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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. Ranks industries according to how much social welfare would improve if the output in an industry were increased by a small amount
Examples of Monopolistic Competition
Strategy
Dansby-Willig performance index
Business strategy
2. Maximize economic profit by producing the quantity at which MC=MR
Monopolistic Characteristics:
Sequential game
Maximizing profit in Oligopoly games
Limit pricing
3. 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
Fair return price
Repeated game
Nash equilibrium
Oligopoly
4. 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
Non-cooperative equilibrium
Block pricing
Marginal Revenue
Subgame perfect equilibrium
5. All firms and individuals willing and able to buy or sell a particular product
Payoff matrix
Mixed (randomized) strategy
Economies of scale
Market
6. An oligopoly in which the sales of the leading (top four) firms are distributed unevenly among them
Unbalanced Oligopoly
First-Degree Price Discrimination (Perfect)
Kinked-demand curve
Stackelberg oligopoly
7. Actions taken by a firm to achieve a goal - such as maximizing profits
No cooperative equilibrium
Business strategy
Mixed (randomized) strategy
Differentiated oligopoly
8. A situation in which a change in price strategy by one firm affects sales and profits of another
Mutual interdependence
Trigger strategy
Perfect Competition Short Run Supply
Repeated game
9. In game theory - a statement of harmful intent easily dismissed by recipient because threat not considered believable
Empty threat
Sequential game
Brand Multiplication
Equilibrium
10. Cooperation among firms that does not involve an explicit agreement
Kinked-demand curve
Nonprime competition
Tacit collusion
Inefficiency
11. Long-run marginal cost curve above long-run average cost
Basis for Product Differentiation
Perfect Competition Long Run Supply
Two-part pricing
Payoff matrix
12. When something can be consumed without reducing the benefits available for subsequent consumption; can be consumed without supporting rivalry between consumers
Nonprime competition
Non-rivalrous consumption
Patent
Fair return price
13. When firms make decisions that make every firm better off than in a noncooperative Nash equilibrium
Cooperation
No cooperative equilibrium
Commodity bundling
Tacit collusion
14. When no one firm has a monopoly - but producers nonetheless realize that they can affect market prices. Firms compete but possess market power
Duopoly
Mixed (randomized) strategy
Contestable market
Imperfect competition
15. 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.)
Profit
Merger
Monopolistic Characteristics:
Payoff table
16. 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
Cheating
Bargaining Power of Suppliers
Monopolistic Competition
Four-firm concentration ratio
17. In game theory - a game that is played again sometime after the previous game ends
Repeated game
Interdependence
Third-degree price discrimination
Market Structure
18. Face competition from companies that currently are not in the market but might enter
Two-part Tariff Method of Pricing
Bargaining Power of Buyers
Present Value (PV)
The Threat from Potential Entrants Firms
19. The practice of charging different prices to consumers for the same good or service
Open Collusion
Price discrimination
Randomized pricing
Commodity bundling
20. A trigger strategy that punishes after an episode of cheating and returns to cooperation if cheating ends
Nash equilibrium
Natural Monopoly (local phone or electric company)
Tit-for-tat strategy
Examples of Monopolistic Competition
21. Takes Place inside the Mind of the consumer
Product Differentiation
Minimum efficient scale (full capacity)
Import competition
Brand Multiplication
22. Keeps the price just where it is to maximize profit
Cutthroat Competition
Perfect Competition (characteristics)
Trigger strategy
Third-Degree Price Discrimination
23. A strategy in which a firm advertises a price and a promise to match any lower prices offered by a competitor
Merger
Network effects
Patent
Price matching
24. (1) Economies of Scale; (2) Economies of Scope; (3) Cost Complementarity; and (4)Patents & Other Legal Barriers
First-mover advantage
Empty threat
Primary Sources of Monopolistic Power
Randomized pricing
25. Variations on one good so that a firm can increase market sharea
Product Differentiation
Brand Multiplication
Fair return price
What is game?
