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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 table that shows the payoffs for every possible action by each player for every possible action by the other player
Non-cooperative behavior
Perfect Competition (characteristics)
Cournot equilibrium
Payoff matrix
2. When no one firm has a monopoly - but producers nonetheless realize that they can affect market prices. Firms compete but possess market power
Block pricing
Perfect Competition Barriers to Entry
Imperfect competition
Non-rivalrous consumption
3. Sets the price at the highest level that is consistent with keeping the potential entrant out. -The strategy of reducing the price to deter entry
Trigger strategy
Cheating
The Threat from Potential Entrants Firms
Limit pricing
4. The price that is low enough to deter entry
Perfect Competition Long Run Supply
Sweezy oligopoly
Limit price
Import competition
5. Pricing strategy in which a firm intentionally varies its price in an attempt to "hide" price information from consumers and rivals
Business strategy
Randomized pricing
Inefficiency
Follower
6. All firms and individuals willing and able to buy or sell a particular product
Monopolistic Characteristics:
Cournot equilibrium
Open Collusion
Market
7. Keeps the price just where it is to maximize profit
Cooperative equilibrium
Normal-form game
Simultaneous consumption
Cutthroat Competition
8. 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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9. The rules describe the setting of the game - the actions the players may take - and the consequences of those actions; -Advertising and R&D are also prisoners' dilemmas
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10. The maximum price that a buyer is willing to pay for a good - or the minimum price that a seller will accept
Reservation Price
Mutual interdependence
Nash equilibrium
Strategy
11. Pricing strategy in which higher prices are charged during peak hours than during off-peak hours
Extensive-form game
Kinked-demand curve
Peak-load pricing
Contestable market
12. In game theory - a statement of harmful intent easily dismissed by recipient because threat not considered believable
High Price Elasticity
Empty threat
No cooperative equilibrium
Contestable market
13. When a manager makes a noncooperative decision
Present Value (PV)
Cheating
Randomized pricing
Simultaneous consumption
14. The actions by persons - firms - or unions to gain special benefits from government at taxpayer's or someone else's expense
Differentiated oligopoly
Rent-seeking behavior
Perfect Competitor Characteristics
Examples of Oligopoly
15. 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
Product Differentiation
Finding profit for oligopoly games
Basis for Product Differentiation
Differentiated oligopoly
16. The smallest quantity at which the average cost curve reaches its minimum
Mutual Interdependence
Perfect Competitor Making a Profit
Minimum efficient scale (full capacity)
Perfect Competition Long Run Supply
17. The practice of bundling several different products together and selling them at a single "bundle" price
Commodity bundling
Finding profit for oligopoly games
Tit-for-tat strategy
Transfer pricing
18. 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
Bargaining Power of Suppliers
Vertical Merger
Mixed (randomized) strategy
Mutual Interdependence
19. A merger of firms in unrelated industries. Example: If Purina Dow Chow merged with Pampers Diaper Company
Cooperative equilibrium
Marginal Revenue
Conglomerate Merger
Nash equilibrium
20. 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
Product Differentiation
Barrier to entry
Contestable market
Kinked-demand curve
21. Game in which each player makes decisions without knowledge of the other player's decisions
Socially optimal price
Simultaneous-move game
High Price Elasticity
Nash equilibrium
22. An attempt by a firm to convince buyers that its product is different from the products of other firms in the industry
Monopolistic Competition
Product differentiation
High Price Elasticity
Import competition
23. The reward received by a player in a game - such as the profit earned by an oligopolist
Strategy
Two-part Tariff Method of Pricing
Payoff
Simultaneous consumption
24. A situation in which neither firm has incentive to change its output given the other firm's output
Kinked-demand curve
Cournot equilibrium
Tacit collusion
Product differentiation
25. An index of market concentration. Sum of squared market shares of all the firms in the industry times 10K HHI=10 - 000Σwi2
