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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. Single seller in an industry - Strong barriers to entry - Profit maximization - faces market demand and sets MR=MC - Unexploited gains from trade
Non-price competition
Monopoly (characteristics)
Herfindahl-Hirschman index (HHI)
No cooperative equilibrium
2. In game theory - a game that is played again sometime after the previous game ends
Third-degree price discrimination
Repeated game
Indefinitely repeated game
Four-firm concentration ratio
3. A pricing strategy in which profits gained from the sale of one product are used to subsidize sales of a related product
Prisoner's dilemma
Repeated game
Cross-subsidy pricing
Monopolistic Characteristics:
4. In game theory - a statement of harmful intent easily dismissed by recipient because threat not considered believable
Mixed (randomized) strategy
Fair return price
Empty threat
Extensive-form game
5. Ranks industries according to how much social welfare would improve if the output in an industry were increased by a small amount
Cheating
Payoff
Bargaining Power of Suppliers
Dansby-Willig performance index
6. A situation in which all decision makers know the payoff table - and they believe all other decision makers also know the payoff table
Rothschild index
Duopoly
Bargaining Power of Suppliers
Common knowledge
7. 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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8. 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
Limit pricing
Credible threat
Sequential game
Non-cooperative equilibrium
9. The practice of bundling several different products together and selling them at a single "bundle" price
Price discrimination
Vertical Merger
Primary Sources of Monopolistic Power
Commodity bundling
10. A merger of firms in unrelated industries. Example: If Purina Dow Chow merged with Pampers Diaper Company
Monopolistic Competition
Monopolistic Characteristics:
Conglomerate Merger
Duopoly
11. In game theory - benefit obtained by party that moves first in a sequential game
Block pricing
Inter-industry competition
First-mover advantage
Merger
12. An oligopoly in which the firms produce a standardized product
Homogenous oligopoly
Minimum efficient scale (full capacity)
Imperfect competition
Limit pricing
13. 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"
Covert Collusion
Credible threat
Differentiated oligopoly
Limit pricing
14. Steel - autos - colas - airlines
Equilibrium
No cooperative equilibrium
Examples of Oligopoly
Non-cooperative equilibrium
15. 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
Rothschild index
Bargaining Power of Suppliers
Strategy
Covert Collusion
16. A table that shows the payoffs for every possible action by each player for every possible action by the other player
Simultaneous consumption
Cournot oligopoly
Non-cooperative behavior
Payoff matrix
17. All firms and individuals willing and able to buy or sell a particular product
Sweezy oligopoly
Kinked-demand curve
Market
Socially optimal price
18. The reward received by a player in a game - such as the profit earned by an oligopolist
Cutthroat Competition
Payoff
Economies of scale
Merger
19. A strategy whereby a player randomizes over two or more available actions in order to keep rivals from being able to predict his action
Contestable market
Marginal Revenue
Cooperative equilibrium
Mixed (randomized) strategy
20. Involves price-fixing
Leader
Inter-industry competition
Merger
Covert Collusion
21. 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
Differentiated oligopoly
Strategy
Repeated game
22. 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
Concentration Ratio
Limit pricing
Monopolistic Competition
Dansby-Willig performance index
23. An establishment firm commits to setting price below the profit-maximizing level to prevent entry
Primary Sources of Monopolistic Power
Limit pricing
Collusion
Second-Degree Price Discrimination
24. 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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25. Long-run marginal cost curve above long-run average cost
Merger
Joint Venture
Perfect Competition Long Run Supply
Ownership of a Key Input
26. The exclusive right to a product for a period of 20 years from the date the product is invented
Import competition
Perfect Competition Barriers to Entry
Patent
Nash equilibrium
27. Different units of a product are sold at different prices. Examples are buying in bulk - or - commodity-bundling
Leader
Second-Degree Price Discrimination
Marginal Revenue
Double marginalization
28. Takes Place inside the Mind of the consumer
Product Differentiation
Implicit Collusion
Non-price competition
Sequential game
29. 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
Payoff
Lerner index
Brand Multiplication
30. 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
Maximizing profit in Oligopoly games
Present Value (PV)
Leader
Nash equilibrium
31. 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
Cross-subsidy pricing
Rothschild index
Pure monopoly
Limit pricing
32. A table that shows the payoffs that each firm earns from every combination of strategies by the firms
Strategy
Payoff matrix
Monopoly (characteristics)
Product Differentiation
33. Operates like the alleged Mafia. Region division of the market among the firms in the industry
Third-Degree Price Discrimination
Open Collusion
Tacit collusion
Differentiated oligopoly
34. A situation in which competing firms must make their individual decisions without knowing the decisions of their rivals
Market Structure
Contestable market
Simultaneous decision games
Randomized pricing
35. A product's ability to satisfy a large number of consumers at the same time
Simultaneous consumption
Stackelberg oligopoly
Randomized pricing
Non-cooperative behavior
36. 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
Credible threat
Payoff matrix
Sweezy oligopoly
Dansby-Willig performance index
37. Price Sensitive
Sweezy oligopoly
High Price Elasticity
First-mover advantage
Disappearing invisible hand
38. A combination of two or more companies into one company
Socially optimal price
Perfect Competitor Making a Profit
Merger
Limit price
39. A strategy that guarantees the highest payoff given the worst possible scenario
Limit pricing
Secure strategy
Strategic behavior
Price discrimination
40. Physical differences - Convenience - Ambience - Reputations - Appeals to vanity - Unconscious fears and desires - Snob appeal - Customized products
Price matching
Basis for Product Differentiation
Double marginalization
Commodity bundling
41. A situation in which no one wants to change his or her behavior
Minimum efficient scale (full capacity)
Duopoly
Sequential game
Equilibrium
42. 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
Monopoly (characteristics)
Natural Monopoly (local phone or electric company)
Kinked-demand curve
Perfect Competitor Making a Profit
43. 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
Merger
Covert Collusion
Simultaneous-move game
44. 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
Double marginalization
Secure strategy
Bertrand oligopoly
Trigger strategy
45. 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)
Lerner index
Limit pricing
Four-firm concentration ratio
Natural Monopoly (local phone or electric company)
46. Demand line is above ATC curve
Perfect Competitor Making a Profit
Fair return price
Present Value (PV)
Reservation Price
47. 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
Horizontal Merger/Integration
Interdependence
Subgame perfect equilibrium
48. The price that is low enough to deter entry
Limit pricing
Implicit Collusion
Limit price
Perfect Competition Barriers to Entry
49. 1/(1+i)n
One-shot game
Present Value (PV)
Third-Degree Price Discrimination
Simultaneous consumption
50. When firms limit production and raise prices in a way that raises each others' profits - even though they have not made any formal agreement
Monopoly (characteristics)
Non-cooperative equilibrium
Open Collusion
Tacit collusion
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