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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. A situation in which neither firm has incentive to change its output given the other firm's output
Profit
Perfect Competition Long Run Supply
Sequential-move game
Cournot equilibrium
2. The practice of charging different prices to consumers for the same good or service
Price discrimination
Third-degree price discrimination
Contestable market
Mutual interdependence
3. The derivative of total revenue
Marginal Revenue
Fair return price
Transfer pricing
Primary Sources of Monopolistic Power
4. A merger between firms who have a buyer/supplier relationship. Example: BF Goodrich merging with rubber plantations
Market
Prisoner's dilemma
Payoff matrix
Vertical Merger
5. Pricing strategy in which consumers are charged a fixed fee for the right to purchase a product - plus a per-unit charge for each unit purchased
Two-part pricing
Common knowledge
Payoff table
Concentration Ratio
6. A market in which: (1) all have access to the same technology; (2) consumers respond quickly to price changes; (3) existing firms cannot respond quickly to entry by lowering their prices; and (4) there are no sunk costs
Sequential-move game
Contestable market
Mutual interdependence
Duopoly
7. Price of a product that enables its producer to obtain a normal profit & that is equal to the ATC of producing it
Normal-form game
Brand Multiplication
Strategy
Fair return price
8. Toothpaste - shampoo - restaurants - banks
Tacit collusion
Monopoly (characteristics)
Present Value (PV)
Examples of Monopolistic Competition
9. A situation in which all decision makers know the payoff table - and they believe all other decision makers also know the payoff table
Basis for Product Differentiation
Natural Monopoly (local phone or electric company)
One-shot game
Common knowledge
10. A representation of a game that summarizes the players - the information available to them at each stage - the strategies available to them - the sequence of moves - and the payoffs resulting from alternative strategies
Strategy
Dansby-Willig performance index
Import competition
Extensive-form game
11. 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
Price war
Concentration Ratio
Kinked-demand curve
Cutthroat Competition
12. 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
Rothschild index
Business strategy
Marginal Revenue
Tacit collusion
13. 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
Disappearing invisible hand
Extensive-form game
Sweezy oligopoly
Homogenous oligopoly
14. Actions taken by a firm to achieve a goal - such as maximizing profits
Non-price competition
Monopoly (characteristics)
No cooperative equilibrium
Business strategy
15. Variations on one good so that a firm can increase market sharea
Mixed (randomized) strategy
Secure strategy
Maximizing profit in Oligopoly games
Brand Multiplication
16. A merger between two firms in the same industry. Example: 2004 K-Mart merged with Sears
Perfect Competition Barriers to Entry
Double marginalization
Perfect Competition Long Run Supply
Horizontal Merger/Integration
17. Identical or substitutable
Undifferentiated
Disappearing invisible hand
Extensive-form game
Rent-seeking behavior
18. Increases in the value of a product to each user - including existing users - as the total number of users rises
Limit pricing
Network effects
Cooperative equilibrium
Credible threat
19. The competition for sales between the products of one industry and the products of another industry
High Price Elasticity
Ownership of a Key Input
Third-degree price discrimination
Inter-industry competition
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
Cooperation
Bargaining Power of Suppliers
Two-part Tariff Method of Pricing
Dominant strategy equilibrium
21. 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)
Monopolistic Competition
Barrier to entry
Business strategy
Payoff matrix
22. 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
Mutual Interdependence
Limit pricing
Block pricing
The Threat from Potential Entrants Firms
23. Operates like the alleged Mafia. Region division of the market among the firms in the industry
Simultaneous decision games
Patent
Open Collusion
Dominant strategy equilibrium
24. Intense competition in which competitors cut retail prices to gain business--oligopolistic competition
Price war
Perfect Competition Barriers to Entry
Market
Nonprime competition
25. When a manager makes a noncooperative decision
Examples of Monopolistic Competition
Second-Degree Price Discrimination
Block pricing
Cheating
26. If production of a good requires a particular input - then control of that input can be a barrier to entry
Network effects
Payoff matrix
Examples of Monopolistic Competition
Ownership of a Key Input
27. Using advertising and other means to try to increase a firm's sales
Non-price competition
Herfindahl-Hirschman index (HHI)
Inter-industry competition
Import competition
28. Game in which each player makes decisions without knowledge of the other player's decisions
Dominant strategy equilibrium
Product differentiation
The Threat from Potential Entrants Firms
Simultaneous-move game
29. The actions by persons - firms - or unions to gain special benefits from government at taxpayer's or someone else's expense
Non-cooperative equilibrium
Fair return price
Rent-seeking behavior
Two-part pricing
30. An oligopoly in which the firms produce a differentiated product
Covert Collusion
One-shot game
Barrier to entry
Differentiated oligopoly
31. An attempt by a firm to convince buyers that its product is different from the products of other firms in the industry
Homogenous oligopoly
Product differentiation
Repeated game
Perfect Competition (characteristics)
32. 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
Dominant strategy
Competitive market
Cooperation
Sequential-move game
33. If buyers have enough bargaining power - they can insist on lower prices - higher-quality products - or additional services
Reservation Price
Bargaining Power of Buyers
Payoff matrix
Limit pricing
34. The situation when a firm's long-run average costs fall as it increases output
Basis for Product Differentiation
Price discrimination
Inefficiency
Economies of scale
35. A strategy or action that always provides the best outcome no matter what decisions rivals make
Dominant strategy
Marginal Revenue
Limit pricing
No cooperative equilibrium
36. 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
Bertrand oligopoly
First-Degree Price Discrimination (Perfect)
Monopolistic Competition
Import competition
37. 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
Cheating
One-shot game
Lerner index
Natural Monopoly (local phone or electric company)
38. Cooperation among firms that does not involve an explicit agreement
Concentration Ratio
Joint Venture
Tacit collusion
Block pricing
39. 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
Dansby-Willig performance index
Limit pricing
Sequential game
40. When firms make decisions that make every firm better off than in a noncooperative Nash equilibrium
Barrier to entry
Limit pricing
Disappearing invisible hand
Cooperation
41. Maximize economic profit by producing the quantity at which MC=MR
Examples of Oligopoly
Maximizing profit in Oligopoly games
Dominant strategy
Marginal Revenue
42. First firm to set its output (Stackelberg's model)
Perfect Competition Long Run Supply
Limit price
Price matching
Leader
43. When something can be consumed without reducing the benefits available for subsequent consumption; can be consumed without supporting rivalry between consumers
Payoff matrix
Market
Non-rivalrous consumption
Non-cooperative behavior
44. 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:
Merger
Pure monopoly
Undifferentiated
45. Produce identical products
Mutual Interdependence
Perfect Competitor Characteristics
Third-Degree Price Discrimination
Cutthroat Competition
46. The price that is low enough to deter entry
Barrier to entry
Pure monopoly
Mutual interdependence
Limit price
47. Single seller in an industry - Strong barriers to entry - Profit maximization - faces market demand and sets MR=MC - Unexploited gains from trade
Follower
Sweezy oligopoly
Monopoly (characteristics)
Patent
48. Physical differences - Convenience - Ambience - Reputations - Appeals to vanity - Unconscious fears and desires - Snob appeal - Customized products
Simultaneous-move game
Extensive-form game
Basis for Product Differentiation
Payoff
49. The practice of bundling several different products together and selling them at a single "bundle" price
Equilibrium
Cutthroat Competition
Perfect Competitor Making a Profit
Commodity bundling
50. A combination of two or more companies into one company
Merger
Tit-for-tat strategy
Interdependence
Payoff matrix