IIA-CIA-PART4 Exam Questions and Answers

QUESTION: 81

Patents are granted to encourage firms to invest in the research and development of new products. Patents are an example of

Vertical integration.
Market concentration.
Entry barriers.
Collusion.

Answer(s): C

Explanation:

Entry barriers exist in all market structures other than perfect competition. The fewer the firms in an industry, the greater the barriers tend to be. Entry barriers include the existence of substantial economies of scale (low unit costs can be achieved only by large producers). They also include barriers created by existing firms. For example, large advertising expenditures may be necessary to compete. Control of raw materials or technology is another barrier. Consequently, patents held by existing firms may serve as an entry barrier because they prevent potential competitors from using certain technology. Patents are rights granted by the federal government to inventors to allow them the exclusive use of their inventions for a specific.

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QUESTION: 82

Which type of market structure is most apt to demonstrate price leadership by a major firm in the industry?

Pure competition.
Monopoly.
Monopolistic competition.
Oligopoly.

Answer(s): D

Explanation:

Price leadership is typical in oligopolistic industries. Under price leadership, price changes are announced by a major firm in the industry. Once the leader has spoken, everyone else in the industry matches the price charged by the leader.

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QUESTION: 83

Of the major processes affecting the evolution of an industry, which one affects rivalry, entry, expansion, and supply?

Long-run changes in the industry growth rate.
Changes in input costs.
Structural changes in suppliers' and customers' industries.
Government policies.

Answer(s): A

Explanation:

Long-run changes in the industry growth rate affect rivalry, entry, expansion, and supply. These changes occur because of changes in five external factors:demographic traits (such as consumer ages and income levels), trends in needs of buyers (caused by changes in regulation, tastes, lifestyles), relative positions of substitute and complementary products, sales to new customers (market penetration), and product innovation, an internal factor, alters the industry's position regarding the external factors.

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QUESTION: 84

During the growthstage of a product's life cycle:

The quality of products is poor.
New product models and features are introduced.
There is little difference between competing products.
The quality of the products becomes more variable and products are less differentiated.

Answer(s): B

Explanation:

In the growth stage, sales and profits increase rapidly, cost per customer decreases, customers are early adopters, new competitors enter an expanding market, new product models and features are introduced, and promotion spending declines or remains stable. The firm enters new market segments and distribution channels and attempts to build brand loyalty and achieve the maximum share of the market. Thus, prices are set to penetrate the market, distribution channels are extended, and the mass market is targeted through advertising. The strategy is to advance by these means and by achieving economies of productive scale.

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QUESTION: 85

Ina product's life cycle, the first symptom of the decline stage is a decline in the

Firm's inventory levels.
Product's sales.
Product's production cost.
Product's prices.

Answer(s): B

Explanation:

The sales of most product types and brands eventually decrease permanently. This decline may be slow or rapid. This first symptom of the decline stage of a product's life cycle triggers such other effects as price cutting, narrowing of the product line, and reduction in promotion budgets.

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IIA IIA-CIA-PART4 Exam (page: 17) IIA Certified Internal Auditor - Part 4, Business Management Skills Updated on: 15-Feb-2026

QUESTION: 81

Explanation:

QUESTION: 82

Explanation:

QUESTION: 83

Explanation:

QUESTION: 84

Explanation:

QUESTION: 85

Explanation:

IIA IIA-CIA-PART4 Exam (page: 17)
IIA Certified Internal Auditor - Part 4, Business Management Skills
Updated on: 15-Feb-2026