48. All firms and individuals willing and able to buy or sell a particular product






49. Identical or substitutable






50. An oligopoly in which the sales of the leading (top four) firms are distributed unevenly among them