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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. Ignoring the effects of their actions on each others' profits
Herfindahl-Hirschman index (HHI)
Non-cooperative behavior
Finding profit for oligopoly games
Market Structure
2. An attempt by a firm to convince buyers that its product is different from the products of other firms in the industry
Dominant firm oligopoly
Tacit collusion
Product differentiation
Pure monopoly
3. A situation in which no one wants to change his or her behavior
Oligopoly
Cooperative equilibrium
Sequential-move game
Equilibrium
4. Where a firm can charge different groups of consumers different prices for the same product. Example: student or senior discounts
Leader
Non-cooperative behavior
Third-degree price discrimination
Tit-for-tat strategy
5. Steel - autos - colas - airlines
Monopoly (characteristics)
The Threat from Potential Entrants Firms
Cutthroat Competition
Examples of Oligopoly
6. 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
Payoff
Product differentiation
Bargaining Power of Buyers
Cournot oligopoly
7. 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)
Two-part pricing
Limit price
Four-firm concentration ratio
Homogenous oligopoly
8. In game theory - a decision rule that describes the actions a player will take at each decision point
Limit price
Interdependence
Non-cooperative equilibrium
Strategy
9. Occurs when a firm produces output - whatever its level - at a higher cost than is necessary to produce it
Strategic behavior
Perfect Competitor Making a Profit
Sweezy oligopoly
Inefficiency
10. Simultaneous move game that is not repeated
Primary Sources of Monopolistic Power
Perfect Competition Barriers to Entry
One-shot game
Strategic behavior
11. Each firm believes that if it raises its price - its competitors will not follow - but if it lowers its price all of its competitors will follow; -a model in which firms in an oligopoly match price cuts by other firms - but do not match price hike
Inter-industry competition
Barrier to entry
Cutthroat Competition
Kinked demand curve model
12. A strategy in which a firm advertises a price and a promise to match any lower prices offered by a competitor
Strategy
Price matching
Profit
Dominant firm oligopoly
13. A merger between two firms in the same industry. Example: 2004 K-Mart merged with Sears
Implicit Collusion
Horizontal Merger/Integration
Perfect Competitor Characteristics
Empty threat
14. Many buyers and sellers - product homogeneity - low cost and accurate information - free entry and exit - best regarded as a benchmark
Payoff matrix
Perfect Competition (characteristics)
Double marginalization
Subgame perfect equilibrium
15. When firms limit production and raise prices in a way that raises each others' profits - even though they have not made any formal agreement
Tacit collusion
Sweezy oligopoly
Commodity bundling
Imperfect competition
16. A product's ability to satisfy a large number of consumers at the same time
Non-cooperative equilibrium
Ownership of a Key Input
Simultaneous consumption
Block pricing
17. A situation in which competing firms must make their individual decisions without knowing the decisions of their rivals
Barrier to entry
Covert Collusion
Simultaneous decision games
Second-Degree Price Discrimination
18. A simpler way to operationalize first-degree price discrimination
Leader
Two-part Tariff Method of Pricing
Monopolistic Competition
Duopoly
19. 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
Empty threat
Two-part pricing
Price discrimination
Concentration Ratio
20. 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
Payoff table
Perfect Competitor Making a Profit
Kinked-demand curve
First-Degree Price Discrimination (Perfect)
21. Pricing strategy in which a firm optimally sets the internal price at which an upstream division wells an input to a downstream division
Cournot equilibrium
Transfer pricing
Minimum efficient scale (full capacity)
Mutual Interdependence
22. An oligopoly in which the firms produce a standardized product
Dominant strategy equilibrium
Examples of Oligopoly
Homogenous oligopoly
Double marginalization
23. Rival who sets its output after the leader (Stackelberg's model)
Follower
Perfect Competition Barriers to Entry
Two-part Tariff Method of Pricing
Competitive market
24. The practice of bundling several different products together and selling them at a single "bundle" price
Sweezy oligopoly
Stackelberg oligopoly
Commodity bundling
Cournot equilibrium
25. A pricing strategy in which profits gained from the sale of one product are used to subsidize sales of a related product
