CIMA Exam CIMAPRA17-BA1-1 Topic 1 Question 65 Discussion

Actual exam question for CIMA's CIMAPRA17-BA1-1 exam

Question #: 65
Topic #: 1

Which of the following sets of conditions will lead to greater stability (or convergence) of prices in the Cobweb model (or Cobweb theorem)?

APrice elastic demand, price inelastic supply

BPrice inelastic demand, price elastic supply

CPrice elastic demand, price elastic supply

DPrice inelastic demand, price inelastic supply

Show Suggested Answer

Suggested Answer: A

by Barbra at Feb 07, 2023, 10:16 PM

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Krystina

2 days ago

This is a tough one. I'm leaning towards D, but I'm not totally confident. Guess I'll have to study the Cobweb model a bit more.

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Domonique

13 days ago

I'm not sure about this one. I guess C might work, but I'm really just taking a shot in the dark here.

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Mona

15 days ago

Hmm, I think option B is the correct answer. Price inelastic demand and price elastic supply would lead to greater stability in the Cobweb model.

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Youlanda

23 days ago

I'm not sure about that. I think it might be A) Price elastic demand, price inelastic supply. If demand is elastic, but supply is inelastic, prices will tend to stabilize over time.

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Tammi

27 days ago

I agree with Judy. When both demand and supply are elastic, any fluctuations in prices will lead to adjustments that bring the market back to equilibrium.

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Judy

30 days ago

I think the answer is C) Price elastic demand, price elastic supply.

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