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Free CPA-Business Exam Braindumps (page: 63)

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PDF with 530 Questions

In the long run in a competitive market, a maximum or ceiling price set below the equilibrium price will:

  1. Cause a surplus to be produced.
  2. Have no effect on the market.
  3. Cause a shortage to be created.
  4. Result in a decrease in price.

Answer(s): C

Explanation:

Choice "c" is correct. Setting a ceiling price below the price dictated by market forces (which is the equilibrium price set by the supply and demand curves) would create excess demand for the product (at its reduced price) and, consequently, a shortage.
Choice "a" is incorrect. A surplus would be produced if a floor price (under which no supplier could sell) were set above the equilibrium price, because suppliers would supply excess product at the inflated price.
Choices "b" and "d" are incorrect, per the above Explanation.



If the federal government were to regulate a product or service in a competitive market by setting a maximum price that is below the equilibrium price, then in the long run this action will:

  1. Result in a surplus.
  2. Result in a shortage.
  3. Cause a decrease in price.
  4. Have no effect on the market.

Answer(s): B

Explanation:

Choice "b" is correct. Setting a maximum or ceiling price, which is below the equilibrium price dictated by a competitive market, would result in a shortage as a result of excess demand.
Choices "a", "c", and "d" are incorrect, per the above Explanation.



A government price support program will:

  1. Lead to surpluses.
  2. Lead to shortages.
  3. Improve the rationing function of prices.
  4. Not influence the rationing function of prices.

Answer(s): A

Explanation:

Choice "a" is correct. A government price support program acts as a subsidy that will encourage suppliers to increase supply beyond an equilibrium point (the point where supply and demand curves intersect). This excess of supply over demand will create surpluses in the market.
Choices "b", "c", and "d" are incorrect, per the above Explanation.



Strategic planning activities normally involve which of the following efforts:

I). Strategic Positioning.
II). Value Chain Analysis.
III). Balance Scorecard Development.

  1. I.
  2. I and II.
  3. I and III.
  4. I, II, and III.

Answer(s): D

Explanation:

Choice "d" is correct. Strategic planning activities are normally acknowledged to include each of three operations including:

I). Strategic positioning. Strategic positioning includes the process of identifying mission, identifying overall strategy, identifying factors critical to succeeding given the assumed strategy and identifying internal and external factors that contribute or detract from achieving the strategy.
II). Value chain analysis. Value chain analysis includes the process of identifying the functional characteristics of an organization and the manner in which each one of those functions adds value to the firm's customers.
III). Balanced scorecard development. Development of a balanced scorecard identifies measurements of value that are both financial and non-financial to be used to monitor and evaluate performance.

Choice "a" is incorrect. All three activities are integral to strategic planning. Choice "b" is incorrect. All three activities are integral to strategic planning. Choice "c" is incorrect. All three activities are integral to strategic planning.






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