LOS e: Illustrate the inputs and methods used in preparing an industry demand-and-supply analysis.

Q1. Which of the following factors would NOT be considered while an analyst is performing an industry demand and supply analysis?

A)   Prospect of a foreign competitor entering the industry.

B)   Historical relationship between gross domestic product (GDP) growth and the growth in company revenues.

C)   Impact of changes in the national taxation policy.

Q2. In an industry analysis, the analyst must assess future demand for the industry’s output. Which of the following would NOT be an appropriate method for assessing future demand?

A)   Incorporate external forces such as government action into demand forecasts. For example, changes in fiscal policy might increase or decrease demand in a certain industry.

B)   Study the inputs and outputs of a given industry. Often the output of one industry is the input for another.

C)   Assuming that gross domestic product (GDP) growth for the country will approximately equal sales growth for the industry.

Q3. Which of the following factors would least likely be considered while an analyst is performing an industry demand and supply analysis?

A)   Availability of property and casualty insurance coverage in the event plant capacity in the industry is affected by natural disasters such as earthquakes and floods.

B)   Short-term imbalances between demand and supply.

C)   Extent of foreign imports.

LOS e: Illustrate the inputs and methods used in preparing an industry demand-and-supply analysis. fficeffice" />

Q1. Which of the following factors would NOT be considered while an analyst is performing an industry demand and supply analysis?

A)   Prospect of a foreign competitor entering the industry.

B)   Historical relationship between gross domestic product (GDP) growth and the growth in company revenues.

C)   Impact of changes in the national taxation policy.

Correct answer is C)

All factors except the tax policy would be a part of industry demand and supply analysis.

Q2. In an industry analysis, the analyst must assess future demand for the industry’s output. Which of the following would NOT be an appropriate method for assessing future demand?

A)   Incorporate external forces such as government action into demand forecasts. For example, changes in fiscal policy might increase or decrease demand in a certain industry.

B)   Study the inputs and outputs of a given industry. Often the output of one industry is the input for another.

C)   Assuming that gross domestic product (GDP) growth for the country will approximately equal sales growth for the industry.

Correct answer is C)

An analyst could use an estimate of GDP growth as a variable in generating an estimate of revenue growth for an industry, but would not assume that the growth in GDP will automatically equal the sales growth of the industry.

Q3. Which of the following factors would least likely be considered while an analyst is performing an industry demand and supply analysis?

A)   Availability of property and casualty insurance coverage in the event plant capacity in the industry is affected by natural disasters such as earthquakes and floods.

B)   Short-term imbalances between demand and supply.

C)   Extent of foreign imports.

Correct answer is A)

All factors except availability of disaster insurance would be a part of the industry demand and supply analysis.

bcb

industry analysis