Describes The Differentiation Of A Product Quiz

20 Questions | By Orsay | Updated: Mar 20, 2022 | Attempts: 1026

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With many products being produced that meet the same consumer needs there is a growing benefit for a business to differentiate their products so that they may be more attractive to a prospective consumer. The quiz below describes the differentiation of a product. Give it a try and see how well you fair.

Questions and Answers

1.

Which U.S. agency is responsible for preventing anticompetitive conduct?
- A.
  
  Securities and Exchange Commission
- B.
  
  Department of Justice
- C.
  
  Office of Fair Trading
- D.
  
  Competition Commission
- E.
  
  Competition Authority
2.

What criterion developed by the DOJ is used to identify all potential competitors within the market?
- A.
  
  Market competition criterion
- B.
  
  DOJ competition criterion
- C.
  
  SSNIP criterion
- D.
  
  SIC criterion
- E.
  
  DOJ market criterion
3.

Which of the following is not a characteristic of substitute products X and Y?
- A.
  
  They have the same or similar product performance characteristics
- B.
  
  They have the same or similar occasions for use
- C.
  
  They are solid in the same geographic market
- D.
  
  Customers are indifferent between X and Y?
- E.
  
  A price increase of X while keeping the Y's price constant leads to a drop in purchases of X and an increase in purchases of Y
4.

What empirical method generally is used to measure the degree to which products substitute for each other?
- A.
  
  Cross-price elasticity
- B.
  
  Price-comparison
- C.
  
  Relatedness factor
- D.
  
  Standard Industrial Classification
- E.
  
  SSNIP
5.

What is a catchment area?
- A.
  
  The area of a firm’s customers as defined by traditional county lines
- B.
  
  The area a firm’s customers shops due to idiosyncratic reasons
- C.
  
  The area a firm operates in which it has no competition
- D.
  
  The area where a firms customer will go to shop in the event the firm were to raise prices
- E.
  
  The contiguous area from which a firm draws most of its customers
6.

What is defined by the number and size distribution of the firms in a market?
- A.
  
  Herfindahl index
- B.
  
  Market share
- C.
  
  Market structure
- D.
  
  SSNIP
- E.
  
  Numbers-equivalent of firms
7.

Which of the following market structures generally has a Herfindahl index at .6 and above (usually having light competition, unless threatened by entry)?
- A.
  
  Perfect competition
- B.
  
  Monopolistic competition
- C.
  
  Oligopoly
- D.
  
  Monopoly
- E.
  
  N-firm
8.

In what type of market structure to sellers set identical prices and are prices generally driven down to marginal costs?
- A.
  
  Perfect competition
- B.
  
  Monopolistic competition
- C.
  
  Oligopoly
- D.
  
  Monopoly
- E.
  
  Diversified
9.

What term describes a firm that faces little or no competition in one of its input markets?
- A.
  
  Monopolist
- B.
  
  Monopsonist
- C.
  
  Oligopolist
- D.
  
  Oligopsonist
- E.
  
  Cartelist
10.

What term describes the differentiation of a product when it is unambiguously better or worse than competing products?
- A.
  
  Horizontal differentiation
- B.
  
  Vertical differentiation
- C.
  
  Idiosyncratic differentiation
- D.
  
  Spatial differentiation
- E.
  
  Non-price differentiation
11.

What term describes the differentiation of a product when only some consumers prefer it to competing products (holding price equal)?
- A.
  
  Horizontal differentiation
- B.
  
  Vertical differentiation
- C.
  
  Idiosyncratic differentiation
- D.
  
  Spatial differentiation
- E.
  
  Non-price differentiation
12.

What group/type preferences describes when tastes differ markedly from one person to the next and result in horizontal differentiation?
- A.
  
  Search preferences
- B.
  
  Horizontal preferences
- C.
  
  Consumer preferences
- D.
  
  Spatial preferences
- E.
  
  Idiosyncratic preferences
13.

Of the following industries listed, which one is generally thought of as having the highest search costs?
- A.
  
  Consumer packaged goods
- B.
  
  Electronics
- C.
  
  Physician service
- D.
  
  Automotive
- E.
  
  Apparel
14.

In what type of market do the actions of individual firms materially affect the overall market?
- A.
  
  Perfect competitive
- B.
  
  Monopolistically competitive
- C.
  
  Oligopoly
- D.
  
  Monopoly
- E.
  
  Diversified
15.

What kind of competition is generally described as quantity competition?
- A.
  
  Bertrand competition
- B.
  
  Cournot competition
- C.
  
  Perfect competition
- D.
  
  Chamberlin competition
- E.
  
  Monopolistic competition
16.

What kind of competition is generally described as price competition?
- A.
  
  Bertrand competition
- B.
  
  Cournot competition
- C.
  
  Perfect competition
- D.
  
  Chamberlin competition
- E.
  
  Monopolistic competition
17.

The average PCM (percentage contribution margin) in a Cournot equilibrium is given by the formula PCM=H/η, where H is the Herfindahl index and η is the price elasticity of market demand. Given this equation, which of the following statements is true?
- A.
  
  The more concentrated the industry, the smaller the PCMs in equilibrium
- B.
  
  The industry concentration only raises the PCMs in equilibrium
- C.
  
  The industry concentration has no bearing on PCM size in equilibrium
- D.
  
  The less concentrated the industry, the larger the PCMs in equilibrium
- E.
  
  The less concentrated the industry, the smaller the PCMs in equilibrium
18.

What terms does Sutton use to describe the costs of establishing a credible brand?
- A.
  
  Brand investment
- B.
  
  Cost of brand establishment
- C.
  
  Cost of advertisement
- D.
  
  Endogenous sunk cost
- E.
  
  Market establishment cost
19.

Which of the following is a reason other than concentration that price-cost margins may vary across industries?
- A.
  
  Accounting practices
- B.
  
  Regulation
- C.
  
  Product differentiation
- D.
  
  Nature of sales transactions
- E.
  
  All of the above
20.

Based on Bresnahan and Reiss's study of the relationship between concentration and prices, how many firms did they determine generally need to be in a market for price competition to be as intense as it would likely get?
- A.
  
  1
- B.
  
  2
- C.
  
  3
- D.
  
  4
- E.
  
  5