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Business Competition

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. 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)






2. 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






3. An establishment firm commits to setting price below the profit-maximizing level to prevent entry






4. 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






5. A product's ability to satisfy a large number of consumers at the same time






6. Face competition from companies that currently are not in the market but might enter






7. An equilibrium in a game in which players do not cooperate but pursue their own self-interest






8. Multiple firms make the same pricing decisions even though they have not explicitly consulted with each other






9. 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






10. (1) Economies of Scale; (2) Economies of Scope; (3) Cost Complementarity; and (4)Patents & Other Legal Barriers






11. Competition based on factors that are not related to price - such as product quality - service and financing - business location - and reputation






12. Variations on one good so that a firm can increase market sharea






13. A combination of two or more companies into one company






14. An agreement among firms in a market about quantities to produce or prices to charge in attempts to limit competition






15. Cooperation among firms that does not involve an explicit agreement






16. Involves price-fixing






17. 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






18. In game theory - a statement of harmful intent easily dismissed by recipient because threat not considered believable






19. The derivative of total revenue






20. 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






21. A table showing - for every possible combination of decisions players can make - the outcomes or "payoffs" for each of the players in each decision combination






22. Steel - autos - colas - airlines






23. 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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24. Actions taken by firms to plan for and react to competition from rival firms






25. A strategy in which a firm advertises a price and a promise to match any lower prices offered by a competitor






26. The exclusive right to a product for a period of 20 years from the date the product is invented






27. Operates like the alleged Mafia. Region division of the market among the firms in the industry






28. Both players have dominant strategies and play them






29. A situation in which competing firms must make their individual decisions without knowing the decisions of their rivals






30. A merger between firms who have a buyer/supplier relationship. Example: BF Goodrich merging with rubber plantations






31. When a manager makes a noncooperative decision






32. The reward received by a player in a game - such as the profit earned by an oligopolist






33. Pricing strategy in which a firm optimally sets the internal price at which an upstream division wells an input to a downstream division






34. The actions by persons - firms - or unions to gain special benefits from government at taxpayer's or someone else's expense






35. A merger between two firms in the same industry. Example: 2004 K-Mart merged with Sears






36. 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






37. Produce identical products






38. A situation in which all decision makers know the payoff table - and they believe all other decision makers also know the payoff table






39. A simpler way to operationalize first-degree price discrimination






40. 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.)






41. 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"






42. An attempt by a firm to convince buyers that its product is different from the products of other firms in the industry






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)






44. A representation of a game indicating the players - their possible strategies - and the payoffs resulting from alternative strategies






45. 2 firms - simplest case in an oligopoly. Profits higher if limiting their production






46. 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






47. 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)






48. An oligopoly in which the firms produce a differentiated product






49. A pricing strategy in which profits gained from the sale of one product are used to subsidize sales of a related product






50. 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