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CIMA Certificate
BA1
Fundamentals of Business Economics Questions and Answers

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Viewing page 2 out of 14 pages

Viewing questions 11-20 out of questions

Questions # 11:

A rise in the demand for petrol by motorists is likely to follow a rise in the price of:

Options:

Steel

Second-hand cars

Public transport

Motor insurance

Answer

Questions # 12:

There are waiting lists and shortages of a product. Which ONE of the following statements explains the cause of this?

Options:

A price floor (minimum price) has been set above free market price

A price ceiling (maximum price) has been set above free market price

A price floor (minimum price) has been set below free market price

A price ceiling (maximum price) has been set below free market price

Answer

Questions # 13:

For a business, diseconomies of scale occur when

Options:

the gains from the division of labor are exhausted

all available economies of scale have been exhausted

the market for the firm's product becomes saturated

difficulties in managing a large firm lead to rising long run average costs

Answer

Questions # 14:

If in the short run a business raises the output of its product then

Options:

average fixed cost will remain constant over the whole range of output

average variable cost will fall over the whole range of output

average total cost will initially fall and then rise as output is increased

average total cost will fall until constant returns to scale achieved

Answer

Questions # 15:

The main purpose of government competition policy is to

Options:

Prevent mergers between large companies

Restrict anti-competitive behavior by firms

Limit the ability of firms to secure long run excess profits

Enforce competition by breaking up large firms

Answer

Questions # 16:

Whenever demand for a good is price elastic, an increase in price will

Options:

Increase monopoly power

Increase consumer expenditure on the good

Increase consumer expenditure on a good in joint demand

Decrease total consumer expenditure on the good

Answer

Questions # 17:

XYZ plc has relocated its head office to a new site which enjoys better road communications and is close to a training college that teaches the skills needed to work at XYZ plc. Why will XYZ's costs fall?

Options:

It will gain the benefits of technical economies of scale

It will gain the benefits of managerial economies of scale

It will gain the benefits of external economies of scale

It will gain the benefits of financial economies of scale

Answer

Questions # 18:

Which of the following can be efficiently allocated between competing uses by the price mechanism?

Options:

Private goods

Public goods

Free goods

Externalities

Answer

Questions # 19:

In 201X the market for a crop suffered high prices. According to cobweb theory what was likely to have happened in the following year?

Options:

Price will stay high as farmers restrict supply to make extra profits

Price will fall because the high price in 201X gave an incentive to farmers to plant more and flood the market with extra supply

Price will fall as consumers find cheaper substitutes to the high-priced crop

Price will rise further as buyers stockpile the new harvest to avoid suffering higher prices for a second year

Answer

Questions # 20:

Which ONE of the following circumstances is essential if producer incomes are to rise following the imposition of a price floor (minimum price) in a market?