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Test your basic knowledge |
Business Competition
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Subject
:
business-skills
Instructions:
Answer 50 questions in 15 minutes.
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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. 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.)
Four-firm concentration ratio
Monopolistic Characteristics:
Open Collusion
Third-Degree Price Discrimination
2. An oligopoly in which the firms produce a standardized product
Homogenous oligopoly
Reservation Price
Dominant strategy equilibrium
Block pricing
3. An equilibrium in a game in which players do not cooperate but pursue their own self-interest
No cooperative equilibrium
Natural Monopoly (local phone or electric company)
Barrier to entry
High Price Elasticity
4. A merger between firms who have a buyer/supplier relationship. Example: BF Goodrich merging with rubber plantations
Vertical Merger
Non-cooperative equilibrium
Perfect Competition Barriers to Entry
Price war
5. Simultaneous move game that is not repeated
One-shot game
Examples of Oligopoly
Peak-load pricing
Herfindahl-Hirschman index (HHI)
6. Increases in the value of a product to each user - including existing users - as the total number of users rises
Present Value (PV)
Perfect Competition Short Run Supply
Network effects
Prisoner's dilemma
7. An attempt by a firm to convince buyers that its product is different from the products of other firms in the industry
Product differentiation
The Threat from Potential Entrants Firms
Strategic behavior
Natural Monopoly (local phone or electric company)
8. Steel - autos - colas - airlines
Examples of Oligopoly
Bargaining Power of Buyers
Price Leadership
Present Value (PV)
9. A table that shows the payoffs that each firm earns from every combination of strategies by the firms
Double marginalization
Stackelberg oligopoly
Equilibrium
Payoff matrix
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
Follower
Rothschild index
Third-degree price discrimination
Mutual interdependence
11. First firm to set its output (Stackelberg's model)
Dansby-Willig performance index
Interdependence
Leader
Covert Collusion
12. (1) Economies of Scale; (2) Economies of Scope; (3) Cost Complementarity; and (4)Patents & Other Legal Barriers
Primary Sources of Monopolistic Power
Limit pricing
Normal-form game
High Price Elasticity
13. Identical or substitutable
Stackelberg oligopoly
Monopolistic Characteristics:
Undifferentiated
Contestable market
14. A situation in which all decision makers know the payoff table - and they believe all other decision makers also know the payoff table
Product differentiation
Monopolistic Competition
Common knowledge
Dansby-Willig performance index
15. 2 firms - simplest case in an oligopoly. Profits higher if limiting their production
Two-part pricing
Bargaining Power of Buyers
Duopoly
Monopolistic Competition
16. Ranks industries according to how much social welfare would improve if the output in an industry were increased by a small amount
Tacit collusion
Present Value (PV)
Dansby-Willig performance index
Prisoner's dilemma
17. When something can be consumed without reducing the benefits available for subsequent consumption; can be consumed without supporting rivalry between consumers
Non-rivalrous consumption
Perfect Competition (characteristics)
Cournot equilibrium
Limit pricing
18. 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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19. Set marginal cost for the cartel equal to marginal revenue for the cartel; -cartel's marginal cost curve is the horizontal sum of the MC curves of the two firms; -Marginal revenue curve is like that of a monopoly
Concentration Ratio
One-shot game
Non-cooperative equilibrium
Finding profit for oligopoly games
20. The physical characteristics of the market within which firms interact
Mixed (randomized) strategy
Market Structure
Examples of Monopolistic Competition
Two-part pricing
21. A strategy that guarantees the highest payoff given the worst possible scenario
Secure strategy
Examples of Monopolistic Competition
One-shot game
Perfect Competitor Making a Profit
22. A strategy in which a firm advertises a price and a promise to match any lower prices offered by a competitor
Non-rivalrous consumption
Price matching
Cournot equilibrium
Price Leadership
23. 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
Trigger strategy
Block pricing
Pure monopoly
Contestable market
24. 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
Follower
Kinked demand curve model
Mutual Interdependence
Price discrimination
25. An agreement among firms in a market about quantities to produce or prices to charge in attempts to limit competition
Collusion
Cournot oligopoly
Contestable market
Ownership of a Key Input
26. A strategy or action that always provides the best outcome no matter what decisions rivals make
Cutthroat Competition
Dominant strategy
Equilibrium
What is game?
