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. An agreement among firms in a market about quantities to produce or prices to charge in attempts to limit competition






2. The competition for sales between the products of one industry and the products of another industry






3. 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






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






5. Demand line is above ATC curve






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






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






8. In game theory - a decision rule that describes the actions a player will take at each decision point






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






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






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






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






13. Different units of a product are sold at different prices. Examples are buying in bulk - or - commodity-bundling






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






15. A situation where one firm is able to provide a service at a lower cost than could several competing firms






16. A strategy whereby a player randomizes over two or more available actions in order to keep rivals from being able to predict his action






17. Both players have dominant strategies and play them






18. Many buyers and sellers - product homogeneity - low cost and accurate information - free entry and exit - best regarded as a benchmark






19. Toothpaste - shampoo - restaurants - banks






20. 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






21. A table that shows the payoffs for every possible action by each player for every possible action by the other player






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






23. 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






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






25. 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






26. The competition that domestic firms encounter from the products and services of foreign producers






27. A situation in which all decision makers know the payoff table - and they believe all other decision makers also know the payoff table






28. The practice of charging different prices to consumers for the same good or service






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






30. Price of a product that enables its producer to obtain a normal profit & that is equal to the ATC of producing it






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






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






33. 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






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






35. Price Sensitive






36. Pricing strategy in which a firm intentionally varies its price in an attempt to "hide" price information from consumers and rivals






37. When no one firm has a monopoly - but producers nonetheless realize that they can affect market prices. Firms compete but possess market power






38. 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






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






40. Ignoring the effects of their actions on each others' profits






41. 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)






42. 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.)






43. 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






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






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






46. A measure of market power - the percentage of all sales that is accounted for by the four or eight largest firms in the market






47. 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






48. 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)






49. A merger between firms who have a buyer/supplier relationship. Example: BF Goodrich merging with rubber plantations






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