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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. 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)
The Threat from Potential Entrants Firms
Barrier to entry
Pure monopoly
Simultaneous-move game
2. 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
Monopolistic Characteristics:
Simultaneous-move game
Pure monopoly
Non-cooperative equilibrium
3. An establishment firm commits to setting price below the profit-maximizing level to prevent entry
Second-Degree Price Discrimination
Cutthroat Competition
One-shot game
Limit pricing
4. 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
Lerner index
Block pricing
Fair return price
Stackelberg oligopoly
5. A product's ability to satisfy a large number of consumers at the same time
Bargaining Power of Suppliers
Economies of scale
Simultaneous consumption
Common knowledge
6. Face competition from companies that currently are not in the market but might enter
Contestable market
The Threat from Potential Entrants Firms
Prisoner's dilemma
Empty threat
7. An equilibrium in a game in which players do not cooperate but pursue their own self-interest
Mixed (randomized) strategy
Strategic behavior
No cooperative equilibrium
Barrier to entry
8. Multiple firms make the same pricing decisions even though they have not explicitly consulted with each other
Transfer pricing
Implicit Collusion
Herfindahl-Hirschman index (HHI)
Normal-form game
9. 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
Limit pricing
Imperfect competition
Present Value (PV)
10. (1) Economies of Scale; (2) Economies of Scope; (3) Cost Complementarity; and (4)Patents & Other Legal Barriers
Strategic behavior
Horizontal Merger/Integration
Inefficiency
Primary Sources of Monopolistic Power
11. Competition based on factors that are not related to price - such as product quality - service and financing - business location - and reputation
Network effects
Brand Multiplication
Nonprime competition
Perfect Competition (characteristics)
12. Variations on one good so that a firm can increase market sharea
Brand Multiplication
Randomized pricing
Interdependence
Rent-seeking behavior
13. A combination of two or more companies into one company
Reservation Price
Simultaneous-move game
Merger
Leader
14. An agreement among firms in a market about quantities to produce or prices to charge in attempts to limit competition
Perfect Competitor Making a Profit
Prisoners' dilemma
Common knowledge
Collusion
15. Cooperation among firms that does not involve an explicit agreement
Tacit collusion
Cutthroat Competition
Cheating
Primary Sources of Monopolistic Power
16. Involves price-fixing
Covert Collusion
Non-cooperative equilibrium
Peak-load pricing
Examples of Monopolistic Competition
17. 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
Network effects
Monopolistic Competition
Reservation Price
Maximizing profit in Oligopoly games
18. In game theory - a statement of harmful intent easily dismissed by recipient because threat not considered believable
Empty threat
Dominant strategy equilibrium
No cooperative equilibrium
Two-part pricing
19. The derivative of total revenue
Patent
Inefficiency
Marginal Revenue
Monopolistic Characteristics:
20. 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
Cross-subsidy pricing
Bargaining Power of Suppliers
Differentiated oligopoly
Kinked demand curve model
21. 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
Payoff table
Perfect Competitor Making a Profit
Kinked demand curve model
Fair return price
22. Steel - autos - colas - airlines
Examples of Oligopoly
Product Differentiation
Randomized pricing
Undifferentiated
23. 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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24. Actions taken by firms to plan for and react to competition from rival firms
Marginal Revenue
Strategic behavior
Cutthroat Competition
Dansby-Willig performance index
25. A strategy in which a firm advertises a price and a promise to match any lower prices offered by a competitor
Price matching
Payoff matrix
Primary Sources of Monopolistic Power
Basis for Product Differentiation
26. The exclusive right to a product for a period of 20 years from the date the product is invented
Patent
Vertical Merger
Perfect Competition (characteristics)
Non-rivalrous consumption
27. Operates like the alleged Mafia. Region division of the market among the firms in the industry
Open Collusion
First-Degree Price Discrimination (Perfect)
Joint Venture
Concentration Ratio
28. Both players have dominant strategies and play them
Simultaneous consumption
Dominant strategy equilibrium
Unbalanced Oligopoly
Undifferentiated
29. A situation in which competing firms must make their individual decisions without knowing the decisions of their rivals
Product differentiation
Examples of Monopolistic Competition
Simultaneous decision games
Market Structure
30. A merger between firms who have a buyer/supplier relationship. Example: BF Goodrich merging with rubber plantations
Competitive market
Product Differentiation
No cooperative equilibrium
Vertical Merger
31. When a manager makes a noncooperative decision
Monopoly (characteristics)
Natural Monopoly (local phone or electric company)
Cheating
Two-part pricing
32. The reward received by a player in a game - such as the profit earned by an oligopolist
Common knowledge
Basis for Product Differentiation
Competitive market
Payoff
33. Pricing strategy in which a firm optimally sets the internal price at which an upstream division wells an input to a downstream division
Prisoner's dilemma
Transfer pricing
Subgame perfect equilibrium
Payoff
34. The actions by persons - firms - or unions to gain special benefits from government at taxpayer's or someone else's expense
Patent
Normal-form game
Rent-seeking behavior
Perfect Competition Barriers to Entry
35. A merger between two firms in the same industry. Example: 2004 K-Mart merged with Sears
Cournot oligopoly
Cournot equilibrium
Horizontal Merger/Integration
Empty threat
36. 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
Prisoner's dilemma
Competitive market
Perfect Competitor Making a Profit
Third-Degree Price Discrimination
37. Produce identical products
Perfect Competitor Characteristics
Equilibrium
The Threat from Potential Entrants Firms
Secure strategy
38. A situation in which all decision makers know the payoff table - and they believe all other decision makers also know the payoff table
Block pricing
Horizontal Merger/Integration
Common knowledge
Kinked demand curve model
39. A simpler way to operationalize first-degree price discrimination
Perfect Competition (characteristics)
Vertical Merger
Two-part Tariff Method of Pricing
Strategic behavior
40. 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.)
Open Collusion
Price matching
Profit
Monopolistic Characteristics:
41. In game theory - a statement of harmful intent by one party that the other party views as believable-- "if you do this - we will do that"
Pure monopoly
Credible threat
Secure strategy
Tacit collusion
42. An attempt by a firm to convince buyers that its product is different from the products of other firms in the industry
Product differentiation
Perfect Competition (characteristics)
Monopolistic Competition
Joint Venture
43. 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)
Joint Venture
One-shot game
Tacit collusion
Four-firm concentration ratio
44. A representation of a game indicating the players - their possible strategies - and the payoffs resulting from alternative strategies
Normal-form game
Sweezy oligopoly
Kinked-demand curve
Cheating
45. 2 firms - simplest case in an oligopoly. Profits higher if limiting their production
Homogenous oligopoly
Duopoly
Transfer pricing
First-Degree Price Discrimination (Perfect)
46. 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
Duopoly
Natural Monopoly (local phone or electric company)
Cournot oligopoly
Non-cooperative equilibrium
47. 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)
What is game?
Socially optimal price
Stackelberg oligopoly
Block pricing
48. An oligopoly in which the firms produce a differentiated product
Perfect Competition (characteristics)
Differentiated oligopoly
What is game?
Homogenous oligopoly
49. A pricing strategy in which profits gained from the sale of one product are used to subsidize sales of a related product
Rothschild index
Concentration Ratio
Cross-subsidy pricing
Non-cooperative equilibrium
50. 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
Kinked-demand curve
Monopolistic Characteristics:
Repeated game
Monopolistic Competition