27. Face competition from companies that currently are not in the market but might enter
Open Collusion
Cooperative equilibrium
The Threat from Potential Entrants Firms
Sequential-move game
28. The maximum price that a buyer is willing to pay for a good - or the minimum price that a seller will accept
Dominant strategy
Basis for Product Differentiation
Reservation Price
Import competition
29. Long-run marginal cost curve above long-run average cost
Economies of scale
Limit pricing
Perfect Competition Long Run Supply
Price war
30. Cooperation among firms that does not involve an explicit agreement
Third-degree price discrimination
Third-Degree Price Discrimination
Tacit collusion
Sequential game
31. A situation in which a change in price strategy by one firm affects sales and profits of another
Open Collusion
Perfect Competitor Characteristics
Mutual interdependence
Product differentiation
32. 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
Third-Degree Price Discrimination
Primary Sources of Monopolistic Power
Cournot oligopoly
Horizontal Merger/Integration
33. Toothpaste - shampoo - restaurants - banks
Simultaneous consumption
Empty threat
Examples of Monopolistic Competition
Price war
34. 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
Cooperation
Sequential game
Empty threat
35. A simpler way to operationalize first-degree price discrimination
Price Leadership
Two-part Tariff Method of Pricing
Four-firm concentration ratio
Perfect Competitor Making a Profit
36. If production of a good requires a particular input - then control of that input can be a barrier to entry
Sequential-move game
Ownership of a Key Input
Simultaneous-move game
Transfer pricing
37. The practice of bundling several different products together and selling them at a single "bundle" price
Payoff
Fair return price
Tit-for-tat strategy
Commodity bundling
38. Price of a product that enables its producer to obtain a normal profit & that is equal to the ATC of producing it
Pure monopoly
Basis for Product Differentiation
Fair return price
Merger
39. 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
Limit pricing
Merger
Vertical Merger
Nash equilibrium
40. Sellers can identify different types of customers and offer each a different price. Examples are special prices for students or the elderly
Perfect Competitor Making a Profit
Normal-form game
Third-Degree Price Discrimination
Merger
41. 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
The Threat from Potential Entrants Firms
Reservation Price
Two-part pricing
Disappearing invisible hand
42. Game in which each player makes decisions without knowledge of the other player's decisions
Empty threat
Simultaneous-move game
Extensive-form game
Simultaneous consumption
43. The derivative of total revenue
Marginal Revenue
Follower
High Price Elasticity
Tacit collusion
44. Occurs when a firm produces output - whatever its level - at a higher cost than is necessary to produce it
Sequential game
Inefficiency
Price matching
Natural Monopoly (local phone or electric company)
45. Maximize economic profit by producing the quantity at which MC=MR
Import competition
Oligopoly
Maximizing profit in Oligopoly games
Two-part pricing
46. A combination of two or more companies into one company
Bertrand oligopoly
Dominant firm oligopoly
Merger
Bargaining Power of Buyers
47. When no one firm has a monopoly - but producers nonetheless realize that they can affect market prices. Firms compete but possess market power
Cournot equilibrium
Imperfect competition
Perfect Competitor Characteristics
Third-Degree Price Discrimination
48. 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
Perfect Competitor Making a Profit
Herfindahl-Hirschman index (HHI)
Double marginalization
Fair return price
49. 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)
Monopolistic Competition
Four-firm concentration ratio
Cheating
Finding profit for oligopoly games
50. The practice of charging different prices to consumers for the same good or service
Limit pricing
Price discrimination
Empty threat
Joint Venture
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