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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. Cooperation among firms that does not involve an explicit agreement






2. Single seller in an industry - Strong barriers to entry - Profit maximization - faces market demand and sets MR=MC - Unexploited gains from trade






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






4. Operates like the alleged Mafia. Region division of the market among the firms in the industry






5. 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"






6. The reward received by a player in a game - such as the profit earned by an oligopolist






7. A pricing strategy in which profits gained from the sale of one product are used to subsidize sales of a related product






8. Involves price-fixing






9. An attempt by a firm to convince buyers that its product is different from the products of other firms in the industry






10. When firms make decisions that make every firm better off than in a noncooperative Nash equilibrium






11. 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






12. Demand line is above ATC curve






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






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






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






16. 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






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






18. Maximize economic profit by producing the quantity at which MC=MR






19. A situation where one firm is able to provide a service at a lower cost than could several competing firms






20. Keeps the price just where it is to maximize profit






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






22. The exclusive right to a product for a period of 20 years from the date the product is invented






23. 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






24. 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






25. In game theory - a decision rule that describes the actions a player will take at each decision point






26. Toothpaste - shampoo - restaurants - banks






27. A simpler way to operationalize first-degree price discrimination






28. The situation when a firm's long-run average costs fall as it increases output






29. An oligopoly in which the sales of the leading (top four) firms are distributed unevenly among them






30. In game theory - a game that is played again sometime after the previous game ends






31. 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






32. Steel - autos - colas - airlines






33. Marginal cost curve above average variable cost - P* = SRMC






34. Game in which one player makes a move after observing the other player's move






35. 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.)






36. 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






37. Multiple firms make the same pricing decisions even though they have not explicitly consulted with each other






38. A situation in which a change in price strategy by one firm affects sales and profits of another






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






40. When firms limit production and raise prices in a way that raises each others' profits - even though they have not made any formal agreement






41. 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






42. A measure of market power - the percentage of all sales that is accounted for by the four or eight largest firms in the market






43. A merger between firms who have a buyer/supplier relationship. Example: BF Goodrich merging with rubber plantations






44. 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






45. 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






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






47. When something can be consumed without reducing the benefits available for subsequent consumption; can be consumed without supporting rivalry between consumers






48. Price of a product that enables its producer to obtain a normal profit & that is equal to the ATC of producing it






49. 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






50. 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