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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. 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
Interdependence
Kinked demand curve model
Non-price competition
Finding profit for oligopoly games
2. If buyers have enough bargaining power - they can insist on lower prices - higher-quality products - or additional services
Bargaining Power of Buyers
Monopolistic Competition
Market Structure
Stackelberg oligopoly
3. 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
Monopolistic Competition
Kinked demand curve model
Inter-industry competition
Rothschild index
4. An attempt by a firm to convince buyers that its product is different from the products of other firms in the industry
Product differentiation
Herfindahl-Hirschman index (HHI)
Repeated game
Price war
5. An equilibrium in a game in which players do not cooperate but pursue their own self-interest
No cooperative equilibrium
Payoff table
Duopoly
Examples of Oligopoly
6. Pricing strategy in which a firm optimally sets the internal price at which an upstream division wells an input to a downstream division
Concentration Ratio
Transfer pricing
Undifferentiated
Mutual Interdependence
7. An establishment firm commits to setting price below the profit-maximizing level to prevent entry
Monopolistic Competition
Rothschild index
Limit pricing
High Price Elasticity
8. A situation where one firm is able to provide a service at a lower cost than could several competing firms
Socially optimal price
Simultaneous consumption
Non-cooperative behavior
Natural Monopoly (local phone or electric company)
9. 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.)
Nonprime competition
Profit
Monopolistic Characteristics:
Market Structure
10. A situation in which all decision makers know the payoff table - and they believe all other decision makers also know the payoff table
Lerner index
Nash equilibrium
Common knowledge
Cooperative equilibrium
11. A strategy in which a firm advertises a price and a promise to match any lower prices offered by a competitor
Competitive market
Price discrimination
Price matching
Imperfect competition
12. 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
Interdependence
Extensive-form game
Secure strategy
Duopoly
13. 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
Cheating
Basis for Product Differentiation
Dominant firm oligopoly
Rothschild index
14. An equilibrium in a game in which players cooperate to increase their mutual payoff
Payoff matrix
Implicit Collusion
Cooperative equilibrium
Sweezy oligopoly
15. A strategy whereby a player randomizes over two or more available actions in order to keep rivals from being able to predict his action
Mixed (randomized) strategy
Business strategy
Nonprime competition
Joint Venture
16. A merger of firms in unrelated industries. Example: If Purina Dow Chow merged with Pampers Diaper Company
Conglomerate Merger
Sequential-move game
Strategic behavior
Monopolistic Characteristics:
17. In game theory - a decision rule that describes the actions a player will take at each decision point
Socially optimal price
Monopolistic Characteristics:
Strategy
Competitive market
18. 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
Examples of Oligopoly
Subgame perfect equilibrium
Perfect Competition Long Run Supply
Stackelberg oligopoly
19. The smallest quantity at which the average cost curve reaches its minimum
Secure strategy
What is game?
Minimum efficient scale (full capacity)
Reservation Price
20. 2 firms - simplest case in an oligopoly. Profits higher if limiting their production
Duopoly
Interdependence
Finding profit for oligopoly games
Non-cooperative behavior
21. Variations on one good so that a firm can increase market sharea
Simultaneous consumption
Cournot oligopoly
Brand Multiplication
Non-cooperative equilibrium
22. (1) Economies of Scale; (2) Economies of Scope; (3) Cost Complementarity; and (4)Patents & Other Legal Barriers
Perfect Competition Long Run Supply
Non-rivalrous consumption
Maximizing profit in Oligopoly games
Primary Sources of Monopolistic Power
23. A measure of market power - the percentage of all sales that is accounted for by the four or eight largest firms in the market
Price discrimination
Concentration Ratio
First-Degree Price Discrimination (Perfect)
Cournot equilibrium
24. The competition for sales between the products of one industry and the products of another industry
Bargaining Power of Suppliers
First-mover advantage
Inter-industry competition
Nash equilibrium
25. In game theory - benefit obtained by party that moves first in a sequential game
Transfer pricing
Price Leadership
First-mover advantage
Dominant strategy equilibrium
26. Steel - autos - colas - airlines
Undifferentiated
Price Leadership
Examples of Oligopoly
Two-part Tariff Method of Pricing
27. Demand line is above ATC curve
Prisoners' dilemma
Stackelberg oligopoly
Implicit Collusion
Perfect Competitor Making a Profit
28. The situation when a firm's long-run average costs fall as it increases output
Bertrand oligopoly
Disappearing invisible hand
Limit price
Economies of scale
29. When no one firm has a monopoly - but producers nonetheless realize that they can affect market prices. Firms compete but possess market power
Dominant strategy
Limit price
Imperfect competition
Price Leadership
30. Pricing strategy in which a firm intentionally varies its price in an attempt to "hide" price information from consumers and rivals
Secure strategy
Sweezy oligopoly
High Price Elasticity
Randomized pricing
31. A situation in which a change in price strategy by one firm affects sales and profits of another
Mutual interdependence
Duopoly
Rent-seeking behavior
Payoff matrix
32. All firms and individuals willing and able to buy or sell a particular product
Market
Basis for Product Differentiation
Limit pricing
Dominant strategy
33. 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
Leader
Collusion
Cournot equilibrium
34. First firm to set its output (Stackelberg's model)
Inefficiency
Commodity bundling
Third-Degree Price Discrimination
Leader
35. 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)
Four-firm concentration ratio
Repeated game
Price discrimination
Perfect Competition Short Run Supply
36. An oligopoly in which the firms produce a differentiated product
Normal-form game
Cutthroat Competition
Strategy
Differentiated oligopoly
37. 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
Market Structure
Bertrand oligopoly
Competitive market
Limit price
38. A strategy that guarantees the highest payoff given the worst possible scenario
Stackelberg oligopoly
Payoff table
Secure strategy
Sequential-move game
39. The reward received by a player in a game - such as the profit earned by an oligopolist
Extensive-form game
Leader
Payoff
Price matching
40. A product's ability to satisfy a large number of consumers at the same time
No cooperative equilibrium
Simultaneous consumption
Non-cooperative equilibrium
Cournot equilibrium
41. 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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42. 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
Unbalanced Oligopoly
Bargaining Power of Suppliers
Marginal Revenue
Open Collusion
43. Multiple firms make the same pricing decisions even though they have not explicitly consulted with each other
Cournot equilibrium
Limit price
Implicit Collusion
Non-cooperative behavior
44. 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)
Market Structure
Covert Collusion
Equilibrium
Stackelberg oligopoly
45. Game in which each player makes decisions without knowledge of the other player's decisions
Maximizing profit in Oligopoly games
Simultaneous-move game
Kinked-demand curve
Product Differentiation
46. Sets the price at the highest level that is consistent with keeping the potential entrant out. -The strategy of reducing the price to deter entry
Cournot oligopoly
Horizontal Merger/Integration
Brand Multiplication
Limit pricing
47. 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
Trigger strategy
Basis for Product Differentiation
Dominant strategy equilibrium
Cheating
48. The practice of bundling several different products together and selling them at a single "bundle" price
Limit pricing
Commodity bundling
Fair return price
Covert Collusion
49. Many buyers and sellers - product homogeneity - low cost and accurate information - free entry and exit - best regarded as a benchmark
Product differentiation
Concentration Ratio
Four-firm concentration ratio
Perfect Competition (characteristics)
50. When something can be consumed without reducing the benefits available for subsequent consumption; can be consumed without supporting rivalry between consumers
Dominant strategy equilibrium
Business strategy
Vertical Merger
Non-rivalrous consumption