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Test your basic knowledge |
Business Competition
Start Test
Study First
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. Identical or substitutable
Follower
Third-Degree Price Discrimination
Undifferentiated
Payoff matrix
2. A strategy that is contingent on the past play of a game and ion which some particular past action "triggers" a different action by a player
Trigger strategy
Sequential-move game
Network effects
Reservation Price
3. 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
Dominant firm oligopoly
Competitive market
Concentration Ratio
Indefinitely repeated game
4. When no one firm has a monopoly - but producers nonetheless realize that they can affect market prices. Firms compete but possess market power
Price Leadership
Competitive market
Imperfect competition
Perfect Competitor Making a Profit
5. Different units of a product are sold at different prices. Examples are buying in bulk - or - commodity-bundling
Sweezy oligopoly
Second-Degree Price Discrimination
Mutual Interdependence
Rothschild index
6. 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
Sweezy oligopoly
Monopoly (characteristics)
Monopolistic Competition
Mutual interdependence
7. The competition for sales between the products of one industry and the products of another industry
Bertrand oligopoly
Inter-industry competition
Randomized pricing
Ownership of a Key Input
8. The smallest quantity at which the average cost curve reaches its minimum
Covert Collusion
Minimum efficient scale (full capacity)
What is game?
Mutual interdependence
9. Involves price-fixing
Dansby-Willig performance index
Examples of Monopolistic Competition
Oligopoly
Covert Collusion
10. Steel - autos - colas - airlines
Four-firm concentration ratio
Perfect Competition (characteristics)
Examples of Oligopoly
What is game?
11. The price that is low enough to deter entry
Follower
Perfect Competitor Making a Profit
Import competition
Limit price
12. 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
Kinked demand curve model
Reservation Price
Finding profit for oligopoly games
Inefficiency
13. A situation in which no one wants to change his or her behavior
Basis for Product Differentiation
Equilibrium
Stackelberg oligopoly
Payoff matrix
14. Many buyers and sellers - product homogeneity - low cost and accurate information - free entry and exit - best regarded as a benchmark
Perfect Competition (characteristics)
Barrier to entry
Nash equilibrium
Herfindahl-Hirschman index (HHI)
15. 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
Merger
Ownership of a Key Input
Non-price competition
Non-cooperative equilibrium
16. Multiple firms make the same pricing decisions even though they have not explicitly consulted with each other
Common knowledge
Implicit Collusion
Kinked demand curve model
Cournot equilibrium
17. An index of market concentration. Sum of squared market shares of all the firms in the industry times 10K HHI=10 - 000Σwi2
Herfindahl-Hirschman index (HHI)
Imperfect competition
Examples of Oligopoly
Brand Multiplication
18. 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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19. 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)
Nonprime competition
Simultaneous decision games
Rothschild index
Four-firm concentration ratio
20. Ranks industries according to how much social welfare would improve if the output in an industry were increased by a small amount
Mixed (randomized) strategy
Disappearing invisible hand
Mutual interdependence
Dansby-Willig performance index
21. Variations on one good so that a firm can increase market sharea
Brand Multiplication
Present Value (PV)
Strategy
Covert Collusion
22. Keeps the price just where it is to maximize profit
Kinked demand curve model
Cutthroat Competition
Price discrimination
Mixed (randomized) strategy
23. Competition based on factors that are not related to price - such as product quality - service and financing - business location - and reputation
Product Differentiation
Present Value (PV)
Maximizing profit in Oligopoly games
Nonprime competition
24. 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
Credible threat
Lerner index
First-Degree Price Discrimination (Perfect)
Price war
25. 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
Perfect Competition Long Run Supply
Oligopoly
Reservation Price
Inefficiency
26. If buyers have enough bargaining power - they can insist on lower prices - higher-quality products - or additional services
Two-part pricing
Block pricing
Bargaining Power of Buyers
Tacit collusion
27. All firms and individuals willing and able to buy or sell a particular product
Price war
Tacit collusion
Inefficiency
Market
28. Operates like the alleged Mafia. Region division of the market among the firms in the industry
Cooperative equilibrium
Patent
Open Collusion
Non-cooperative behavior
29. A firm whose price decisions are tacitly accepted and followed by others in the industry
Nonprime competition
The Threat from Potential Entrants Firms
Perfect Competition (characteristics)
Price Leadership
30. A merger of firms in unrelated industries. Example: If Purina Dow Chow merged with Pampers Diaper Company
Limit price
Perfect Competition Short Run Supply
Conglomerate Merger
Block pricing
31. Price Sensitive
High Price Elasticity
Commodity bundling
Cournot oligopoly
Secure strategy
32. An oligopoly in which the firms produce a differentiated product
Profit
Differentiated oligopoly
Basis for Product Differentiation
Third-Degree Price Discrimination
33. Single firm is sole producer of a product for which there are no close substitutes
Block pricing
Product Differentiation
Pure monopoly
Profit
34. Pricing strategy in which higher prices are charged during peak hours than during off-peak hours
Network effects
Strategic behavior
Rent-seeking behavior
Peak-load pricing
35. 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
Monopoly (characteristics)
Mutual Interdependence
Examples of Oligopoly
Kinked demand curve model
36. 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
Joint Venture
Nonprime competition
Perfect Competition (characteristics)
Sequential game
37. A situation in which a change in price strategy by one firm affects sales and profits of another
Duopoly
Bargaining Power of Buyers
Mutual interdependence
Prisoners' dilemma
38. Actions taken by firms to plan for and react to competition from rival firms
Extensive-form game
Non-cooperative equilibrium
Strategic behavior
Import competition
39. Occurs when a firm produces output - whatever its level - at a higher cost than is necessary to produce it
Homogenous oligopoly
Barrier to entry
Inefficiency
Cross-subsidy pricing
40. 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
No cooperative equilibrium
Monopoly (characteristics)
Price matching
Block pricing
41. When the decisions of two or more firms significantly affect each others' profits
Sequential-move game
Interdependence
Nonprime competition
Sweezy oligopoly
42. 2 firms - simplest case in an oligopoly. Profits higher if limiting their production
Tacit collusion
Minimum efficient scale (full capacity)
Inefficiency
Duopoly
43. When managers are able to charge each consumer their reservation price. Examples are car and home sales
Limit price
First-Degree Price Discrimination (Perfect)
Payoff matrix
Indefinitely repeated game
44. 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
Kinked-demand curve
Perfect Competitor Making a Profit
Contestable market
Block pricing
45. An attempt by a firm to convince buyers that its product is different from the products of other firms in the industry
Two-part Tariff Method of Pricing
Product differentiation
Joint Venture
Non-cooperative equilibrium
46. (1) Economies of Scale; (2) Economies of Scope; (3) Cost Complementarity; and (4)Patents & Other Legal Barriers
Perfect Competition (characteristics)
Market Structure
Sequential-move game
Primary Sources of Monopolistic Power
47. Pricing strategy in which a firm optimally sets the internal price at which an upstream division wells an input to a downstream division
Import competition
Transfer pricing
Rothschild index
Market
48. 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
Collusion
Cross-subsidy pricing
Cooperation
Double marginalization
49. An oligopoly in which the sales of the leading (top four) firms are distributed unevenly among them
Unbalanced Oligopoly
Simultaneous decision games
Nash equilibrium
Third-degree price discrimination
50. Cooperation among firms that does not involve an explicit agreement
Tacit collusion
Minimum efficient scale (full capacity)
Patent
Stackelberg oligopoly