CEA Market & Industry Analysis 5

Question 1

Which type of market analysis examines macroeconomic, technological, social, environmental, legal, and political factors affecting an industry?

Accepted Answer

PESTLE Analysis

Answer

PESTLE (Political, Economic, Social, Technological, Legal, Environmental) analysis identifies external macro-environmental factors that shape industry conditions.

Question 2

A market experiencing excess capacity and declining prices is most likely in which phase of the industry life cycle?

Accepted Answer

Decline

Answer

The decline phase is characterized by falling demand, excess capacity, price wars as firms fight for shrinking market share, and eventual industry exit.

Question 3

The term 'price leadership' in an oligopoly refers to a situation where:

Accepted Answer

One firm sets prices and rivals follow

Answer

Price leadership occurs when a dominant firm sets its price and rival firms follow suit, achieving tacit coordination without explicit agreement.

Question 4

Which measure captures the total economic value created by all producers and consumers in a market?

Accepted Answer

Total surplus (consumer plus producer surplus)

Answer

Total surplus is the sum of consumer surplus and producer surplus, representing the aggregate net benefit derived from all market transactions.

Question 5

When an industry's supply curve is perfectly inelastic in the short run, a demand shock primarily affects:

Accepted Answer

Market price

Answer

With perfectly inelastic supply, quantity cannot adjust in the short run, so any shift in demand manifests entirely as a price change.

(CEA) Certified Economic Analyst Practice Test

(CEA) Certified Economic Analyst Practice Test

CEA Market & Industry Analysis 5