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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. A firm whose price decisions are tacitly accepted and followed by others in the industry
Price Leadership
Oligopoly
Monopoly (characteristics)
Indefinitely repeated game
2. In game theory - a game that is played again sometime after the previous game ends
Repeated game
Perfect Competitor Characteristics
Fair return price
Strategic behavior
3. 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.)
Monopolistic Characteristics:
Common knowledge
Mutual Interdependence
Market
4. A merger between firms who have a buyer/supplier relationship. Example: BF Goodrich merging with rubber plantations
Vertical Merger
Examples of Oligopoly
Reservation Price
Price Leadership
5. A situation in which neither firm has incentive to change its output given the other firm's output
Conglomerate Merger
Disappearing invisible hand
Cournot equilibrium
Normal-form game
6. 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
Conglomerate Merger
What is game?
Payoff
7. 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)
Price matching
Monopoly (characteristics)
Barrier to entry
Dominant strategy
8. Identical or substitutable
Cournot oligopoly
Brand Multiplication
Undifferentiated
Implicit Collusion
9. 1/(1+i)n
Herfindahl-Hirschman index (HHI)
Present Value (PV)
Open Collusion
Conglomerate Merger
10. An oligopoly in which the firms produce a differentiated product
Differentiated oligopoly
Monopoly (characteristics)
Price matching
Concentration Ratio
11. An oligopoly in which the sales of the leading (top four) firms are distributed unevenly among them
Simultaneous decision games
Non-rivalrous consumption
Unbalanced Oligopoly
One-shot game
12. 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
Trigger strategy
Prisoner's dilemma
Product Differentiation
Competitive market
13. Simultaneous move game that is not repeated
Inter-industry competition
Mixed (randomized) strategy
Kinked-demand curve
One-shot game
14. 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
Lerner index
Interdependence
Follower
Implicit Collusion
15. A situation in which a change in price strategy by one firm affects sales and profits of another
Follower
Mutual interdependence
Prisoners' dilemma
Bargaining Power of Buyers
16. 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
Minimum efficient scale (full capacity)
Third-degree price discrimination
Kinked demand curve model
Sweezy oligopoly
17. When something can be consumed without reducing the benefits available for subsequent consumption; can be consumed without supporting rivalry between consumers
Vertical Merger
Mutual interdependence
Non-rivalrous consumption
Four-firm concentration ratio
18. Ranks industries according to how much social welfare would improve if the output in an industry were increased by a small amount
Third-degree price discrimination
Trigger strategy
Dansby-Willig performance index
Double marginalization
19. The maximum price that a buyer is willing to pay for a good - or the minimum price that a seller will accept
Reservation Price
Inefficiency
Cutthroat Competition
Perfect Competitor Making a Profit
20. Using advertising and other means to try to increase a firm's sales
Contestable market
Non-price competition
Economies of scale
Dominant strategy equilibrium
21. A pricing strategy in which profits gained from the sale of one product are used to subsidize sales of a related product
Cross-subsidy pricing
Double marginalization
Network effects
Dansby-Willig performance index
22. A strategy whereby a player randomizes over two or more available actions in order to keep rivals from being able to predict his action
Ownership of a Key Input
Second-Degree Price Discrimination
Business strategy
Mixed (randomized) strategy
23. A few firms produce most market output - Products may or may not be differentiated - Effective entry barriers protect firm profitability - Firm interdependence requires strategic thinking
Simultaneous-move game
Oligopoly
Pure monopoly
Non-price competition
24. Actions taken by a firm to achieve a goal - such as maximizing profits
Business strategy
Secure strategy
Subgame perfect equilibrium
Competitive market
25. When no one firm has a monopoly - but producers nonetheless realize that they can affect market prices. Firms compete but possess market power
Third-Degree Price Discrimination
Reservation Price
Imperfect competition
Equilibrium
26. A strategy in which a firm advertises a price and a promise to match any lower prices offered by a competitor
Price matching
Sequential game
Concentration Ratio
Normal-form game
27. Competition based on factors that are not related to price - such as product quality - service and financing - business location - and reputation
Mutual interdependence
Nonprime competition
Leader
Natural Monopoly (local phone or electric company)
28. Demand line is above ATC curve
Prisoner's dilemma
Payoff
Limit pricing
Perfect Competitor Making a Profit
29. 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
Contestable market
Empty threat
Prisoners' dilemma
Block pricing
30. A business arrangement in which two or more firms undertake a specific economic activity together. Once the activity is over - the firms go their own way
Joint Venture
Secure strategy
Cooperation
Four-firm concentration ratio
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
Interdependence
Bargaining Power of Suppliers
Mutual Interdependence
Limit pricing
32. The competition that domestic firms encounter from the products and services of foreign producers
Patent
Sweezy oligopoly
Import competition
Third-Degree Price Discrimination
33. Increases in the value of a product to each user - including existing users - as the total number of users rises
Unbalanced Oligopoly
Concentration Ratio
Network effects
Price Leadership
34. In game theory - benefit obtained by party that moves first in a sequential game
Undifferentiated
First-mover advantage
Price discrimination
Payoff
35. A game that is played over and over again forever and in which players receive payoffs during each play of the game
Import competition
Indefinitely repeated game
Two-part pricing
Kinked demand curve model
36. A strategy or action that always provides the best outcome no matter what decisions rivals make
Dominant strategy
Strategic behavior
Imperfect competition
Marginal Revenue
37. An equilibrium in a game in which players cooperate to increase their mutual payoff
Third-degree price discrimination
Cooperative equilibrium
Sequential-move game
Limit pricing
38. In game theory - game where parties make their moves in turn - one party making the first move followed by the other
Sequential game
Nash equilibrium
Reservation Price
Present Value (PV)
39. Different units of a product are sold at different prices. Examples are buying in bulk - or - commodity-bundling
Limit pricing
Second-Degree Price Discrimination
Two-part Tariff Method of Pricing
Minimum efficient scale (full capacity)
40. The derivative of total revenue
High Price Elasticity
Fair return price
Simultaneous decision games
Marginal Revenue
41. Steel - autos - colas - airlines
Equilibrium
Examples of Oligopoly
Primary Sources of Monopolistic Power
Collusion
42. Both players have dominant strategies and play them
Dominant strategy equilibrium
Kinked demand curve model
Joint Venture
Cross-subsidy pricing
43. The situation when a firm's long-run average costs fall as it increases output
Duopoly
Ownership of a Key Input
Tacit collusion
Economies of scale
44. Maximize economic profit by producing the quantity at which MC=MR
Implicit Collusion
Maximizing profit in Oligopoly games
Brand Multiplication
Perfect Competition Short Run Supply
45. 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
Cooperation
Import competition
Dominant strategy equilibrium
Payoff table
46. When firms limit production and raise prices in a way that raises each others' profits - even though they have not made any formal agreement
Perfect Competition (characteristics)
Tacit collusion
Duopoly
Bargaining Power of Buyers
47. Game in which each player makes decisions without knowledge of the other player's decisions
Product Differentiation
Simultaneous consumption
Simultaneous-move game
Conglomerate Merger
48. 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
Nonprime competition
Sweezy oligopoly
Monopoly (characteristics)
Simultaneous consumption
49. Single firm is sole producer of a product for which there are no close substitutes
Pure monopoly
Perfect Competition Barriers to Entry
Trigger strategy
Mixed (randomized) strategy
50. The actions by persons - firms - or unions to gain special benefits from government at taxpayer's or someone else's expense
Collusion
Rent-seeking behavior
No cooperative equilibrium
Fair return price