26. An establishment firm commits to setting price below the profit-maximizing level to prevent entry
Maximizing profit in Oligopoly games
Inter-industry competition
Limit pricing
Credible threat
27. 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
Tit-for-tat strategy
Interdependence
Oligopoly
Peak-load pricing
28. The physical characteristics of the market within which firms interact
Market Structure
One-shot game
Common knowledge
Kinked demand curve model
29. 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
Socially optimal price
Examples of Monopolistic Competition
Finding profit for oligopoly games
Extensive-form game
30. Many buyers and sellers - product homogeneity - low cost and accurate information - free entry and exit - best regarded as a benchmark
Perfect Competition (characteristics)
Examples of Oligopoly
The Threat from Potential Entrants Firms
Herfindahl-Hirschman index (HHI)
31. 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
Price Leadership
Primary Sources of Monopolistic Power
Strategic behavior
Sweezy oligopoly
32. In game theory - benefit obtained by party that moves first in a sequential game
First-mover advantage
Economies of scale
Sequential game
Duopoly
33. Operates like the alleged Mafia. Region division of the market among the firms in the industry
Two-part pricing
Credible threat
Open Collusion
Differentiated oligopoly
34. Rival who sets its output after the leader (Stackelberg's model)
Payoff
Joint Venture
Follower
Unbalanced Oligopoly
35. 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
Competitive market
Stackelberg oligopoly
Commodity bundling
Transfer pricing
36. Rules - strategies - payoffs - outcomes
Product Differentiation
Finding profit for oligopoly games
What is game?
Common knowledge
37. Pricing strategy in which a firm optimally sets the internal price at which an upstream division wells an input to a downstream division
Rothschild index
Tacit collusion
Socially optimal price
Transfer pricing
38. Industry in which (1) few firms serving many customers; (2) firms produce identical products t constant marginal cost; (3) firms compete in price and react optimally to competitor's prices; (4) consumers have perfect information and here are no trans
Network effects
One-shot game
Cutthroat Competition
Bertrand oligopoly
39. 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)
Minimum efficient scale (full capacity)
Stackelberg oligopoly
Monopolistic Competition
Vertical Merger
40. Game in which each player makes decisions without knowledge of the other player's decisions
Simultaneous-move game
Network effects
Extensive-form game
Open Collusion
41. If production of a good requires a particular input - then control of that input can be a barrier to entry
Ownership of a Key Input
No cooperative equilibrium
Differentiated oligopoly
Product differentiation
42. The reward received by a player in a game - such as the profit earned by an oligopolist
Dominant strategy
Payoff
Natural Monopoly (local phone or electric company)
The Threat from Potential Entrants Firms
43. Involves price-fixing
Natural Monopoly (local phone or electric company)
Covert Collusion
Follower
Profit
44. A strategy that guarantees the highest payoff given the worst possible scenario
Rothschild index
Secure strategy
Covert Collusion
Simultaneous-move game
45. A pricing strategy in which profits gained from the sale of one product are used to subsidize sales of a related product
Normal-form game
Cross-subsidy pricing
Tacit collusion
Undifferentiated
46. 2 firms - simplest case in an oligopoly. Profits higher if limiting their production
Dominant firm oligopoly
Dominant strategy equilibrium
Duopoly
Patent
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
Competitive market
Cournot oligopoly
Monopolistic Competition
Two-part pricing
48. A game that is played over and over again forever and in which players receive payoffs during each play of the game
Strategic behavior
Horizontal Merger/Integration
Indefinitely repeated game
Oligopoly
49. Specific assets - Economies of scale - Excess capacity - Reputation effects
Import competition
What is game?
First-mover advantage
Perfect Competition Barriers to Entry
50. A representation of a game indicating the players - their possible strategies - and the payoffs resulting from alternative strategies
Product differentiation
Kinked demand curve model
Normal-form game
Simultaneous consumption