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






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






3. 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






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






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






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






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






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






10. 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






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






12. Rules - strategies - payoffs - outcomes






13. 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)






14. 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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15. Involves price-fixing






16. 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






17. 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






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






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






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






21. Demand line is above ATC curve






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






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






24. The maximum price that a buyer is willing to pay for a good - or the minimum price that a seller will accept






25. 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)






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






27. Toothpaste - shampoo - restaurants - banks






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






29. 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






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






31. Nash equilibrium - the result when each player in a game chooses the action that maximizes his or her payoff given the actions of other players - ignoring the effects of his or her action on the payoffs received by those players (when you confess w






32. 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






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






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






35. Price Sensitive






36. An index of market concentration. Sum of squared market shares of all the firms in the industry times 10K HHI=10 - 000Σwi2






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






38. Revenue-Costs






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






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






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






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






43. Both players have dominant strategies and play them






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






45. Price of a product that enables its producer to obtain a normal profit & that is equal to the ATC of producing it






46. The demand curve for a non-collusive oligopolist - which is based on the assumption that rivals will match a price decrease and will ignore a price increase






47. 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)






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






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






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