CIMA Certificate in Business Accounting Practice Questions — All Questions

If demand for a product rises while supply is unchanged, the price tends to:

• a.Fall
• b.Rise✓
• c.Stay the same
• d.Become zero

Excess demand relative to supply pushes prices up.

A market where many firms sell identical products with free entry is:

• a.Perfect competition✓
• b.Monopoly
• c.Oligopoly
• d.Monopsony

Perfect competition features many firms, homogeneous products, and free entry.

A monopoly is characterized by:

• a.Many small firms
• b.Perfectly elastic demand
• c.A single dominant seller✓
• d.Identical products from many sellers

A monopoly has one dominant supplier of a product.

Price elasticity of demand measures how quantity demanded responds to a change in:

• a.Income only
• b.Supply
• c.Advertising
• d.Price✓

Price elasticity relates the change in quantity demanded to a change in price.