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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. An agreement among firms in a market about quantities to produce or prices to charge in attempts to limit competition
Collusion
Price war
Sequential game
Concentration Ratio
2. The competition for sales between the products of one industry and the products of another industry
Non-cooperative equilibrium
Concentration Ratio
Inter-industry competition
Equilibrium
3. 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
Contestable market
Tacit collusion
Lerner index
Merger
4. When the decisions of two or more firms significantly affect each others' profits
Tit-for-tat strategy
Dansby-Willig performance index
Interdependence
Differentiated oligopoly
5. Demand line is above ATC curve
Natural Monopoly (local phone or electric company)
Perfect Competitor Making a Profit
Prisoners' dilemma
Finding profit for oligopoly games
6. Competition based on factors that are not related to price - such as product quality - service and financing - business location - and reputation
Limit pricing
Cooperative equilibrium
Third-Degree Price Discrimination
Nonprime competition
7. Ranks industries according to how much social welfare would improve if the output in an industry were increased by a small amount
Maximizing profit in Oligopoly games
Dansby-Willig performance index
Cournot oligopoly
Strategic behavior
8. In game theory - a decision rule that describes the actions a player will take at each decision point
Cheating
Strategy
Subgame perfect equilibrium
Inter-industry competition
9. The smallest quantity at which the average cost curve reaches its minimum
Concentration Ratio
Finding profit for oligopoly games
Inter-industry competition
Minimum efficient scale (full capacity)
10. When managers are able to charge each consumer their reservation price. Examples are car and home sales
Payoff table
First-Degree Price Discrimination (Perfect)
What is game?
Two-part Tariff Method of Pricing
11. The physical characteristics of the market within which firms interact
Indefinitely repeated game
Market Structure
Double marginalization
Price Leadership
12. If buyers have enough bargaining power - they can insist on lower prices - higher-quality products - or additional services
Perfect Competition Long Run Supply
The Threat from Potential Entrants Firms
Bargaining Power of Buyers
Ownership of a Key Input
13. Different units of a product are sold at different prices. Examples are buying in bulk - or - commodity-bundling
Finding profit for oligopoly games
Joint Venture
Market Structure
Second-Degree Price Discrimination
14. A strategy that guarantees the highest payoff given the worst possible scenario
Unbalanced Oligopoly
Secure strategy
Collusion
Lerner index
15. A situation where one firm is able to provide a service at a lower cost than could several competing firms
Basis for Product Differentiation
Natural Monopoly (local phone or electric company)
Patent
Dominant strategy
16. A strategy whereby a player randomizes over two or more available actions in order to keep rivals from being able to predict his action
The Threat from Potential Entrants Firms
Mixed (randomized) strategy
Peak-load pricing
Finding profit for oligopoly games
17. Both players have dominant strategies and play them
Dominant strategy equilibrium
Bertrand oligopoly
Socially optimal price
Basis for Product Differentiation
18. Many buyers and sellers - product homogeneity - low cost and accurate information - free entry and exit - best regarded as a benchmark
High Price Elasticity
Perfect Competition (characteristics)
Patent
Extensive-form game
19. Toothpaste - shampoo - restaurants - banks
Finding profit for oligopoly games
Examples of Monopolistic Competition
One-shot game
Imperfect competition
20. 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
No cooperative equilibrium
What is game?
