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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. Each firm believes that if it raises its price - its competitors will not follow - but if it lowers its price all of its competitors will follow; -a model in which firms in an oligopoly match price cuts by other firms - but do not match price hike






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






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






4. Ranks industries according to how much social welfare would improve if the output in an industry were increased by a small amount






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






6. The practice of bundling several different products together and selling them at a single "bundle" price






7. A trigger strategy that punishes after an episode of cheating and returns to cooperation if cheating ends






8. 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






9. The derivative of total revenue






10. When no one firm has a monopoly - but producers nonetheless realize that they can affect market prices. Firms compete but possess market power






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






12. Revenue-Costs






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






14. Demand line is above ATC curve






15. 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






16. If buyers have enough bargaining power - they can insist on lower prices - higher-quality products - or additional services






17. 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






18. 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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19. 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)






20. Ignoring the effects of their actions on each others' profits






21. Single firm is sole producer of a product for which there are no close substitutes






22. The physical characteristics of the market within which firms interact






23. Physical differences - Convenience - Ambience - Reputations - Appeals to vanity - Unconscious fears and desires - Snob appeal - Customized products






24. The maximum price that a buyer is willing to pay for a good - or the minimum price that a seller will accept






25. If production of a good requires a particular input - then control of that input can be a barrier to entry






26. Intense competition in which competitors cut retail prices to gain business--oligopolistic competition






27. The practice of charging different prices to consumers for the same good or service






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






29. 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






30. Actions taken by a firm to achieve a goal - such as maximizing profits






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






32. Game in which each player makes decisions without knowledge of the other player's decisions






33. Using advertising and other means to try to increase a firm's sales






34. A situation in which neither firm has incentive to change its output given the other firm's output






35. A strategy whereby a player randomizes over two or more available actions in order to keep rivals from being able to predict his action






36. 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.)






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






38. Steel - autos - colas - airlines






39. Long-run marginal cost curve above long-run average cost






40. A market in which: (1) all have access to the same technology; (2) consumers respond quickly to price changes; (3) existing firms cannot respond quickly to entry by lowering their prices; and (4) there are no sunk costs






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






42. In game theory - game where parties make their moves in turn - one party making the first move followed by the other






43. When managers are able to charge each consumer their reservation price. Examples are car and home sales






44. 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






45. 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






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






47. 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






48. An equilibrium in a game in which players cooperate to increase their mutual payoff






49. In game theory - benefit obtained by party that moves first in a sequential game






50. The players end up worse off than they would if they were able to cooperate; -the pursuit of self-interest does not promote the social interest in these games