Test your basic knowledge |

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. All firms and individuals willing and able to buy or sell a particular product






2. 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)






3. Pricing strategy in which higher prices are charged during peak hours than during off-peak hours






4. Toothpaste - shampoo - restaurants - banks






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






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






7. 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






8. Ranks industries according to how much social welfare would improve if the output in an industry were increased by a small amount






9. A game that is played over and over again forever and in which players receive payoffs during each play of the game






10. 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






11. An oligopoly in which the firms produce a standardized product






12. 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






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






14. 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






15. 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






16. A situation in which competing firms must make their individual decisions without knowing the decisions of their rivals






17. Rules - strategies - payoffs - outcomes






18. Occurs when a firm produces output - whatever its level - at a higher cost than is necessary to produce it






19. 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)






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






21. If buyers have enough bargaining power - they can insist on lower prices - higher-quality products - or additional services






22. 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






23. An index of market concentration. Sum of squared market shares of all the firms in the industry times 10K HHI=10 - 000Σwi2






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






25. 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






26. Increases in the value of a product to each user - including existing users - as the total number of users rises






27. When the decisions of two or more firms significantly affect each others' profits






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






29. First firm to set its output (Stackelberg's model)






30. 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






31. A situation in which neither firm has incentive to change its output given the other firm's output






32. 2 firms - simplest case in an oligopoly. Profits higher if limiting their production






33. 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






34. Single firm is sole producer of a product for which there are no close substitutes






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






36. Actions taken by firms to plan for and react to competition from rival firms






37. The derivative of total revenue






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






39. 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






40. (1) Economies of Scale; (2) Economies of Scope; (3) Cost Complementarity; and (4)Patents & Other Legal Barriers






41. Steel - autos - colas - airlines






42. A strategy in which a firm advertises a price and a promise to match any lower prices offered by a competitor






43. 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






44. 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






45. A situation in which no one wants to change his or her behavior






46. Both players have dominant strategies and play them






47. Long-run marginal cost curve above long-run average cost






48. A merger of firms in unrelated industries. Example: If Purina Dow Chow merged with Pampers Diaper Company






49. Identical or substitutable






50. Produce identical products