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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 pricing strategy in which profits gained from the sale of one product are used to subsidize sales of a related product
Cournot equilibrium
Cross-subsidy pricing
Second-Degree Price Discrimination
Pure monopoly
2. Demand line is above ATC curve
Payoff matrix
Non-rivalrous consumption
Economies of scale
Perfect Competitor Making a Profit
3. Competition based on factors that are not related to price - such as product quality - service and financing - business location - and reputation
Basis for Product Differentiation
Economies of scale
Simultaneous consumption
Nonprime competition
4. (1) Economies of Scale; (2) Economies of Scope; (3) Cost Complementarity; and (4)Patents & Other Legal Barriers
Primary Sources of Monopolistic Power
Dansby-Willig performance index
Double marginalization
Indefinitely repeated game
5. Cooperation among firms that does not involve an explicit agreement
Reservation Price
Dominant strategy
Tacit collusion
Perfect Competitor Characteristics
6. An equilibrium in a game in which players cooperate to increase their mutual payoff
Equilibrium
Barrier to entry
Cooperative equilibrium
Minimum efficient scale (full capacity)
7. 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
Prisoners' dilemma
Herfindahl-Hirschman index (HHI)
Bargaining Power of Suppliers
Third-degree price discrimination
8. 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
Reservation Price
Strategy
Conglomerate Merger
Joint Venture
9. 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
Bargaining Power of Buyers
Differentiated oligopoly
Bertrand oligopoly
Sequential-move game
10. 2 firms - simplest case in an oligopoly. Profits higher if limiting their production
Brand Multiplication
Payoff table
Duopoly
Kinked demand curve model
11. 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
One-shot game
Non-cooperative equilibrium
Perfect Competition (characteristics)
Leader
12. 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
Merger
Dominant firm oligopoly
Profit
13. 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)
Four-firm concentration ratio
Stackelberg oligopoly
Dominant strategy equilibrium
Transfer pricing
14. Single firm is sole producer of a product for which there are no close substitutes
Pure monopoly
Non-cooperative behavior
Inter-industry competition
Brand Multiplication
15. When no one firm has a monopoly - but producers nonetheless realize that they can affect market prices. Firms compete but possess market power
Mutual Interdependence
Third-degree price discrimination
Simultaneous-move game
Imperfect competition
16. In game theory - game where parties make their moves in turn - one party making the first move followed by the other
Third-degree price discrimination
Payoff matrix
Collusion
Sequential game
17. A strategy or action that always provides the best outcome no matter what decisions rivals make
Dominant strategy
First-Degree Price Discrimination (Perfect)
Conglomerate Merger
Cournot oligopoly
18. A strategy that guarantees the highest payoff given the worst possible scenario
Trigger strategy
Rothschild index
Mutual Interdependence
Secure strategy
19. 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"
Credible threat
Payoff
Vertical Merger
Ownership of a Key Input
20. Game in which one player makes a move after observing the other player's move
Contestable market
Sequential game
Sequential-move game
Primary Sources of Monopolistic Power
21. The situation that exists when two or more groups need each other and must depend on each other to accomplish a goal that is important to each of them
Mutual Interdependence
Leader
Homogenous oligopoly
Fair return price
22. 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
Oligopoly
Nash equilibrium
Rothschild index
Normal-form game
23. When a manager makes a noncooperative decision
Cheating
Oligopoly
Monopolistic Characteristics:
Product Differentiation
24. Pricing strategy in which a firm optimally sets the internal price at which an upstream division wells an input to a downstream division
Homogenous oligopoly
Transfer pricing
Fair return price
Implicit Collusion
25. The maximum price that a buyer is willing to pay for a good - or the minimum price that a seller will accept
Examples of Monopolistic Competition
High Price Elasticity
The Threat from Potential Entrants Firms
Reservation Price
26. Single seller in an industry - Strong barriers to entry - Profit maximization - faces market demand and sets MR=MC - Unexploited gains from trade
