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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 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
Herfindahl-Hirschman index (HHI)
Subgame perfect equilibrium
High Price Elasticity
Basis for Product Differentiation
2. An oligopoly in which the sales of the leading (top four) firms are distributed unevenly among them
Randomized pricing
No cooperative equilibrium
Unbalanced Oligopoly
Inter-industry competition
3. 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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4. Multiple firms make the same pricing decisions even though they have not explicitly consulted with each other
Inter-industry competition
Implicit Collusion
Bertrand oligopoly
Primary Sources of Monopolistic Power
5. Physical differences - Convenience - Ambience - Reputations - Appeals to vanity - Unconscious fears and desires - Snob appeal - Customized products
Basis for Product Differentiation
Non-cooperative behavior
Sequential-move game
Randomized pricing
6. 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
Four-firm concentration ratio
Peak-load pricing
Non-price competition
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
Cooperation
Leader
Bargaining Power of Suppliers
Simultaneous decision games
8. A representation of a game indicating the players - their possible strategies - and the payoffs resulting from alternative strategies
Differentiated oligopoly
Normal-form game
Strategic behavior
Credible threat
9. 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
Undifferentiated
Collusion
Payoff matrix
Two-part pricing
10. An equilibrium in a game in which players cooperate to increase their mutual payoff
Cooperative equilibrium
Double marginalization
No cooperative equilibrium
Extensive-form game
11. In game theory - game where parties make their moves in turn - one party making the first move followed by the other
Finding profit for oligopoly games
Product differentiation
Cutthroat Competition
Sequential game
12. Operates like the alleged Mafia. Region division of the market among the firms in the industry
Finding profit for oligopoly games
Non-price competition
First-mover advantage
Open Collusion
13. 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.)
Barrier to entry
Collusion
Oligopoly
Monopolistic Characteristics:
14. 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)
Conglomerate Merger
Stackelberg oligopoly
Prisoners' dilemma
Fair return price
15. 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
Four-firm concentration ratio
Bargaining Power of Buyers
Payoff table
Horizontal Merger/Integration
16. When firms make decisions that make every firm better off than in a noncooperative Nash equilibrium
Network effects
Implicit Collusion
Cooperation
Kinked demand curve model
17. The practice of bundling several different products together and selling them at a single "bundle" price
Perfect Competition Barriers to Entry
Commodity bundling
Credible threat
Kinked-demand curve
18. A product's ability to satisfy a large number of consumers at the same time
Minimum efficient scale (full capacity)
Present Value (PV)
Simultaneous consumption
Mixed (randomized) strategy
19. Produce identical products
Undifferentiated
Perfect Competitor Characteristics
Cheating
Perfect Competition Long Run Supply
20. An index of market concentration. Sum of squared market shares of all the firms in the industry times 10K HHI=10 - 000Σwi2
Non-cooperative equilibrium
Vertical Merger
Herfindahl-Hirschman index (HHI)
Bargaining Power of Buyers
21. The physical characteristics of the market within which firms interact
One-shot game
Market Structure
Nonprime competition
Socially optimal price
22. The actions by persons - firms - or unions to gain special benefits from government at taxpayer's or someone else's expense
Extensive-form game
Implicit Collusion
Stackelberg oligopoly
Rent-seeking behavior
23. The maximum price that a buyer is willing to pay for a good - or the minimum price that a seller will accept
Implicit Collusion
Peak-load pricing
Dansby-Willig performance index
Reservation Price
24. 2 firms - simplest case in an oligopoly. Profits higher if limiting their production
Perfect Competitor Characteristics
Homogenous oligopoly
Four-firm concentration ratio
Duopoly
25. The price that is low enough to deter entry
Limit price
Leader
Finding profit for oligopoly games
Merger
26. 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
Non-cooperative behavior
Finding profit for oligopoly games
Cooperation
27. An equilibrium in a game in which players do not cooperate but pursue their own self-interest
No cooperative equilibrium
Double marginalization
Trigger strategy
Minimum efficient scale (full capacity)
28. 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
Examples of Oligopoly
Joint Venture
Imperfect competition
Prisoner's dilemma
29. 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
Rothschild index
Oligopoly
Secure strategy
Repeated game
30. 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
Two-part pricing
Lerner index
Nash equilibrium
Finding profit for oligopoly games
31. 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
Rent-seeking behavior
Socially optimal price
Network effects
Two-part pricing
32. When managers are able to charge each consumer their reservation price. Examples are car and home sales
First-Degree Price Discrimination (Perfect)
Normal-form game
Minimum efficient scale (full capacity)
Cooperative equilibrium
33. Where a firm can charge different groups of consumers different prices for the same product. Example: student or senior discounts
Product differentiation
Third-degree price discrimination
High Price Elasticity
Economies of scale
34. Pricing strategy in which higher prices are charged during peak hours than during off-peak hours
Peak-load pricing
Collusion
Transfer pricing
Price matching
35. A firm whose price decisions are tacitly accepted and followed by others in the industry
Cournot oligopoly
What is game?
Price Leadership
Repeated game
36. 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
Barrier to entry
Block pricing
Undifferentiated
Perfect Competition (characteristics)
37. A strategy that guarantees the highest payoff given the worst possible scenario
Non-price competition
Secure strategy
Covert Collusion
Extensive-form game
38. The smallest quantity at which the average cost curve reaches its minimum
Reservation Price
Minimum efficient scale (full capacity)
Peak-load pricing
Monopolistic Characteristics:
39. If production of a good requires a particular input - then control of that input can be a barrier to entry
Randomized pricing
Ownership of a Key Input
Cheating
Dominant strategy
40. An establishment firm commits to setting price below the profit-maximizing level to prevent entry
Two-part pricing
Limit pricing
Barrier to entry
Strategic behavior
41. A simpler way to operationalize first-degree price discrimination
Basis for Product Differentiation
Two-part Tariff Method of Pricing
Perfect Competition Barriers to Entry
Non-price competition
42. First firm to set its output (Stackelberg's model)
Lerner index
Strategy
Perfect Competitor Characteristics
Leader
43. Ranks industries according to how much social welfare would improve if the output in an industry were increased by a small amount
Prisoner's dilemma
Cross-subsidy pricing
Dansby-Willig performance index
Open Collusion
44. If buyers have enough bargaining power - they can insist on lower prices - higher-quality products - or additional services
Price war
Bargaining Power of Buyers
Third-degree price discrimination
Randomized pricing
45. A combination of two or more companies into one company
Lerner index
Mutual Interdependence
Non-rivalrous consumption
Merger
46. An oligopoly in which the firms produce a standardized product
Limit pricing
First-Degree Price Discrimination (Perfect)
Subgame perfect equilibrium
Homogenous oligopoly
47. Long-run marginal cost curve above long-run average cost
Pure monopoly
Empty threat
Transfer pricing
Perfect Competition Long Run Supply
48. 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
Monopolistic Competition
One-shot game
High Price Elasticity
Dominant firm oligopoly
49. The rules describe the setting of the game - the actions the players may take - and the consequences of those actions; -Advertising and R&D are also prisoners' dilemmas
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50. Competition based on factors that are not related to price - such as product quality - service and financing - business location - and reputation
Commodity bundling
Prisoners' dilemma
Nonprime competition
First-Degree Price Discrimination (Perfect)