Practice Quizzes
In differentiating a product, the supply-side consideration is to _______ as possible
be as different from competitors
The problem that arises in coordination games with multiple equilibria is that it is difficult to achieve the:
commonly desired outcome
Which criteria for market segmentation would be easiest to use for an online retailer? a) income b) customer height c) student or non student status d) account address
d
When a seller offers lower prices to those buyers who are willing to overcome some obstacle to get it, the seller is using the ____ to reveal their _____
hurdle method, reservation price
Whether or not a child goes to private or public school is a verifiable measure of household _____
income
Your ability to price discriminate can be maximized if you have considerable ______ (the only one of your kind nearby), are facing rising costs, and if your product is difficult to ____
market power, resell
When advertising increases brand loyalty for your company's brand, then the company's demand curve becomes
more inelastic
Coordination problems can be solved by communication, laws and regulations, focal points, culture, and ____
norms
When resources are shared or owned in common, the Nash equilibrium leads to:
overuse of resources
Product differentiation is not charging a lower _____ than other sellers
price
When sellers try to win customers through charging as low a price as possible, _____ is happening
price competition
A price discriminating company can attract more customers by ____ price, as long as _____
reducing, the price is above its marginal cost
When each player must choose without knowing the other player's choice, a ______ game is taking place
simultaneous
A basic logic that applies to all ______ is: making a good choice requires that you anticipate what others will do
strategic interactions
In a Nash equilibrium, no player can do ____ by unilaterally changing his or her choice
better
A certain shampoo is on sale twice a year. This is an example of a seller using _____ as a form of ____ to achieve price discrimination
price fluctuation, the hurdle method
A _____ is a product that can be easily evaluated before purchase
search good
When Joe's Manufacturing Company successfully differentiates its product, then from the perspective of consumers: a) the output of rival sellers is not a good substitute for Joe's output b) there are different prices charged by different sellers, but the product is the same c) the product may be different, but price remains the key factor in purchase decisions d) rival sellers produce different but equally desirable products
a
Dimesh owns a restaurant. He is able to negotiate lower prices than other restaurants pay with his supplier because he buys in volume and threatens to buy from another supplier. Dimesh is exercising _____
bargaining power
Marcella is a tomato farmer. Under which of the following conditions would she face the most intense competition? a) there are six suppliers in the market for the main input used by firms in the tomato market b) there is little threat of new entrants into the market c) Marcella is one of 1200 tomato farmers who see in the same tomato market
c
When a company practices price discrimination, it will keep adding customers until the point where the....
company's marginal cost equals the last customer's marginal benefit
Under the Five Forces Framework, the market power of customers can impact a sellers profitability when customers with ______ can use their leverage to lower the selling price that sellers charge
market power
A useful rule of thumb is that the higher the marginal benefit a consumer gains from a product, the higher the buyers' ___ will be
reservation price
Selling alternative versions of a product at different prices is a way to identify the _____ of customers at different prices
reservation price
When multiple businesses want to buy the same location, this is an example of
suppliers with bargaining power
Which of the following can reduce the incentive of business partners to hold up a company has made relationship-specific investments? a) a long-term relationship based on trust exists between the partners and the company b) a high level of market power is held by the business partners c) the more the company relies on the business partner, the lower the incentive for the partners to hold-up d) the greater the level of relationship-specific investments, the lower the incentive for the partners to hold-up
a
Which of the following is an example of a company practicing price discrimination? a) most passengers traveling on an airplane pay different prices for their tickets b) the average price of a haircut is $20 in Dayton and $30 in cincinatti c) Johann's bakery charges $2 for a cookie and Bella's bakery charges 3 d) a restaurant charges different prices for different sized drinks
a
In which of the following situations would a company have a lower chance of losing customers when it raises the price of its product? a) customers have many sellers to choose from b) the product is differentiated across companies c) there are low switching costs d) companies advertise their prices
b
What factor determines how many segments to divide your demand in for group pricing? a) the similarity of demand across segments b) the amount of consumer information available to the community c) the ability of the company to identify segments with similar reservation price d) whether the product is a tangible good or an intangible service
b
Which of the following is NOT one of the four steps for making good strategic decisions? a) think about the "what ifs" separately b) consider all the possible outcomes c) play your best response d) assume that others will defer to your action
d
When a check mark is put next to each player's best response, and there is a cell with a check mark for each player, there is a .....
Nash Equilibrium
Once an original decision has been made, what happens on a game tree with which each additional decision made by a player?
a new branch is formed
What protects a business from the threat of entry by potential competitors?
barriers to entry
According to the Five Forces Framework, the _____ degree of rivalry in an industry, the ______ the average profits will be in the industry
greater, lower
Price discrimination can be successful only if
the product cannot be resold
A fabric mill merging with a pants factory is an example of ____ management
vertical
Price discrimination leads to ____ than a one-price system
a more efficient output
When price discriminating, a company owner should set price _______ for each customer
at or just below the marginal benefit
When players in a game ___, they make agreements not to compete with each other and typically charge higher prices
collude
Customers that are ___ often receive discounted prices and coupons
price-sensitive
Persuasive advertising focuses on _____ and provides few facts about the product
emotions
Consumer backlash against price discrimination often focuses on the issue of _____
fairness
The science of making good decisions in situations involving strategic interactions is ______
game theory
As a basic rule of thumb, business owners should differentiate their products as much as possible when price competition is _____
intense
Investments that are worth more in the context of a specific business relationship are known as ________ investments
relationship-specific
How does the threat of potential substitutes lessen the market power of a business? If the substitute becomes available, then the: a) business may lose customers to the substitute good's market unless it lowers price b) business may gain customers from the substitute market, adding to its profits c) business may reduce its costs by substituting one input of another input d) addition of new substitutes will raise the level of customer satisfaction, allowing higher prices to be charged
a
When an input seller has market power in the input market, its customers: a) may end up paying a higher price for inputs b) have the ability to charge a higher price for their products c) gain market power in their product markets d) may earn higher products
a
When using coordination games to look at the issue of bank runs, the best outcome occurs when
all people keep their money in the bank