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Test your basic knowledge |
Business Competition
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Subject
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business-skills
Instructions:
Answer 50 questions in 15 minutes.
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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. Pricing strategy in which a firm optimally sets the internal price at which an upstream division wells an input to a downstream division
Limit pricing
Profit
Transfer pricing
Socially optimal price
2. Long-run marginal cost curve above long-run average cost
Perfect Competition Long Run Supply
Indefinitely repeated game
Lerner index
Network effects
3. Increases in the value of a product to each user - including existing users - as the total number of users rises
Commodity bundling
Homogenous oligopoly
Network effects
Sweezy oligopoly
4. Using advertising and other means to try to increase a firm's sales
Unbalanced Oligopoly
Non-price competition
Third-Degree Price Discrimination
What is game?
5. A strategy whereby a player randomizes over two or more available actions in order to keep rivals from being able to predict his action
Bargaining Power of Suppliers
Basis for Product Differentiation
Mixed (randomized) strategy
Price matching
6. Identical or substitutable
Prisoners' dilemma
Cournot oligopoly
Undifferentiated
Two-part pricing
7. 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
Differentiated oligopoly
Vertical Merger
Dominant firm oligopoly
Mutual Interdependence
8. A situation in which neither firm has incentive to change its output given the other firm's output
Dominant firm oligopoly
Cournot equilibrium
Perfect Competitor Characteristics
Double marginalization
9. 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
Primary Sources of Monopolistic Power
Horizontal Merger/Integration
Trigger strategy
Block pricing
10. 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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11. Nash equilibrium - the result when each player in a game chooses the action that maximizes his or her payoff given the actions of other players - ignoring the effects of his or her action on the payoffs received by those players (when you confess w
Non-cooperative equilibrium
Ownership of a Key Input
Competitive market
Dominant strategy equilibrium
12. Simultaneous move game that is not repeated
One-shot game
Non-price competition
Dominant firm oligopoly
Open Collusion
13. When a manager makes a noncooperative decision
Non-cooperative equilibrium
Cheating
Finding profit for oligopoly games
What is game?
14. An attempt by a firm to convince buyers that its product is different from the products of other firms in the industry
Product differentiation
Inefficiency
Limit pricing
Ownership of a Key Input
15. Game in which each player makes decisions without knowledge of the other player's decisions
The Threat from Potential Entrants Firms
Natural Monopoly (local phone or electric company)
Sequential game
Simultaneous-move game
16. Revenue-Costs
Profit
Joint Venture
Maximizing profit in Oligopoly games
Vertical Merger
17. When firms limit production and raise prices in a way that raises each others' profits - even though they have not made any formal agreement
Tacit collusion
Follower
Barrier to entry
Bargaining Power of Buyers
18. An equilibrium in a game in which players cooperate to increase their mutual payoff
Leader
Cooperative equilibrium
Two-part pricing
Nonprime competition
19. An oligopoly in which the firms produce a standardized product
Homogenous oligopoly
Perfect Competition Short Run Supply
Unbalanced Oligopoly
Profit
20. When no one firm has a monopoly - but producers nonetheless realize that they can affect market prices. Firms compete but possess market power
Payoff table
Bargaining Power of Buyers
Imperfect competition
Payoff
21. 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.)
