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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 oligopoly in which the firms produce a differentiated product
Dominant strategy equilibrium
Kinked demand curve model
Four-firm concentration ratio
Differentiated oligopoly
2. The competition for sales between the products of one industry and the products of another industry
Inter-industry competition
High Price Elasticity
Unbalanced Oligopoly
Mutual Interdependence
3. A merger of firms in unrelated industries. Example: If Purina Dow Chow merged with Pampers Diaper Company
Conglomerate Merger
Dominant firm oligopoly
Implicit Collusion
Indefinitely repeated game
4. When the decisions of two or more firms significantly affect each others' profits
Interdependence
Leader
Dominant firm oligopoly
Primary Sources of Monopolistic Power
5. First firm to set its output (Stackelberg's model)
Leader
Two-part pricing
Inter-industry competition
Indefinitely repeated game
6. 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
Network effects
Kinked-demand curve
Tacit collusion
Nash equilibrium
7. Many buyers and sellers - product homogeneity - low cost and accurate information - free entry and exit - best regarded as a benchmark
Perfect Competition (characteristics)
Barrier to entry
Dominant strategy equilibrium
Undifferentiated
8. A situation in which neither firm has incentive to change its output given the other firm's output
Dansby-Willig performance index
Cournot equilibrium
Examples of Oligopoly
Reservation Price
9. Keeps the price just where it is to maximize profit
Cross-subsidy pricing
Cutthroat Competition
Nash equilibrium
Unbalanced Oligopoly
10. 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
Pure monopoly
Undifferentiated
Payoff matrix
Rothschild index
11. Competition based on factors that are not related to price - such as product quality - service and financing - business location - and reputation
Mutual interdependence
No cooperative equilibrium
One-shot game
Nonprime competition
12. Where a firm can charge different groups of consumers different prices for the same product. Example: student or senior discounts
Third-degree price discrimination
Kinked demand curve model
Indefinitely repeated game
Inter-industry competition
13. 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
Marginal Revenue
Perfect Competition Short Run Supply
Monopolistic Competition
14. Pricing strategy in which a firm optimally sets the internal price at which an upstream division wells an input to a downstream division
Competitive market
Transfer pricing
Nonprime competition
Payoff matrix
15. An equilibrium in a game in which players cooperate to increase their mutual payoff
Empty threat
Cooperative equilibrium
Open Collusion
Oligopoly
16. Pricing strategy in which higher prices are charged during peak hours than during off-peak hours
Payoff
Non-price competition
Oligopoly
Peak-load pricing
17. 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
Kinked-demand curve
Common knowledge
Joint Venture
High Price Elasticity
18. An equilibrium in a game in which players do not cooperate but pursue their own self-interest
No cooperative equilibrium
Competitive market
Randomized pricing
Leader
19. A measure of market power - the percentage of all sales that is accounted for by the four or eight largest firms in the market
Tit-for-tat strategy
Payoff matrix
Concentration Ratio
Competitive market
20. A product's ability to satisfy a large number of consumers at the same time
Simultaneous consumption
Double marginalization
Randomized pricing
Repeated game
21. Ignoring the effects of their actions on each others' profits
Dominant strategy
Non-cooperative behavior
High Price Elasticity
Barrier to entry
22. An index of market concentration. Sum of squared market shares of all the firms in the industry times 10K HHI=10 - 000Σwi2
Herfindahl-Hirschman index (HHI)
Oligopoly
Prisoners' dilemma
Strategic behavior
23. When a manager makes a noncooperative decision
Rent-seeking behavior
Cheating
Cournot oligopoly
Secure strategy
24. A merger between two firms in the same industry. Example: 2004 K-Mart merged with Sears
Differentiated oligopoly
Horizontal Merger/Integration
Market Structure
Subgame perfect equilibrium
25. 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
Second-Degree Price Discrimination
Mixed (randomized) strategy
Block pricing
Kinked demand curve model
26. 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
Stackelberg oligopoly
Dominant firm oligopoly
Oligopoly
Finding profit for oligopoly games
27. A pricing strategy in which profits gained from the sale of one product are used to subsidize sales of a related product
Non-cooperative behavior
High Price Elasticity
Cross-subsidy pricing
Trigger strategy
28. All firms and individuals willing and able to buy or sell a particular product
Market
Simultaneous-move game
Maximizing profit in Oligopoly games
Barrier to entry
29. When firms make decisions that make every firm better off than in a noncooperative Nash equilibrium
Market Structure
Cooperation
Cournot equilibrium
What is game?
30. 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
Mutual interdependence
Payoff table
Concentration Ratio
Inefficiency
31. Occurs when a firm produces output - whatever its level - at a higher cost than is necessary to produce it
Inefficiency
Homogenous oligopoly
Basis for Product Differentiation
Simultaneous consumption
32. 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
Network effects
Limit pricing
Simultaneous consumption
33. The physical characteristics of the market within which firms interact
Tit-for-tat strategy
Dominant strategy equilibrium
Market Structure
Simultaneous consumption
34. Revenue-Costs
Subgame perfect equilibrium
Indefinitely repeated game
Sequential-move game
Profit
35. When managers are able to charge each consumer their reservation price. Examples are car and home sales
Reservation Price
First-Degree Price Discrimination (Perfect)
Common knowledge
Import competition
36. Actions taken by firms to plan for and react to competition from rival firms
Transfer pricing
Strategic behavior
Contestable market
Tit-for-tat strategy
37. 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
Cooperation
Simultaneous-move game
Extensive-form game
No cooperative equilibrium
38. A combination of two or more companies into one company
Merger
Bertrand oligopoly
Concentration Ratio
Monopoly (characteristics)
39. In game theory - a decision rule that describes the actions a player will take at each decision point
Strategy
Trigger strategy
Cooperative equilibrium
Second-Degree Price Discrimination
40. 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
Sweezy oligopoly
Double marginalization
Secure strategy
Non-cooperative behavior
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. Pricing strategy in which consumers are charged a fixed fee for the right to purchase a product - plus a per-unit charge for each unit purchased
Follower
Repeated game
Two-part pricing
Payoff table
43. In game theory - benefit obtained by party that moves first in a sequential game
Prisoners' dilemma
First-mover advantage
Lerner index
Perfect Competition Long Run Supply
44. When firms limit production and raise prices in a way that raises each others' profits - even though they have not made any formal agreement
Cournot oligopoly
Concentration Ratio
Tacit collusion
Rent-seeking behavior
45. Intense competition in which competitors cut retail prices to gain business--oligopolistic competition
Perfect Competition Short Run Supply
Homogenous oligopoly
Fair return price
Price war
46. Cooperation among firms that does not involve an explicit agreement
Payoff
Nash equilibrium
Tacit collusion
Double marginalization
47. 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
Double marginalization
Limit pricing
Examples of Monopolistic Competition
48. Industry in which (1) few firms serving many customers; (2) firms produce identical products t constant marginal cost; (3) firms compete in price and react optimally to competitor's prices; (4) consumers have perfect information and here are no trans
Two-part pricing
Bertrand oligopoly
Open Collusion
Monopolistic Competition
49. An establishment firm commits to setting price below the profit-maximizing level to prevent entry
Open Collusion
Mutual interdependence
Prisoners' dilemma
Limit pricing
50. A situation in which a change in price strategy by one firm affects sales and profits of another
Indefinitely repeated game
Mutual interdependence
Import competition
Payoff matrix