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AICPA CPA-Business Exam - Topic 1 Question 75 Discussion

In any competitive market, an equal increase in both demand and supply can be expected to always:
A) Increase both price and market-clearing quantity.
B) Increase market-clearing quantity.
C) Increase price.
D) Decrease price.

AICPA CPA-Business Exam - Topic 1 Question 75 Discussion

Actual exam question for AICPA's CPA-Business exam
Question #: 75
Topic #: 1
[All CPA-Business Questions]

In any competitive market, an equal increase in both demand and supply can be expected to always:

Show Suggested Answer Hide Answer
Suggested Answer: A

Choice 'a' is correct. 7.0 percent cost of funds from retained earnings.

The cost of retained earnings is equal to the rate of return required by the firm's common shareholders (or, in effect, the return 'lost' by them when the firm chooses to fund with retained earnings). While oftentimes this rate is somewhat subjective, we are given the facts to exactly answer the question in this case. The stock is currently selling for $100/share, and the dividend is given at $7/share.

$7 / $100 = 7%

Choices 'b', 'c', and 'd' are incorrect, per the above Explanation:/calculation.


by Kiley at Oct 06, 2023, 02:14 PM

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Ellsworth
8 months ago
I’m surprised this is even a debate, isn’t it obvious?
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Melinda
8 months ago
I agree with B, just quantity changes, price stays stable.
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Moon
8 months ago
Wait, how can both demand and supply increase and not affect price?
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Kati
8 months ago
I think A is right, price should increase too.
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Merlyn
9 months ago
Definitely B, quantity will go up for sure.
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Lashawn
9 months ago
I recall that if demand increases more than supply, prices go up, but if they increase equally, the quantity increases without affecting price. So, B seems like the right choice.
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Flo
9 months ago
I feel like I might be mixing concepts here, but I thought that an equal increase in demand and supply could lead to a decrease in price? That doesn't sound right, though.
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Aliza
9 months ago
I think I practiced a similar question where the conclusion was that price remains unchanged if demand and supply shift equally. So, I might lean towards option B.
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Caprice
9 months ago
I remember studying that when both demand and supply increase equally, the market-clearing quantity definitely goes up, but I'm not sure about the price.
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Anglea
9 months ago
Easy peasy! When both demand and supply increase, the equilibrium shifts to the right, so the market-clearing quantity goes up, but the price stays the same. The answer is definitely B.
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Fletcher
9 months ago
Okay, I think I've got this. If demand and supply both increase by the same amount, the equilibrium price shouldn't change, but the equilibrium quantity will increase. So the answer is B - increase market-clearing quantity.
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Reynalda
9 months ago
Hmm, this is a tricky one. I'm a bit confused - I know that an increase in just demand or just supply would have different effects on price and quantity, but I'm not sure how they interact when both change at the same time. I'll have to think this through carefully.
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Gwen
9 months ago
I'm pretty sure this is asking about the effects of a simultaneous increase in both demand and supply in a competitive market. I think the answer is B - it will increase the market-clearing quantity, but I'm not 100% sure about the effect on price.
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Lyda
9 months ago
Hmm, I'm not totally sure about this one. I think it might be A, but I'm also considering C - Unauthorized access. I'll have to think it through carefully.
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Isabelle
9 months ago
Okay, let me think this through. The project is delivering a "modest solution" with three services, and the team is following a "bottom-up approach" to fulfill tactical requirements. Based on that, I'm going to go with C - Increased Federation.
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Laurena
9 months ago
This question seems pretty straightforward. I think the function of vBond in a Cisco SDWAN deployment is to onboard SDWAN routers into the SD-WAN overlay, so I'll go with option C.
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Eric
9 months ago
This is a good test of my understanding of corporate governance. I'll draw on my knowledge of the audit committee's role to identify the matters they should typically address.
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Bernadine
10 months ago
Hmm, I'm a bit confused by all the details in this question. I'll need to carefully break down each component and make sure I understand how they all fit together before I can solve this.
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Tora
1 year ago
Woah, this question is like a riddle wrapped in an enigma, wrapped in a toasted bagel. I'm stumped!
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Tawna
1 year ago
B) Increase market-clearing quantity.
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Annabelle
1 year ago
C) Increase price.
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Louvenia
1 year ago
C) Increase price.
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Barrett
1 year ago
B) Increase market-clearing quantity.
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Alba
1 year ago
A) Increase both price and market-clearing quantity.
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Fernanda
1 year ago
A) Increase both price and market-clearing quantity.
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Glenna
1 year ago
Haha, this is like a game of economic Tetris. I'm just going to close my eyes and pick an answer. D, let's go!
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Zita
1 year ago
Wait, wait, wait... If both demand and supply rise, won't the market-clearing quantity increase too? I'm going with B.
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Hyman
1 year ago
I'm not sure, but I think it will increase both price and market-clearing quantity.
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Douglass
1 year ago
No, I believe it will only increase market-clearing quantity.
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Eun
1 year ago
But wouldn't it also increase price?
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Clorinda
1 year ago
I think an increase in both demand and supply will increase market-clearing quantity.
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Julio
1 year ago
Okay, let's see... If both demand and supply go up, the price should increase, right? Gotta be C!
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Lavonna
1 year ago
Yeah, that makes sense. So the answer must be C, to increase price.
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Louvenia
1 year ago
I think you're right, an increase in both demand and supply should lead to an increase in price.
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Refugia
1 year ago
I agree with Reynalda, because when both demand and supply increase equally, it creates a balance that leads to an increase in both price and market-clearing quantity.
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Novella
1 year ago
Hmm, an equal increase in both demand and supply? Sounds like a tricky one. I'm going to think this through carefully.
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Rasheeda
1 year ago
Yeah, if there's more demand and supply, the price would go up.
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Alexia
1 year ago
C) Increase price.
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Maryann
1 year ago
I think that makes sense, if both demand and supply increase equally.
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Thora
1 year ago
A) Increase both price and market-clearing quantity.
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Hyman
1 year ago
I disagree, I believe it will only increase market-clearing quantity.
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Reynalda
1 year ago
I think an equal increase in both demand and supply will increase both price and market-clearing quantity.
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