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Test your basic knowledge |
Business Competition
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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. In game theory - game where parties make their moves in turn - one party making the first move followed by the other
Conglomerate Merger
Socially optimal price
Sequential game
Follower
2. Sellers can identify different types of customers and offer each a different price. Examples are special prices for students or the elderly
Two-part pricing
Cheating
Non-price competition
Third-Degree Price Discrimination
3. A simpler way to operationalize first-degree price discrimination
Joint Venture
Barrier to entry
Examples of Monopolistic Competition
Two-part Tariff Method of Pricing
4. A firm whose price decisions are tacitly accepted and followed by others in the industry
Kinked-demand curve
Fair return price
Price Leadership
One-shot game
5. A situation in which neither firm has incentive to change its output given the other firm's output
Follower
Cournot equilibrium
Bertrand oligopoly
Inefficiency
6. 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
Product Differentiation
Product differentiation
Double marginalization
Primary Sources of Monopolistic Power
7. 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
Payoff matrix
Monopolistic Competition
Cutthroat Competition
Strategy
8. In game theory - a statement of harmful intent by one party that the other party views as believable-- "if you do this - we will do that"
Credible threat
Perfect Competitor Making a Profit
Payoff matrix
Cournot oligopoly
9. 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)
First-mover advantage
Horizontal Merger/Integration
Simultaneous decision games
10. 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
Kinked demand curve model
Peak-load pricing
Cournot oligopoly
High Price Elasticity
11. The price that is low enough to deter entry
Limit price
Brand Multiplication
Collusion
Reservation Price
12. In game theory - a decision rule that describes the actions a player will take at each decision point
Perfect Competitor Characteristics
Strategy
Imperfect competition
Cooperation
13. When firms limit production and raise prices in a way that raises each others' profits - even though they have not made any formal agreement
Tacit collusion
Minimum efficient scale (full capacity)
Examples of Monopolistic Competition
Monopolistic Characteristics:
14. A measure of market power - the percentage of all sales that is accounted for by the four or eight largest firms in the market
Concentration Ratio
Contestable market
Perfect Competition Short Run Supply
Peak-load pricing
15. An agreement among firms in a market about quantities to produce or prices to charge in attempts to limit competition
Common knowledge
Trigger strategy
Collusion
Open Collusion
16. An oligopoly in which the sales of the leading (top four) firms are distributed unevenly among them
Monopolistic Characteristics:
Horizontal Merger/Integration
Simultaneous consumption
Unbalanced Oligopoly
17. Takes Place inside the Mind of the consumer
Dansby-Willig performance index
Perfect Competitor Making a Profit
Double marginalization
Product Differentiation
18. Ranks industries according to how much social welfare would improve if the output in an industry were increased by a small amount
Profit
Monopolistic Competition
Business strategy
Dansby-Willig performance index
19. Intense competition in which competitors cut retail prices to gain business--oligopolistic competition
Dominant strategy
Payoff matrix
Price war
Two-part pricing
20. The actions by persons - firms - or unions to gain special benefits from government at taxpayer's or someone else's expense
Payoff
Limit pricing
Two-part Tariff Method of Pricing
Rent-seeking behavior
21. The derivative of total revenue
Equilibrium
Price Leadership
Two-part Tariff Method of Pricing
Marginal Revenue
22. Pricing strategy in which higher prices are charged during peak hours than during off-peak hours
Rothschild index
Peak-load pricing
Trigger strategy
Monopoly (characteristics)
23. 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.)