Conglomerate Merger
Monopolistic Characteristics:
Herfindahl-Hirschman index (HHI)
Unbalanced Oligopoly
26. 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
Dominant strategy equilibrium
Block pricing
Patent
Commodity bundling
27. A strategy that is contingent on the past play of a game and ion which some particular past action "triggers" a different action by a player
Bertrand oligopoly
Trigger strategy
Nash equilibrium
Perfect Competitor Making a Profit
28. 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
Non-cooperative equilibrium
Product Differentiation
Brand Multiplication
Double marginalization
29. 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
Minimum efficient scale (full capacity)
Non-price competition
Sequential-move game
Joint Venture
30. Face competition from companies that currently are not in the market but might enter
Perfect Competition (characteristics)
Credible threat
Open Collusion
The Threat from Potential Entrants Firms
31. A combination of two or more companies into one company
Monopoly (characteristics)
Monopolistic Characteristics:
Merger
Natural Monopoly (local phone or electric company)
32. An establishment firm commits to setting price below the profit-maximizing level to prevent entry
Limit pricing
Collusion
Natural Monopoly (local phone or electric company)
Basis for Product Differentiation
33. 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
Secure strategy
Monopolistic Competition
Simultaneous-move game
Mutual interdependence
34. Ranks industries according to how much social welfare would improve if the output in an industry were increased by a small amount
Reservation Price
Dansby-Willig performance index
Horizontal Merger/Integration
Non-price competition
35. An equilibrium in a game in which players cooperate to increase their mutual payoff
Concentration Ratio
Marginal Revenue
Dominant strategy equilibrium
Cooperative equilibrium
36. First firm to set its output (Stackelberg's model)
Non-cooperative equilibrium
Herfindahl-Hirschman index (HHI)
Examples of Oligopoly
Leader
37. Single seller in an industry - Strong barriers to entry - Profit maximization - faces market demand and sets MR=MC - Unexploited gains from trade
Indefinitely repeated game
Trigger strategy
Monopoly (characteristics)
Undifferentiated
38. 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
Contestable market
Cournot equilibrium
Leader
Sweezy oligopoly
39. In game theory - a game that is played again sometime after the previous game ends
Brand Multiplication
Repeated game
Patent
Leader
40. Price Sensitive
Perfect Competition Barriers to Entry
Natural Monopoly (local phone or electric company)
High Price Elasticity
Oligopoly
41. Different units of a product are sold at different prices. Examples are buying in bulk - or - commodity-bundling
Dominant strategy equilibrium
Market
Bertrand oligopoly
Second-Degree Price Discrimination
42. Revenue-Costs
Third-Degree Price Discrimination
Bertrand oligopoly
Tit-for-tat strategy
Profit
43. Increases in the value of a product to each user - including existing users - as the total number of users rises
Dominant firm oligopoly
Patent
Network effects
Price discrimination
44. A situation where one firm is able to provide a service at a lower cost than could several competing firms
Natural Monopoly (local phone or electric company)
Secure strategy
Common knowledge
Prisoners' dilemma
45. An oligopoly in which the sales of the leading (top four) firms are distributed unevenly among them
Maximizing profit in Oligopoly games
Unbalanced Oligopoly
Perfect Competitor Characteristics
Tit-for-tat strategy
46. 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
Disappearing invisible hand
Product Differentiation
Prisoner's dilemma
Homogenous oligopoly
47. If buyers have enough bargaining power - they can insist on lower prices - higher-quality products - or additional services
Primary Sources of Monopolistic Power
Bargaining Power of Buyers
Normal-form game
Non-cooperative behavior
48. 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
Strategic behavior
Oligopoly
Patent
Implicit Collusion
49. Takes Place inside the Mind of the consumer
Nash equilibrium
Product Differentiation
Price Leadership
Strategy
50. Many buyers and sellers - product homogeneity - low cost and accurate information - free entry and exit - best regarded as a benchmark
Dominant firm oligopoly
Maximizing profit in Oligopoly games
Perfect Competition (characteristics)
Pure monopoly