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Business Competition
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Subject
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business-skills
Instructions:
Answer 50 questions in 15 minutes.
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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. In game theory - a game that is played again sometime after the previous game ends
Block pricing
Dominant strategy
Two-part Tariff Method of Pricing
Repeated game
2. When firms limit production and raise prices in a way that raises each others' profits - even though they have not made any formal agreement
Competitive market
Market Structure
Tacit collusion
Pure monopoly
3. A combination of two or more companies into one company
Lerner index
Reservation Price
Merger
Market
4. 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
Socially optimal price
Herfindahl-Hirschman index (HHI)
Profit
5. Revenue-Costs
Four-firm concentration ratio
Perfect Competition Short Run Supply
Limit pricing
Profit
6. 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
Cooperative equilibrium
Socially optimal price
Limit price
Oligopoly
7. 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
Cheating
Second-Degree Price Discrimination
Implicit Collusion
Bertrand oligopoly
8. 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"
Bargaining Power of Suppliers
Price war
Patent
Credible threat
9. Both players have dominant strategies and play them
Perfect Competition Long Run Supply
Dominant strategy equilibrium
Simultaneous decision games
Herfindahl-Hirschman index (HHI)
10. Marginal cost curve above average variable cost - P* = SRMC
Perfect Competition Short Run Supply
Lerner index
Cutthroat Competition
Present Value (PV)
11. 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.)
Limit pricing
Two-part Tariff Method of Pricing
Monopolistic Characteristics:
Cross-subsidy pricing
12. Cooperation among firms that does not involve an explicit agreement
Imperfect competition
Tacit collusion
Stackelberg oligopoly
One-shot game
13. 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
Kinked demand curve model
First-mover advantage
Bargaining Power of Buyers
Limit pricing
14. The derivative of total revenue
Cournot oligopoly
Non-cooperative behavior
Disappearing invisible hand
Marginal Revenue
15. The actions by persons - firms - or unions to gain special benefits from government at taxpayer's or someone else's expense
Joint Venture
Primary Sources of Monopolistic Power
Market Structure
Rent-seeking behavior
16. 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
Differentiated oligopoly
Commodity bundling
Socially optimal price
Concentration Ratio
17. 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
Rothschild index
Non-rivalrous consumption
Concentration Ratio
Sweezy oligopoly
18. An agreement among firms in a market about quantities to produce or prices to charge in attempts to limit competition
Collusion
Kinked demand curve model
Limit pricing
Present Value (PV)
19. An equilibrium in a game in which players do not cooperate but pursue their own self-interest
Limit price
Stackelberg oligopoly
No cooperative equilibrium
Subgame perfect equilibrium
20. 2 firms - simplest case in an oligopoly. Profits higher if limiting their production
Disappearing invisible hand
Duopoly
Dominant strategy
Product Differentiation
21. When no one firm has a monopoly - but producers nonetheless realize that they can affect market prices. Firms compete but possess market power
Imperfect competition
Non-cooperative equilibrium
Stackelberg oligopoly
Strategic behavior
22. In game theory - a statement of harmful intent easily dismissed by recipient because threat not considered believable
Leader
Examples of Oligopoly
Primary Sources of Monopolistic Power
Empty threat
23. A strategy whereby a player randomizes over two or more available actions in order to keep rivals from being able to predict his action
Cournot oligopoly
Trigger strategy
Mixed (randomized) strategy
Non-rivalrous consumption
24. Occurs when a firm produces output - whatever its level - at a higher cost than is necessary to produce it
Inefficiency
Network effects
Cournot equilibrium
Mixed (randomized) strategy
25. Long-run marginal cost curve above long-run average cost
Marginal Revenue
Perfect Competition Long Run Supply
Limit pricing
Horizontal Merger/Integration
26. An attempt by a firm to convince buyers that its product is different from the products of other firms in the industry
