Market Equilibrium
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CPA Auditing and Attestation (AUD) › Market Equilibrium
Under which of the following conditions is the supplier most able to influence or control buyers?
When the industry is controlled by a large number of companies
When the purchasing industry is an important customer to the supplying industry
When the supplier's products are not differentiated
When the supplier does not face the threat of substitute products
Explanation
When there are few good substitutes for a supplier's product, the supplier has market power. As a result, the supplier is better able to control buyers and act as a price setter rather than a price taker.
When does competition not become an even stronger force impacting the profitability of a firm?
Customers do not have strong brand preferences
Various firms use various types of strategic plans
The market is not growing fast
The costs of exiting the market are less than the costs of continuing to operate
Explanation
This is not a factor that would cause market competitiveness to be even stronger.
Price discrimination is accomplished most effectively in markets with which of the following characteristics?
Advanced technology capabilities that determine optimal pricing
Excess capacity that meets high demand at different price levels
High competition that generates many price changes
Fairly distinct segments of customers
Explanation
When customers are distinct, a seller can charge different prices to different groups by justifying that the products they are buying are unique to that specific group. There is also less power from the perspective of the customer because they cannot join together as easily and bargain with the seller.
Which type of unemployment is shown when individuals do not have the qualifications or skills necessary to fill available jobs?
Natural
Cyclical
Frictional
Structural
Explanation
Structural unemployment occurs when the jobs available do not match the skills of the unemployed individuals.
Which of the following types of unemployment typically results from technological advances?
Cyclical
Frictional
Short term
Structural
Explanation
Cyclical results from declining DP and frictional is normal unemployment. Short term is a broad description not applicable here.
Lagging indicators of the economy ____ economic activity where as leading indicators _____ economic activity.
Follow, predict
Predict, follow
Coincide, follow
Predict, coincide
Explanation
While both indicators are necessary to assist in viewing the bigger picture of the economy as a whole, leading assist in taking action and lagging aid in understanding.