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Free CIMAPRA17-BA1-1 Exam Braindumps
BA1 - Fundamentals of Business Economics Questions 181–185 (page: 38)

Updated On: 9-Feb-2026
Page 38 of 95
PDF with 468 Questions

Porter describes differentiation as a firm having a unique product or service that is valued by the customer.
Which ONE of the following is NOT a factor in the higher prices and profits from differentiated products?

  1. Lower price elasticity of demand due to the product having few substitutes
  2. Price inelastic supply because differentiation acts as a barrier to entry against other firms
  3. Higher customer satisfaction making them willing to pay a higher price
  4. Higher costs of production and marketing necessitating the charging of a higher price

Answer(s): D



Firms in competitive markets can earn only normal profit in the long run because:

  1. they produce homogeneous products
  2. there are no barriers to entry into these markets
  3. production costs are the same for all producers
  4. of the absence of economies of scale

Answer(s): B



Why do monopoly market structures charge higher prices than would be charged by more competitive market structures?

  1. They are more likely to suffer from diseconomies of scale
  2. They must recover their higher research and development expenditures
  3. They can increase profits by reducing output to force prices higher
  4. They have barriers to entry that stop customers going to new markets

Answer(s): C



One of the features of an oligopoly market is that the pricing strategy of producers

  1. is conditioned by the expected reaction of rival producers
  2. tends to ignore expectations about consumer reactions
  3. is constrained by the absence of barriers to entry into the industry
  4. is largely determined by government competition rules

Answer(s): A



All of the following would provide justification for government competition authorities to investigate the businesses involved except one.
Which ONE is the exception?

  1. The operation of a cartel
  2. A merger between the two dominant firms in an industry
  3. A price fixing agreement between two rival firms
  4. An advertising campaign directly targeting rival firms

Answer(s): D



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