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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 situation where one firm is able to provide a service at a lower cost than could several competing firms
Maximizing profit in Oligopoly games
Double marginalization
Natural Monopoly (local phone or electric company)
Cournot oligopoly
2. 2 firms - simplest case in an oligopoly. Profits higher if limiting their production
High Price Elasticity
Pure monopoly
Duopoly
Bargaining Power of Buyers
3. An oligopoly in which the firms produce a standardized product
Dominant strategy
Homogenous oligopoly
Cross-subsidy pricing
Two-part Tariff Method of Pricing
4. Marginal cost curve above average variable cost - P* = SRMC
Nash equilibrium
Dominant strategy equilibrium
Maximizing profit in Oligopoly games
Perfect Competition Short Run Supply
5. (1) Economies of Scale; (2) Economies of Scope; (3) Cost Complementarity; and (4)Patents & Other Legal Barriers
Non-rivalrous consumption
Tit-for-tat strategy
Oligopoly
Primary Sources of Monopolistic Power
6. A merger between two firms in the same industry. Example: 2004 K-Mart merged with Sears
Horizontal Merger/Integration
Common knowledge
Implicit Collusion
Kinked-demand curve
7. The practice of charging different prices to consumers for the same good or service
Finding profit for oligopoly games
Four-firm concentration ratio
Payoff table
Price discrimination
8. A merger between firms who have a buyer/supplier relationship. Example: BF Goodrich merging with rubber plantations
Double marginalization
Mixed (randomized) strategy
Vertical Merger
Examples of Oligopoly
9. 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
Limit pricing
Sweezy oligopoly
Horizontal Merger/Integration
Monopoly (characteristics)
10. All firms and individuals willing and able to buy or sell a particular product
Market
Block pricing
Unbalanced Oligopoly
Finding profit for oligopoly games
11. 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.)
Monopolistic Characteristics:
Business strategy
Perfect Competition Long Run Supply
First-mover advantage
12. 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
Mutual Interdependence
Commodity bundling
Nash equilibrium
Network effects
13. A table that shows the payoffs that each firm earns from every combination of strategies by the firms
Payoff matrix
Cross-subsidy pricing
Price Leadership
Barrier to entry
14. The derivative of total revenue
Import competition
Tacit collusion
Covert Collusion
Marginal Revenue
15. The physical characteristics of the market within which firms interact
Herfindahl-Hirschman index (HHI)
Market Structure
Commodity bundling
Joint Venture
16. The price of a product that results in the most efficient allocation of an economy's resources and that is equal to the marginal cost of the product
Socially optimal price
Cooperative equilibrium
Cooperation
Interdependence
17. Game in which each player makes decisions without knowledge of the other player's decisions
Cooperation
Merger
Extensive-form game
Simultaneous-move game
18. A combination of two or more companies into one company
Merger
Trigger strategy
Collusion
Common knowledge
19. When no one firm has a monopoly - but producers nonetheless realize that they can affect market prices. Firms compete but possess market power
Horizontal Merger/Integration
Non-cooperative equilibrium
Brand Multiplication
Imperfect competition
20. A strategy whereby a player randomizes over two or more available actions in order to keep rivals from being able to predict his action
Market Structure
Covert Collusion
Inefficiency
Mixed (randomized) strategy
21. 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)
Collusion
Equilibrium
Barrier to entry
Price discrimination
22. Price of a product that enables its producer to obtain a normal profit & that is equal to the ATC of producing it
Fair return price
Unbalanced Oligopoly
Price Leadership
Secure strategy
23. A table that shows the payoffs for every possible action by each player for every possible action by the other player
Contestable market
Primary Sources of Monopolistic Power
Payoff matrix
Interdependence
24. 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
Examples of Monopolistic Competition
Two-part Tariff Method of Pricing
Secure strategy
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
Transfer pricing
What is game?
Homogenous oligopoly
26. The exclusive right to a product for a period of 20 years from the date the product is invented
Dominant strategy equilibrium
Patent
Socially optimal price
Examples of Monopolistic Competition
27. Single seller in an industry - Strong barriers to entry - Profit maximization - faces market demand and sets MR=MC - Unexploited gains from trade
Market
Rothschild index
Monopoly (characteristics)
Fair return price
28. Operates like the alleged Mafia. Region division of the market among the firms in the industry
Open Collusion
Prisoner's dilemma
Undifferentiated
Bargaining Power of Buyers
29. Rules - strategies - payoffs - outcomes
Indefinitely repeated game
Rothschild index
What is game?
Perfect Competitor Characteristics
30. In game theory - a game that is played again sometime after the previous game ends
Follower
Payoff matrix
Repeated game
Nonprime competition
31. Simultaneous move game that is not repeated
Economies of scale
Non-price competition
One-shot game
Implicit Collusion
32. In game theory - a statement of harmful intent easily dismissed by recipient because threat not considered believable
Empty threat
Duopoly
Oligopoly
What is game?
33. 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)
Cooperative equilibrium
Interdependence
Stackelberg oligopoly
Monopolistic Characteristics:
34. 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
Competitive market
Non-cooperative equilibrium
Ownership of a Key Input
Commodity bundling
35. The actions by persons - firms - or unions to gain special benefits from government at taxpayer's or someone else's expense
Cheating
Rent-seeking behavior
Two-part Tariff Method of Pricing
Bargaining Power of Suppliers
36. 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
Barrier to entry
Sweezy oligopoly
Sequential game
Two-part pricing
37. Many buyers and sellers - product homogeneity - low cost and accurate information - free entry and exit - best regarded as a benchmark
Differentiated oligopoly
Common knowledge
Perfect Competition (characteristics)
Limit price
38. Game in which one player makes a move after observing the other player's move
Block pricing
Oligopoly
Unbalanced Oligopoly
Sequential-move game
39. Maximize economic profit by producing the quantity at which MC=MR
Maximizing profit in Oligopoly games
Cheating
One-shot game
Joint Venture
40. Involves price-fixing
Kinked demand curve model
Covert Collusion
Nash equilibrium
Equilibrium
41. The practice of bundling several different products together and selling them at a single "bundle" price
Commodity bundling
Stackelberg oligopoly
Product differentiation
Tit-for-tat strategy
42. 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"
Marginal Revenue
Sequential-move game
Basis for Product Differentiation
Credible threat
43. When firms make decisions that make every firm better off than in a noncooperative Nash equilibrium
Cooperation
Economies of scale
Merger
Product differentiation
44. Keeps the price just where it is to maximize profit
Cutthroat Competition
Trigger strategy
Inefficiency
Economies of scale
45. The maximum price that a buyer is willing to pay for a good - or the minimum price that a seller will accept
Tacit collusion
Reservation Price
Transfer pricing
Examples of Oligopoly
46. 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
Lerner index
Socially optimal price
Mutual interdependence
Bargaining Power of Suppliers
47. Produce identical products
Perfect Competition Barriers to Entry
Sequential game
Herfindahl-Hirschman index (HHI)
Perfect Competitor Characteristics
48. An equilibrium in a game in which players cooperate to increase their mutual payoff
Cross-subsidy pricing
Cooperative equilibrium
Interdependence
Inter-industry competition
49. Identical or substitutable
Inter-industry competition
Undifferentiated
Rent-seeking behavior
Dominant strategy equilibrium
50. If production of a good requires a particular input - then control of that input can be a barrier to entry
Equilibrium
Limit price
Ownership of a Key Input
Non-cooperative equilibrium