Competitive market
Extensive-form game
Monopoly (characteristics)
Mutual interdependence
27. Operates like the alleged Mafia. Region division of the market among the firms in the industry
Payoff
Open Collusion
Profit
Credible threat
28. A trigger strategy that punishes after an episode of cheating and returns to cooperation if cheating ends
Primary Sources of Monopolistic Power
Tit-for-tat strategy
Double marginalization
Import competition
29. An agreement among firms in a market about quantities to produce or prices to charge in attempts to limit competition
Collusion
Conglomerate Merger
First-mover advantage
Payoff matrix
30. Specific assets - Economies of scale - Excess capacity - Reputation effects
Monopolistic Characteristics:
Perfect Competition Barriers to Entry
Perfect Competition (characteristics)
Horizontal Merger/Integration
31. The smallest quantity at which the average cost curve reaches its minimum
Trigger strategy
Minimum efficient scale (full capacity)
Mutual interdependence
Competitive market
32. A strategy whereby a player randomizes over two or more available actions in order to keep rivals from being able to predict his action
Reservation Price
Cutthroat Competition
Mixed (randomized) strategy
Disappearing invisible hand
33. If buyers have enough bargaining power - they can insist on lower prices - higher-quality products - or additional services
Joint Venture
Patent
Bargaining Power of Buyers
Undifferentiated
34. 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
Basis for Product Differentiation
Payoff matrix
Prisoners' dilemma
Sweezy oligopoly
35. An index of market concentration. Sum of squared market shares of all the firms in the industry times 10K HHI=10 - 000Σwi2
Inter-industry competition
Perfect Competitor Making a Profit
Herfindahl-Hirschman index (HHI)
Payoff matrix
36. 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
Tacit collusion
Credible threat
Dominant firm oligopoly
Limit pricing
37. Sellers can identify different types of customers and offer each a different price. Examples are special prices for students or the elderly
Third-Degree Price Discrimination
Mutual Interdependence
Transfer pricing
Non-price competition
38. A strategy that is contingent on the past play of a game and ion which some particular past action "triggers" a different action by a player
Covert Collusion
Trigger strategy
Horizontal Merger/Integration
The Threat from Potential Entrants Firms
39. A representation of a game indicating the players - their possible strategies - and the payoffs resulting from alternative strategies
Normal-form game
Cross-subsidy pricing
Examples of Oligopoly
Concentration Ratio
40. 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)
Profit
Tacit collusion
Mutual interdependence
Stackelberg oligopoly
41. In game theory - benefit obtained by party that moves first in a sequential game
Barrier to entry
Price matching
First-mover advantage
Equilibrium
42. A firm whose price decisions are tacitly accepted and followed by others in the industry
Transfer pricing
Import competition
Price Leadership
Product differentiation
43. Toothpaste - shampoo - restaurants - banks
Double marginalization
Sequential-move game
Examples of Monopolistic Competition
Limit pricing
44. A table that shows the payoffs for every possible action by each player for every possible action by the other player
Payoff matrix
Two-part Tariff Method of Pricing
Ownership of a Key Input
Prisoner's dilemma
45. The situation when a firm's long-run average costs fall as it increases output
Unbalanced Oligopoly
Perfect Competitor Making a Profit
No cooperative equilibrium
Economies of scale
46. When managers are able to charge each consumer their reservation price. Examples are car and home sales
Natural Monopoly (local phone or electric company)
Credible threat
First-Degree Price Discrimination (Perfect)
Perfect Competition Long Run Supply
47. First firm to set its output (Stackelberg's model)
Leader
Sequential game
Indefinitely repeated game
Limit pricing
48. 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
Competitive market
Ownership of a Key Input
Commodity bundling
Block pricing
49. In game theory - a statement of harmful intent easily dismissed by recipient because threat not considered believable
Barrier to entry
Normal-form game
Empty threat
Imperfect competition
50. A situation in which competing firms must make their individual decisions without knowing the decisions of their rivals
Simultaneous decision games
Payoff matrix
Minimum efficient scale (full capacity)
Trigger strategy