Monopolistic Characteristics:
Profit
Simultaneous decision games
Minimum efficient scale (full capacity)
22. When managers are able to charge each consumer their reservation price. Examples are car and home sales
Vertical Merger
Finding profit for oligopoly games
Bargaining Power of Suppliers
First-Degree Price Discrimination (Perfect)
23. Ignoring the effects of their actions on each others' profits
Differentiated oligopoly
Business strategy
Non-cooperative behavior
Herfindahl-Hirschman index (HHI)
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
Prisoners' dilemma
Market Structure
Leader
Kinked demand curve model
25. Steel - autos - colas - airlines
Payoff table
Bertrand oligopoly
Secure strategy
Examples of Oligopoly
26. The physical characteristics of the market within which firms interact
No cooperative equilibrium
Duopoly
Market Structure
Rent-seeking behavior
27. Many buyers and sellers - product homogeneity - low cost and accurate information - free entry and exit - best regarded as a benchmark
Perfect Competition (characteristics)
Payoff
Collusion
Kinked-demand curve
28. An industry where (1) there are few firms serving many customers; (2) firms produce differentiated products; (3) each firm believes rivals will respond to price reductions but will not follow price increases; and (4) barriers to entry exist
Sweezy oligopoly
Network effects
Reservation Price
Perfect Competition (characteristics)
29. A combination of two or more companies into one company
Socially optimal price
Empty threat
Merger
Follower
30. Rival who sets its output after the leader (Stackelberg's model)
Follower
Limit price
Common knowledge
Barrier to entry
31. 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
Subgame perfect equilibrium
Cutthroat Competition
Leader
Limit pricing
32. Multiple firms make the same pricing decisions even though they have not explicitly consulted with each other
Implicit Collusion
Dominant firm oligopoly
First-Degree Price Discrimination (Perfect)
Third-Degree Price Discrimination
33. A measure of market power - the percentage of all sales that is accounted for by the four or eight largest firms in the market
Peak-load pricing
Concentration Ratio
Third-Degree Price Discrimination
Indefinitely repeated game
34. An establishment firm commits to setting price below the profit-maximizing level to prevent entry
Bargaining Power of Buyers
Mixed (randomized) strategy
Limit pricing
First-mover advantage
35. Competition based on factors that are not related to price - such as product quality - service and financing - business location - and reputation
Indefinitely repeated game
Peak-load pricing
Nonprime competition
Limit pricing
36. A merger between firms who have a buyer/supplier relationship. Example: BF Goodrich merging with rubber plantations
Vertical Merger
Open Collusion
Perfect Competitor Characteristics
One-shot game
37. 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
Profit
Normal-form game
Limit pricing
Follower
38. In game theory - a game that is played again sometime after the previous game ends
Sweezy oligopoly
What is game?
Repeated game
Cooperative equilibrium
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
Rothschild index
Cutthroat Competition
Nash equilibrium
Limit price
40. 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
Marginal Revenue
Natural Monopoly (local phone or electric company)
Dominant firm oligopoly
Mixed (randomized) strategy
41. A game that is played over and over again forever and in which players receive payoffs during each play of the game
Homogenous oligopoly
Indefinitely repeated game
Concentration Ratio
Bargaining Power of Buyers
42. An equilibrium in a game in which players do not cooperate but pursue their own self-interest
Dominant strategy
Primary Sources of Monopolistic Power
No cooperative equilibrium
Product Differentiation
43. Variations on one good so that a firm can increase market sharea
Brand Multiplication
Market Structure
Monopolistic Competition
Empty threat
44. 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
Bargaining Power of Suppliers
Cutthroat Competition
Commodity bundling
Merger
45. A table that shows the payoffs that each firm earns from every combination of strategies by the firms
Patent
Payoff matrix
What is game?
Homogenous oligopoly
46. Intense competition in which competitors cut retail prices to gain business--oligopolistic competition
Price war
High Price Elasticity
Cross-subsidy pricing
Simultaneous-move game
47. Takes Place inside the Mind of the consumer
Product Differentiation
Double marginalization
Perfect Competition (characteristics)
Monopolistic Competition
48. A trigger strategy that punishes after an episode of cheating and returns to cooperation if cheating ends
Four-firm concentration ratio
Tit-for-tat strategy
Second-Degree Price Discrimination
Perfect Competition Short Run Supply
49. Marginal cost curve above average variable cost - P* = SRMC
Cooperative equilibrium
Tacit collusion
Perfect Competition Short Run Supply
Limit pricing
50. An index of market concentration. Sum of squared market shares of all the firms in the industry times 10K HHI=10 - 000Σwi2
Tacit collusion
Monopolistic Characteristics:
Vertical Merger
Herfindahl-Hirschman index (HHI)
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