Economic Markets - CPA Business Environment and Concepts (BEC)

Card 0 of 18

Question

Under which of the following conditions is the supplier most able to influence or control buyers?

Answer

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.

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Question

When does competition not become an even stronger force impacting the profitability of a firm?

Answer

This is not a factor that would cause market competitiveness to be even stronger.

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Question

Price discrimination is accomplished most effectively in markets with which of the following characteristics?

Answer

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.

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Question

Which type of unemployment is shown when individuals do not have the qualifications or skills necessary to fill available jobs?

Answer

Structural unemployment occurs when the jobs available do not match the skills of the unemployed individuals.

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Question

Which of the following types of unemployment typically results from technological advances?

Answer

Cyclical results from declining DP and frictional is normal unemployment. Short term is a broad description not applicable here.

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Question

Lagging indicators of the economy ____ economic activity where as leading indicators _____ economic activity.

Answer

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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Question

Which of the following segments of the economy will be least affected by the business cycle?

Answer

Healthcare services are part of an industry that has an inelastic demand. Regardless of the status of the economy, consumers will always have the same need for healthcare service.

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Question

In the long run, a firm may experience increasing returns due to:

Answer

Economies of scale is the process by which the cost to produce something decreases with increased production and scale.

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Question

Elasticity of demand or supply is:

Answer

Elasticity of demand or supply is a measure of how sensitive the demand for or the supply of a product is to a change in its price.

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Question

Frictional unemployment refers to unemployment resulting from:

Answer

Frictional unemployment arises from workers routinely changing jobs or from workers being temporarily laid off.

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Question

During a period of high inflation, which of the following groups in society would be most likely to gain?

Answer

During a period of high inflation, those with a fixed amount of debt will repay their debt with inflated dollars and are thus likely to gain.

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Question

There are ___ methods of measuring GDP, and _____ is not a method of measuring GDP.

Answer

There are 2 methods of measuring GDP, expenditure, and income approaches. There is no GDP measuring method known as the Output approach.

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Question

If the US dollar increases in value relative to other major currencies, aggregate demand should:

Answer

If the dollar gains In value, net exports will suffer as US goods become more expensive overseas, hence aggregate demand will decrease.

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Question

An increase (right shift) in aggregate demand causes:

Answer

A right shifting increase in aggregate demand would cause an increase in the price level and increase in real GDP.

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Question

Which of the following is most likely to accompany a reduction in aggregate demand?

Answer

As aggregate demand falls, the unemployment rate rises so employment would decrease.

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Question

Which of the following situations best illustrates a potential horizontal merger between Companies A and B?

Answer

When two companies operating in the same industry merge, it represents a horizontal merger.

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Question

Pet Inc. is looking to expand its cat and dog food business in the upcoming year. After due diligence is performed, Pet Inc. identifies another company that would fulfill its strategic objective but is much larger and has various other lines of business. Which strategy should Felix management pursue given the above?

Answer

Since the other company is much larger than Pet Inc., a purchase of assets would not only be the best option, but also the only feasible option.

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Question

When mapping out supply and demand curves, _____ could belong as the Y-axis and _____ could belong as the X-axis.

Answer

While the supply and demand chart can vary depending on the micro or macroeconomic viewpoint, this option is the only one that could be possible.

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