Concentration Ratio
Monopolistic Competition
21. A table that shows the payoffs for every possible action by each player for every possible action by the other player
Mixed (randomized) strategy
Payoff matrix
Limit price
No cooperative equilibrium
22. The situation when a firm's long-run average costs fall as it increases output
Tacit collusion
Double marginalization
Tit-for-tat strategy
Economies of scale
23. Set marginal cost for the cartel equal to marginal revenue for the cartel; -cartel's marginal cost curve is the horizontal sum of the MC curves of the two firms; -Marginal revenue curve is like that of a monopoly
Finding profit for oligopoly games
Dominant strategy
Sweezy oligopoly
Repeated game
24. A strategy in which a firm advertises a price and a promise to match any lower prices offered by a competitor
Third-degree price discrimination
Examples of Monopolistic Competition
Price matching
Cooperative equilibrium
25. 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
Minimum efficient scale (full capacity)
Subgame perfect equilibrium
Credible threat
Limit pricing
26. The competition that domestic firms encounter from the products and services of foreign producers
Pure monopoly
Rothschild index
One-shot game
Import competition
27. A situation in which all decision makers know the payoff table - and they believe all other decision makers also know the payoff table
One-shot game
Present Value (PV)
Common knowledge
Perfect Competition Long Run Supply
28. The practice of charging different prices to consumers for the same good or service
Cooperation
Price discrimination
Third-degree price discrimination
Strategy
29. In game theory - game where parties make their moves in turn - one party making the first move followed by the other
Sequential game
Cournot oligopoly
Tit-for-tat strategy
Non-cooperative equilibrium
30. Price of a product that enables its producer to obtain a normal profit & that is equal to the ATC of producing it
Maximizing profit in Oligopoly games
Double marginalization
Fair return price
Cutthroat Competition
31. A situation in which neither firm has incentive to change its output given the other firm's output
Perfect Competition Long Run Supply
Bargaining Power of Buyers
Cournot equilibrium
Strategy
32. The actions by persons - firms - or unions to gain special benefits from government at taxpayer's or someone else's expense
Rothschild index
Price matching
Nonprime competition
Rent-seeking behavior
33. 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
Payoff matrix
Interdependence
Payoff table
Second-Degree Price Discrimination
34. Keeps the price just where it is to maximize profit
Duopoly
Implicit Collusion
Cutthroat Competition
Prisoners' dilemma
35. Price Sensitive
Simultaneous consumption
Fair return price
Equilibrium
High Price Elasticity
36. Pricing strategy in which a firm intentionally varies its price in an attempt to "hide" price information from consumers and rivals
High Price Elasticity
Brand Multiplication
Randomized pricing
Maximizing profit in Oligopoly games
37. When no one firm has a monopoly - but producers nonetheless realize that they can affect market prices. Firms compete but possess market power
Perfect Competition (characteristics)
Imperfect competition
Ownership of a Key Input
Simultaneous decision games
38. Pricing strategy in which identical products are packaged together in order to enhance profits by forcing customers to make an all-or-none decision to purchase
Two-part Tariff Method of Pricing
Block pricing
Concentration Ratio
Non-rivalrous consumption
39. An oligopoly in which the firms produce a standardized product
Bertrand oligopoly
Lerner index
Contestable market
Homogenous oligopoly
40. Ignoring the effects of their actions on each others' profits
Price matching
Second-Degree Price Discrimination
Indefinitely repeated game
Non-cooperative behavior
41. 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)
Network effects
Cooperative equilibrium
Perfect Competition (characteristics)
Barrier to entry
42. 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.)
Sequential game
Monopolistic Characteristics:
Natural Monopoly (local phone or electric company)
Price discrimination
43. 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
Monopolistic Competition
Prisoners' dilemma
Nash equilibrium
Oligopoly
44. 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
Open Collusion
Present Value (PV)
Bargaining Power of Suppliers
Price Leadership
45. In game theory - a game that is played again sometime after the previous game ends
Open Collusion
Repeated game
Cooperation
Covert Collusion
46. 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
Empty threat
Imperfect competition
Tacit collusion
47. 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
Cournot oligopoly
Perfect Competition Long Run Supply
Undifferentiated
Follower
48. 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)
Fair return price
Perfect Competition Long Run Supply
Rothschild index
Four-firm concentration ratio
49. A merger between firms who have a buyer/supplier relationship. Example: BF Goodrich merging with rubber plantations
Homogenous oligopoly
Vertical Merger
Kinked demand curve model
Perfect Competition Long Run Supply
50. Maximize economic profit by producing the quantity at which MC=MR
Limit pricing
High Price Elasticity
Maximizing profit in Oligopoly games
Cutthroat Competition