Product differentiation
Tacit collusion
Natural Monopoly (local phone or electric company)
No cooperative equilibrium
27. The exclusive right to a product for a period of 20 years from the date the product is invented
Non-price competition
Contestable market
Follower
Patent
28. Operates like the alleged Mafia. Region division of the market among the firms in the industry
Tacit collusion
Open Collusion
Stackelberg oligopoly
Inefficiency
29. A merger between firms who have a buyer/supplier relationship. Example: BF Goodrich merging with rubber plantations
Vertical Merger
Disappearing invisible hand
Payoff
Joint Venture
30. 1/(1+i)n
Joint Venture
Price matching
Present Value (PV)
Horizontal Merger/Integration
31. When managers are able to charge each consumer their reservation price. Examples are car and home sales
Cheating
Follower
First-Degree Price Discrimination (Perfect)
Third-Degree Price Discrimination
32. Price of a product that enables its producer to obtain a normal profit & that is equal to the ATC of producing it
Third-Degree Price Discrimination
Unbalanced Oligopoly
Fair return price
Sweezy oligopoly
33. 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
Disappearing invisible hand
Kinked-demand curve
Cournot equilibrium
Prisoners' dilemma
34. An establishment firm commits to setting price below the profit-maximizing level to prevent entry
Limit pricing
Contestable market
Block pricing
Maximizing profit in Oligopoly games
35. Involves price-fixing
First-mover advantage
Covert Collusion
Product differentiation
Tacit collusion
36. An index of market concentration. Sum of squared market shares of all the firms in the industry times 10K HHI=10 - 000Σwi2
Herfindahl-Hirschman index (HHI)
Trigger strategy
Nonprime competition
Reservation Price
37. Actions taken by a firm to achieve a goal - such as maximizing profits
No cooperative equilibrium
Business strategy
Payoff matrix
Examples of Monopolistic Competition
38. The practice of charging different prices to consumers for the same good or service
Prisoners' dilemma
Imperfect competition
Price discrimination
Leader
39. The smallest quantity at which the average cost curve reaches its minimum
Implicit Collusion
Tacit collusion
Fair return price
Minimum efficient scale (full capacity)
40. The practice of bundling several different products together and selling them at a single "bundle" price
Examples of Monopolistic Competition
Commodity bundling
Payoff
Normal-form game
41. Demand line is above ATC curve
Present Value (PV)
Dominant strategy
Competitive market
Perfect Competitor Making a Profit
42. Different units of a product are sold at different prices. Examples are buying in bulk - or - commodity-bundling
Simultaneous decision games
Cournot equilibrium
Four-firm concentration ratio
Second-Degree Price Discrimination
43. When each firm has an incentive to cheat - but both are worse off if both cheat -- illustrates why cooperation is difficult to maintain even when it is mutually beneficial to do so
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44. Competition based on factors that are not related to price - such as product quality - service and financing - business location - and reputation
Stackelberg oligopoly
Nonprime competition
Follower
Mutual Interdependence
45. The reward received by a player in a game - such as the profit earned by an oligopolist
Payoff
Simultaneous consumption
Concentration Ratio
Third-degree price discrimination
46. The competition for sales between the products of one industry and the products of another industry
Monopolistic Characteristics:
Vertical Merger
First-mover advantage
Inter-industry competition
47. Where a firm can charge different groups of consumers different prices for the same product. Example: student or senior discounts
Third-degree price discrimination
Brand Multiplication
Merger
Covert Collusion
48. Specific assets - Economies of scale - Excess capacity - Reputation effects
Inter-industry competition
Horizontal Merger/Integration
Perfect Competition Barriers to Entry
Simultaneous decision games
49. A merger of firms in unrelated industries. Example: If Purina Dow Chow merged with Pampers Diaper Company
Implicit Collusion
Conglomerate Merger
Prisoners' dilemma
Simultaneous-move game
50. Steel - autos - colas - airlines
Conglomerate Merger
Examples of Oligopoly
Reservation Price
Bertrand oligopoly
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