CPA Business Environment and Concepts (BEC) : Market Equilibrium
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Example Questions
Example Question #5 : Economic Markets
Under which of the following conditions is the supplier most able to influence or control buyers?
When the industry is controlled by a large number of companies
When the supplier does not face the threat of substitute products
When the supplier's products are not differentiated
When the purchasing industry is an important customer to the supplying industry
When the supplier does not face the threat of substitute products
When there are few good substitutes for a supplier's product, the supplier has market power. As a result, the supplier is better able to control buyers and act as a price setter rather than a price taker.
Example Question #6 : Economic Markets
When does competition not become an even stronger force impacting the profitability of a firm?
Customers do not have strong brand preferences
Various firms use various types of strategic plans
The market is not growing fast
The costs of exiting the market are less than the costs of continuing to operate
The costs of exiting the market are less than the costs of continuing to operate
This is not a factor that would cause market competitiveness to be even stronger.
Example Question #7 : Economic Markets
Price discrimination is accomplished most effectively in markets with which of the following characteristics?
Advanced technology capabilities that determine optimal pricing
Fairly distinct segments of customers
Excess capacity that meets high demand at different price levels
High competition that generates many price changes
Fairly distinct segments of customers
When customers are distinct, a seller can charge different prices to different groups by justifying that the products they are buying are unique to that specific group. There is also less power from the perspective of the customer because they cannot join together as easily and bargain with the seller.
Example Question #9 : Economic Markets
Which type of unemployment is shown when individuals do not have the qualifications or skills necessary to fill available jobs?
Cyclical
Natural
Structural
Frictional
Structural
Structural unemployment occurs when the jobs available do not match the skills of the unemployed individuals.
Example Question #1 : Market Equilibrium
Which of the following types of unemployment typically results from technological advances?
Structural
Cyclical
Short term
Frictional
Structural
Cyclical results from declining DP and frictional is normal unemployment. Short term is a broad description not applicable here.
Example Question #11 : Economic Markets
Lagging indicators of the economy ____ economic activity where as leading indicators _____ economic activity.
Predict, coincide
Follow, predict
Coincide, follow
Predict, follow
Follow, predict
While both indicators are necessary to assist in viewing the bigger picture of the economy as a whole, leading assist in taking action and lagging aid in understanding.
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