CPA LEVEL I Business Environment & Concepts (BEC) PRACTICE EXAM Q & A 2026 (Complete And Verified Study material) (20pages) LEARNEXAMS

1. Which of the following is an example of a business

environment factor that affects the strategic planning of a

company?

a) The level of competition in the industry

b) The availability of skilled labor in the market

c) The interest rate charged by banks for loans

d) The preferences and tastes of customers

Answer: A. The level of competition in the industry is an

external factor that influences the strategic planning of a

company, as it affects the profitability, market share, and

growth potential of the company. The other options are

examples of operational, financial, and marketing factors,

respectively, that affect the tactical and operational

planning of a company.

2. Which of the following is a characteristic of a perfectly

competitive market?

a) There are many buyers and sellers of homogeneous

products

b) There are significant barriers to entry and exit

c) There is a high degree of product differentiation and

innovation

d) There is a single seller who sets the price and quantity

Answer: A. A perfectly competitive market is one where

there are many buyers and sellers of homogeneous

products, meaning that the products are identical and

indistinguishable. There are no barriers to entry and exit,

meaning that new firms can enter and exit the market

easily. There is no product differentiation or innovation,