CIMA Certificate in Business Accounting Practice Questions — All Questions

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

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

Excess demand relative to supply pushes prices up.

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

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

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

A monopoly is characterized by:

• a.Many small firms
• b.A single dominant seller✓
• c.Perfectly elastic demand
• 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.Supply
• b.Advertising
• c.Income only
• d.Price✓

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