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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. 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
Limit pricing
Payoff
Homogenous oligopoly
Extensive-form game
2. The reward received by a player in a game - such as the profit earned by an oligopolist
Dominant firm oligopoly
Cooperative equilibrium
Minimum efficient scale (full capacity)
Payoff
3. Ranks industries according to how much social welfare would improve if the output in an industry were increased by a small amount
Covert Collusion
Price Leadership
Competitive market
Dansby-Willig performance index
4. When an upstream divisions leverages "monopoly like" power to charge higher marginal cost to a downstream division - resulting in failure of the firm to optimize profits based on the wrong quantity decision at the firms level
Payoff table
Mutual Interdependence
Differentiated oligopoly
Double marginalization
5. Toothpaste - shampoo - restaurants - banks
Subgame perfect equilibrium
Horizontal Merger/Integration
Patent
Examples of Monopolistic Competition
6. In game theory - a statement of harmful intent easily dismissed by recipient because threat not considered believable
Empty threat
Vertical Merger
Peak-load pricing
Perfect Competition (characteristics)
7. Cooperation among firms that does not involve an explicit agreement
Minimum efficient scale (full capacity)
Barrier to entry
Tacit collusion
Payoff
8. 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
Implicit Collusion
Rothschild index
Sweezy oligopoly
Interdependence
9. Specific assets - Economies of scale - Excess capacity - Reputation effects
Perfect Competition Barriers to Entry
Nonprime competition
Homogenous oligopoly
Rothschild index
10. 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
Examples of Monopolistic Competition
Perfect Competition Long Run Supply
No cooperative equilibrium
11. 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
Business strategy
Interdependence
Inefficiency
12. Pricing strategy in which a firm optimally sets the internal price at which an upstream division wells an input to a downstream division
Nash equilibrium
Homogenous oligopoly
Transfer pricing
Monopolistic Characteristics:
13. All firms and individuals willing and able to buy or sell a particular product
Reservation Price
Covert Collusion
Simultaneous decision games
Market
14. 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"
Credible threat
Prisoners' dilemma
Inter-industry competition
Secure strategy
15. An equilibrium in a game in which players do not cooperate but pursue their own self-interest
No cooperative equilibrium
Patent
Block pricing
Profit
16. Variations on one good so that a firm can increase market sharea
Basis for Product Differentiation
Mutual interdependence
Brand Multiplication
Covert Collusion
17. 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
Differentiated oligopoly
Perfect Competition Short Run Supply
Trigger strategy
First-Degree Price Discrimination (Perfect)
18. In game theory - benefit obtained by party that moves first in a sequential game
Two-part pricing
Import competition
First-mover advantage
Simultaneous consumption
19. One large firm that has a significant cost advantage over many other - smaller competing firms; -the large firm operates as a monopoly: setting price and output to maximize profit; -the small firms act as perfect competitors: taking as given the mar
Randomized pricing
Price discrimination
Nonprime competition
Dominant firm oligopoly
20. An agreement among firms in a market about quantities to produce or prices to charge in attempts to limit competition
Tit-for-tat strategy
Collusion
Pure monopoly
Disappearing invisible hand
21. Actions taken by firms to plan for and react to competition from rival firms
Secure strategy
Prisoners' dilemma
Mutual interdependence
Strategic behavior
22. 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
Randomized pricing
Basis for Product Differentiation
Monopolistic Characteristics:
Cournot oligopoly
23. A table that shows the payoffs that each firm earns from every combination of strategies by the firms
Simultaneous consumption
Limit pricing
Payoff matrix
Extensive-form game
24. Both players have dominant strategies and play them
Equilibrium
Dominant strategy equilibrium
Import competition
Competitive market
25. If production of a good requires a particular input - then control of that input can be a barrier to entry
Repeated game
Price war
Ownership of a Key Input
Undifferentiated
26. A combination of two or more companies into one company
Mixed (randomized) strategy
Socially optimal price
Price Leadership
Merger
27. 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
Follower
Dominant firm oligopoly
Extensive-form game
Mutual Interdependence
28. A merger between two firms in the same industry. Example: 2004 K-Mart merged with Sears
Minimum efficient scale (full capacity)
Indefinitely repeated game
Horizontal Merger/Integration
Nash equilibrium
29. Marginal cost curve above average variable cost - P* = SRMC
Dominant strategy
Simultaneous-move game
Normal-form game
Perfect Competition Short Run Supply
30. Sellers can identify different types of customers and offer each a different price. Examples are special prices for students or the elderly
Strategy
Two-part Tariff Method of Pricing
Third-Degree Price Discrimination
First-mover advantage
31. The situation that exists when two or more groups need each other and must depend on each other to accomplish a goal that is important to each of them
Product differentiation
Examples of Oligopoly
Mutual Interdependence
Marginal Revenue
32. Steel - autos - colas - airlines
Non-price competition
Examples of Oligopoly
Price discrimination
Mutual Interdependence
33. Price Sensitive
Dansby-Willig performance index
Equilibrium
High Price Elasticity
Merger
34. The actions by persons - firms - or unions to gain special benefits from government at taxpayer's or someone else's expense
Normal-form game
Empty threat
Two-part pricing
Rent-seeking behavior
35. 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
Horizontal Merger/Integration
Joint Venture
Four-firm concentration ratio
Sweezy oligopoly
36. 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
Present Value (PV)
Peak-load pricing
Kinked demand curve model
Horizontal Merger/Integration
37. 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)
Mixed (randomized) strategy
Stackelberg oligopoly
Price discrimination
Limit pricing
38. Price of a product that enables its producer to obtain a normal profit & that is equal to the ATC of producing it
Cross-subsidy pricing
Fair return price
Trigger strategy
Minimum efficient scale (full capacity)
39. An index of market concentration. Sum of squared market shares of all the firms in the industry times 10K HHI=10 - 000Σwi2
Limit price
Market
Herfindahl-Hirschman index (HHI)
Brand Multiplication
40. 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
Nash equilibrium
Limit pricing
Oligopoly
Cross-subsidy pricing
41. A situation in which a change in price strategy by one firm affects sales and profits of another
Conglomerate Merger
Mutual interdependence
Payoff matrix
Marginal Revenue
42. The smallest quantity at which the average cost curve reaches its minimum
Socially optimal price
Payoff table
Minimum efficient scale (full capacity)
Natural Monopoly (local phone or electric company)
43. A strategy or action that always provides the best outcome no matter what decisions rivals make
Import competition
Sequential game
Dominant strategy
Tit-for-tat strategy
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
Cheating
Bargaining Power of Suppliers
Tacit collusion
Maximizing profit in Oligopoly games
45. Rules - strategies - payoffs - outcomes
Fair return price
Leader
Cournot oligopoly
What is game?
46. When managers are able to charge each consumer their reservation price. Examples are car and home sales
Strategic behavior
First-Degree Price Discrimination (Perfect)
What is game?
Mutual Interdependence
47. An oligopoly in which the sales of the leading (top four) firms are distributed unevenly among them
Bertrand oligopoly
Present Value (PV)
Third-Degree Price Discrimination
Unbalanced Oligopoly
48. 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
Examples of Oligopoly
Bargaining Power of Suppliers
Non-cooperative equilibrium
Two-part Tariff Method of Pricing
49. Keeps the price just where it is to maximize profit
Cutthroat Competition
Oligopoly
Network effects
Tit-for-tat strategy
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
Joint Venture
Tacit collusion
Credible threat
Reservation Price