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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. A condition describing a set of strategies that constitutes a Nash equilibrium and allows no player to improve their own payoff at any stage of the game by changing strategies






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






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






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






6. 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






7. If many firms can supply an input and the input is not specialized - the suppliers are unlikely to have the bargaining power to limit a firm's profits






8. A representation of a game indicating the players - their possible strategies - and the payoffs resulting from alternative strategies






9. 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






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






11. In game theory - game where parties make their moves in turn - one party making the first move followed by the other






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






13. 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.)






14. 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)






15. 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






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






17. The practice of bundling several different products together and selling them at a single "bundle" price






18. A product's ability to satisfy a large number of consumers at the same time






19. Produce identical products






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






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






22. The actions by persons - firms - or unions to gain special benefits from government at taxpayer's or someone else's expense






23. The maximum price that a buyer is willing to pay for a good - or the minimum price that a seller will accept






24. 2 firms - simplest case in an oligopoly. Profits higher if limiting their production






25. The price that is low enough to deter entry






26. 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






27. An equilibrium in a game in which players do not cooperate but pursue their own self-interest






28. 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






29. 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






30. 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






31. 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






32. When managers are able to charge each consumer their reservation price. Examples are car and home sales






33. Where a firm can charge different groups of consumers different prices for the same product. Example: student or senior discounts






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






35. A firm whose price decisions are tacitly accepted and followed by others in the industry






36. 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






37. A strategy that guarantees the highest payoff given the worst possible scenario






38. The smallest quantity at which the average cost curve reaches its minimum






39. If production of a good requires a particular input - then control of that input can be a barrier to entry






40. An establishment firm commits to setting price below the profit-maximizing level to prevent entry






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






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






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






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






45. A combination of two or more companies into one company






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






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






48. 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






49. 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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50. Competition based on factors that are not related to price - such as product quality - service and financing - business location - and reputation