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






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






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






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






5. 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.)






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






7. 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






8. The competition that domestic firms encounter from the products and services of foreign producers






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






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






11. 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






12. 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)






13. Pricing strategy in which a firm optimally sets the internal price at which an upstream division wells an input to a downstream division






14. Long-run marginal cost curve above long-run average cost






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






16. When a manager makes a noncooperative decision






17. 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






18. Takes Place inside the Mind of the consumer






19. 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






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






21. 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






22. 1/(1+i)n






23. If buyers have enough bargaining power - they can insist on lower prices - higher-quality products - or additional services






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






25. A game that is played over and over again forever and in which players receive payoffs during each play of the game






26. First firm to set its output (Stackelberg's model)






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






28. 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






29. Involves price-fixing






30. The price that is low enough to deter entry






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






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






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






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






35. The physical characteristics of the market within which firms interact






36. 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)






37. Keeps the price just where it is to maximize profit






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






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. 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






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






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






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






44. An attempt by a firm to convince buyers that its product is different from the products of other firms in the industry






45. 2 firms - simplest case in an oligopoly. Profits higher if limiting their production






46. 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






47. 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






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






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






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