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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. 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
Inefficiency
Oligopoly
Vertical Merger
Tacit collusion
2. Pricing strategy in which a firm intentionally varies its price in an attempt to "hide" price information from consumers and rivals
Randomized pricing
Secure strategy
Rothschild index
Cheating
3. First firm to set its output (Stackelberg's model)
Leader
Basis for Product Differentiation
Simultaneous-move game
Double marginalization
4. Occurs when a firm produces output - whatever its level - at a higher cost than is necessary to produce it
Inefficiency
Lerner index
First-mover advantage
Non-rivalrous consumption
5. 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
Normal-form game
Business strategy
Concentration Ratio
Subgame perfect equilibrium
6. (1) Economies of Scale; (2) Economies of Scope; (3) Cost Complementarity; and (4)Patents & Other Legal Barriers
Homogenous oligopoly
Dominant firm oligopoly
Present Value (PV)
Primary Sources of Monopolistic Power
7. Different units of a product are sold at different prices. Examples are buying in bulk - or - commodity-bundling
Perfect Competition (characteristics)
Second-Degree Price Discrimination
Prisoner's dilemma
Third-Degree Price Discrimination
8. 2 firms - simplest case in an oligopoly. Profits higher if limiting their production
Horizontal Merger/Integration
Undifferentiated
Mixed (randomized) strategy
Duopoly
9. An attempt by a firm to convince buyers that its product is different from the products of other firms in the industry
Cross-subsidy pricing
Homogenous oligopoly
Subgame perfect equilibrium
Product differentiation
10. An agreement among firms in a market about quantities to produce or prices to charge in attempts to limit competition
Interdependence
Collusion
Concentration Ratio
Reservation Price
11. 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
First-mover advantage
Patent
Tacit collusion
12. The practice of bundling several different products together and selling them at a single "bundle" price
Bargaining Power of Buyers
Commodity bundling
Socially optimal price
Non-cooperative behavior
13. The smallest quantity at which the average cost curve reaches its minimum
No cooperative equilibrium
Minimum efficient scale (full capacity)
Profit
Non-price competition
14. A game that is played over and over again forever and in which players receive payoffs during each play of the game
Indefinitely repeated game
Bargaining Power of Buyers
No cooperative equilibrium
Disappearing invisible hand
15. 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
Monopolistic Competition
Mutual interdependence
Interdependence
16. 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
Open Collusion
Stackelberg oligopoly
Kinked-demand curve
Nonprime competition
17. 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
The Threat from Potential Entrants Firms
Limit pricing
Non-rivalrous consumption
Block pricing
18. Long-run marginal cost curve above long-run average cost
Four-firm concentration ratio
Perfect Competition Long Run Supply
Horizontal Merger/Integration
Mutual Interdependence
19. Involves price-fixing
Bargaining Power of Buyers
Perfect Competitor Making a Profit
Covert Collusion
Credible threat
20. One large firm that has a significant cost advantage over many other - smaller competing firms; -the large firm operates as a monopoly: setting price and output to maximize profit; -the small firms act as perfect competitors: taking as given the mar
Dominant firm oligopoly
Trigger strategy
Concentration Ratio
Inter-industry competition
21. When the decisions of two or more firms significantly affect each others' profits
Indefinitely repeated game
Interdependence
Extensive-form game
Market
22. A pricing strategy in which profits gained from the sale of one product are used to subsidize sales of a related product
Cross-subsidy pricing
Transfer pricing
Non-rivalrous consumption
Perfect Competitor Characteristics
23. When no one firm has a monopoly - but producers nonetheless realize that they can affect market prices. Firms compete but possess market power
Cutthroat Competition
Competitive market
Cournot equilibrium
Imperfect competition
24. Marginal cost curve above average variable cost - P* = SRMC
Commodity bundling
Perfect Competition Short Run Supply
Bargaining Power of Suppliers
First-Degree Price Discrimination (Perfect)