Normal-form game
Profit
Monopolistic Characteristics:
Common knowledge
24. Many buyers and sellers - product homogeneity - low cost and accurate information - free entry and exit - best regarded as a benchmark
Minimum efficient scale (full capacity)
Limit pricing
Economies of scale
Perfect Competition (characteristics)
25. If production of a good requires a particular input - then control of that input can be a barrier to entry
Cross-subsidy pricing
Differentiated oligopoly
Randomized pricing
Ownership of a Key Input
26. 2 firms - simplest case in an oligopoly. Profits higher if limiting their production
Non-cooperative equilibrium
Basis for Product Differentiation
Second-Degree Price Discrimination
Duopoly
27. A strategy that guarantees the highest payoff given the worst possible scenario
Dominant strategy equilibrium
Mixed (randomized) strategy
Secure strategy
Simultaneous decision games
28. A table that shows the payoffs that each firm earns from every combination of strategies by the firms
Lerner index
Payoff matrix
Price war
Rothschild index
29. 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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30. Multiple firms make the same pricing decisions even though they have not explicitly consulted with each other
Extensive-form game
Import competition
Implicit Collusion
Disappearing invisible hand
31. When no one firm has a monopoly - but producers nonetheless realize that they can affect market prices. Firms compete but possess market power
Product Differentiation
Imperfect competition
First-mover advantage
Perfect Competition (characteristics)
32. Increases in the value of a product to each user - including existing users - as the total number of users rises
Present Value (PV)
Prisoners' dilemma
Economies of scale
Network effects
33. Occurs when a firm produces output - whatever its level - at a higher cost than is necessary to produce it
Perfect Competitor Characteristics
Inefficiency
Limit price
First-Degree Price Discrimination (Perfect)
34. A strategy in which a firm advertises a price and a promise to match any lower prices offered by a competitor
Sequential-move game
Strategy
Perfect Competition (characteristics)
Price matching
35. When the decisions of two or more firms significantly affect each others' profits
Interdependence
Second-Degree Price Discrimination
Reservation Price
Perfect Competition Long Run Supply
36. Involves price-fixing
Kinked demand curve model
Covert Collusion
Second-Degree Price Discrimination
Simultaneous-move game
37. First firm to set its output (Stackelberg's model)
Lerner index
Leader
Commodity bundling
One-shot game
38. 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
Market Structure
Non-cooperative equilibrium
Unbalanced Oligopoly
Imperfect competition
39. (1) Economies of Scale; (2) Economies of Scope; (3) Cost Complementarity; and (4)Patents & Other Legal Barriers
Primary Sources of Monopolistic Power
Examples of Oligopoly
Simultaneous consumption
No cooperative equilibrium
40. 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
Contestable market
Randomized pricing
Bargaining Power of Suppliers
Product Differentiation
41. An equilibrium in a game in which players do not cooperate but pursue their own self-interest
Rothschild index
No cooperative equilibrium
Monopoly (characteristics)
Reservation Price
42. A strategy whereby a player randomizes over two or more available actions in order to keep rivals from being able to predict his action
Herfindahl-Hirschman index (HHI)
Socially optimal price
Reservation Price
Mixed (randomized) strategy
43. Toothpaste - shampoo - restaurants - banks
Brand Multiplication
Covert Collusion
Cooperation
Examples of Monopolistic Competition
44. A merger of firms in unrelated industries. Example: If Purina Dow Chow merged with Pampers Diaper Company
Stackelberg oligopoly
Pure monopoly
Payoff matrix
Conglomerate Merger
45. A situation in which a change in price strategy by one firm affects sales and profits of another
Price discrimination
Fair return price
Mutual interdependence
Vertical Merger
46. The practice of charging different prices to consumers for the same good or service
Sequential-move game
Price discrimination
Cooperation
Stackelberg oligopoly
47. Demand line is above ATC curve
Monopoly (characteristics)
Perfect Competitor Making a Profit
Market Structure
Simultaneous-move game
48. A situation in which no one wants to change his or her behavior
Dansby-Willig performance index
Equilibrium
Business strategy
Limit price
49. Pricing strategy in which a firm optimally sets the internal price at which an upstream division wells an input to a downstream division
Transfer pricing
Second-Degree Price Discrimination
Primary Sources of Monopolistic Power
Third-degree price discrimination
50. 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
Market Structure
Block pricing
Socially optimal price
Limit pricing