Barrier to entry
Rent-seeking behavior
Cutthroat Competition
Cross-subsidy pricing
26. A table that shows the payoffs for every possible action by each player for every possible action by the other player
Sequential-move game
Monopolistic Competition
Payoff matrix
Transfer pricing
27. Keeps the price just where it is to maximize profit
Cutthroat Competition
Differentiated oligopoly
Business strategy
Tit-for-tat strategy
28. Operates like the alleged Mafia. Region division of the market among the firms in the industry
Limit price
Socially optimal price
Randomized pricing
Open Collusion
29. The actions by persons - firms - or unions to gain special benefits from government at taxpayer's or someone else's expense
Payoff matrix
Interdependence
Rent-seeking behavior
Patent
30. 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
Marginal Revenue
Subgame perfect equilibrium
Secure strategy
Nonprime competition
31. A game that is played over and over again forever and in which players receive payoffs during each play of the game
Business strategy
Pure monopoly
Indefinitely repeated game
Two-part Tariff Method of Pricing
32. 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
Nonprime competition
Concentration Ratio
No cooperative equilibrium
Mutual Interdependence
33. A situation in which all decision makers know the payoff table - and they believe all other decision makers also know the payoff table
Mutual interdependence
Common knowledge
Dominant strategy
Disappearing invisible hand
34. Price Sensitive
Inter-industry competition
Double marginalization
Herfindahl-Hirschman index (HHI)
High Price Elasticity
35. 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
Limit pricing
Inefficiency
Import competition
Cooperative equilibrium
36. The exclusive right to a product for a period of 20 years from the date the product is invented
Basis for Product Differentiation
Patent
First-Degree Price Discrimination (Perfect)
Dominant firm oligopoly
37. Face competition from companies that currently are not in the market but might enter
The Threat from Potential Entrants Firms
Strategy
Four-firm concentration ratio
First-mover advantage
38. Increases in the value of a product to each user - including existing users - as the total number of users rises
Non-cooperative behavior
Limit price
Network effects
Prisoner's dilemma
39. Price of a product that enables its producer to obtain a normal profit & that is equal to the ATC of producing it
Cross-subsidy pricing
Subgame perfect equilibrium
Dominant firm oligopoly
Fair return price
40. The competition for sales between the products of one industry and the products of another industry
Inter-industry competition
Mutual interdependence
Undifferentiated
Limit pricing
41. Single seller in an industry - Strong barriers to entry - Profit maximization - faces market demand and sets MR=MC - Unexploited gains from trade
Two-part Tariff Method of Pricing
One-shot game
Interdependence
Monopoly (characteristics)
42. An oligopoly in which the sales of the leading (top four) firms are distributed unevenly among them
Monopolistic Characteristics:
Cross-subsidy pricing
Barrier to entry
Unbalanced Oligopoly
43. Game in which each player makes decisions without knowledge of the other player's decisions
Simultaneous-move game
Dominant firm oligopoly
Equilibrium
Herfindahl-Hirschman index (HHI)
44. Sellers can identify different types of customers and offer each a different price. Examples are special prices for students or the elderly
Extensive-form game
Payoff
Non-rivalrous consumption
Third-Degree Price Discrimination
45. 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)
Perfect Competition Short Run Supply
Covert Collusion
Cournot equilibrium
Barrier to entry
46. Multiple firms make the same pricing decisions even though they have not explicitly consulted with each other
Implicit Collusion
Open Collusion
Patent
Payoff matrix
47. Actions taken by a firm to achieve a goal - such as maximizing profits
Economies of scale
Finding profit for oligopoly games
Duopoly
Business strategy
48. A strategy that guarantees the highest payoff given the worst possible scenario
Unbalanced Oligopoly
Secure strategy
Barrier to entry
Oligopoly
49. When firms make decisions that make every firm better off than in a noncooperative Nash equilibrium
Patent
Barrier to entry
Cooperation
Perfect Competition Short Run Supply
50. Maximize economic profit by producing the quantity at which MC=MR
Maximizing profit in Oligopoly games
Market Structure
Bargaining Power of Buyers
Limit pricing