25. 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
Price matching
Business strategy
Vertical Merger
26. Operates like the alleged Mafia. Region division of the market among the firms in the industry
Open Collusion
Business strategy
Simultaneous-move game
Duopoly
27. A situation in which all decision makers know the payoff table - and they believe all other decision makers also know the payoff table
Leader
Perfect Competition Short Run Supply
Limit pricing
Common knowledge
28. An oligopoly in which the sales of the leading (top four) firms are distributed unevenly among them
Bargaining Power of Buyers
Perfect Competition Long Run Supply
Unbalanced Oligopoly
Two-part Tariff Method of Pricing
29. 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
Vertical Merger
Ownership of a Key Input
Bargaining Power of Suppliers
The Threat from Potential Entrants Firms
30. A merger between firms who have a buyer/supplier relationship. Example: BF Goodrich merging with rubber plantations
Implicit Collusion
Leader
Import competition
Vertical Merger
31. A merger between two firms in the same industry. Example: 2004 K-Mart merged with Sears
Horizontal Merger/Integration
Minimum efficient scale (full capacity)
Cheating
Simultaneous consumption
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
Market Structure
Examples of Oligopoly
Bertrand oligopoly
Perfect Competition (characteristics)
33. All firms and individuals willing and able to buy or sell a particular product
Simultaneous decision games
Market
Natural Monopoly (local phone or electric company)
Perfect Competition (characteristics)
34. 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
Non-rivalrous consumption
Nonprime competition
Follower
Trigger strategy
35. Single firm is sole producer of a product for which there are no close substitutes
Market
Examples of Oligopoly
Follower
Pure monopoly
36. 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
Undifferentiated
Non-cooperative equilibrium
High Price Elasticity
Prisoners' dilemma
37. 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)
Price war
Follower
Limit price
38. 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.)
Present Value (PV)
Dansby-Willig performance index
The Threat from Potential Entrants Firms
Monopolistic Characteristics:
39. A firm whose price decisions are tacitly accepted and followed by others in the industry
Price Leadership
Monopoly (characteristics)
Kinked-demand curve
Limit pricing
40. In game theory - a decision rule that describes the actions a player will take at each decision point
Fair return price
Price war
Strategy
Implicit Collusion
41. Multiple firms make the same pricing decisions even though they have not explicitly consulted with each other
Examples of Monopolistic Competition
Unbalanced Oligopoly
Implicit Collusion
Sweezy oligopoly
42. A representation of a game that summarizes the players - the information available to them at each stage - the strategies available to them - the sequence of moves - and the payoffs resulting from alternative strategies
Monopoly (characteristics)
Fair return price
Randomized pricing
Extensive-form game
43. 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)
Tit-for-tat strategy
Limit pricing
Perfect Competitor Making a Profit
Four-firm concentration ratio
44. An oligopoly in which the firms produce a standardized product
Tacit collusion
Homogenous oligopoly
Inter-industry competition
Natural Monopoly (local phone or electric company)
45. A trigger strategy that punishes after an episode of cheating and returns to cooperation if cheating ends
Mutual interdependence
Monopoly (characteristics)
Kinked demand curve model
Tit-for-tat strategy
46. A strategy whereby a player randomizes over two or more available actions in order to keep rivals from being able to predict his action
Prisoners' dilemma
Homogenous oligopoly
Cournot equilibrium
Mixed (randomized) strategy
47. 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
Rothschild index
Inefficiency
Perfect Competition Long Run Supply
Dominant strategy equilibrium
48. The exclusive right to a product for a period of 20 years from the date the product is invented
Lerner index
Patent
Perfect Competition Barriers to Entry
Marginal Revenue
49. 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
Perfect Competition Long Run Supply
Monopolistic Competition
Duopoly
Profit
50. Cooperation among firms that does not involve an explicit agreement
Network effects
Tacit collusion
Mutual interdependence
Business strategy