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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. The exclusive right to a product for a period of 20 years from the date the product is invented






2. 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)






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






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






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






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






7. 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






8. 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






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






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






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






12. Produce identical products






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






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






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






16. 1/(1+i)n






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






18. Game in which each player makes decisions without knowledge of the other player's decisions






19. 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






20. The players end up worse off than they would if they were able to cooperate; -the pursuit of self-interest does not promote the social interest in these games






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






22. 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.)






23. Face competition from companies that currently are not in the market but might enter






24. 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






25. Increases in the value of a product to each user - including existing users - as the total number of users rises






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






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






28. All firms and individuals willing and able to buy or sell a particular product






29. A table that shows the payoffs that each firm earns from every combination of strategies by the firms






30. Identical or substitutable






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






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






33. 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






34. 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






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






36. 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






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






38. Pricing strategy in which a firm optimally sets the internal price at which an upstream division wells an input to a downstream division






39. 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






40. Variations on one good so that a firm can increase market sharea






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






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






43. Steel - autos - colas - airlines






44. 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






45. 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






46. When an upstream divisions leverages "monopoly like" power to charge higher marginal cost to a downstream division - resulting in failure of the firm to optimize profits based on the wrong quantity decision at the firms level






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






48. A pricing strategy in which profits gained from the sale of one product are used to subsidize sales of a related product






49. 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






50. 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)