1. Which of the following is an assumption in a perfectly competitive financial market?
a. No single trader or traders can have a significant impact on market prices.
b. Some traders can impact market prices more than others.
c. Trading prices vary based on supply only.
d. Information about borrowing/lending activities is only available to those willing to pay market prices.
2. Which of the following characteristics would indicate that an item sold would have a high price elasticity of demand?
a. The item has many similar substitutes.
b. The cost of the item is low compared to the total budget of the purchasers.
c. The item is considered a necessity.
d. Changes in the price of the item are regulated by governmental agency.
3. A company has a policy of frequently cutting prices to increase sales. Product demand is significantly elastic. What impact would this have on the company's situation?
a. Quantity increases proportionally more than the price declines.
b. Quantity increases proportionally less than the price declines.
c. Price increases proportionally more than the quantity declines.
d. Price increases proportionally less than the quantity declines.
4. Which of the following costing methods will yield the lowest inventory value?
a. Absorption
b. Hybrid
c. Process
d. Variable