Fashion retailers are more sensitive to business cycles than:
Options
AAutomobile industry
BCement industry
CFood industry
DConstruction industry
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Business CyclesPYQ - June 2022Question 90 of 20
All Questions Correct Answer
✅ Option c — Food industry
All Options:
- AAutomobile industry
- BCement industry
- CFood industry
- DConstruction industry
Detailed Solution & Explanation
To determine which industry is less sensitive to business cycles, we need to consider the nature of demand for each industry.
• The business cycle refers to the fluctuations in economic activity, with periods of expansion and contraction.
• Industries with inelastic demand, meaning demand that is not significantly affected by changes in income or economic conditions, are less sensitive to business cycles.
• The food industry is a classic example of an industry with inelastic demand, as people will continue to buy essential food items regardless of their income or economic conditions.
• In contrast, fashion retailers are more sensitive to business cycles because demand for their products is elastic, meaning it is significantly affected by changes in income or economic conditions.
• The automobile and construction industries are also sensitive to business cycles, as they are often considered discretionary spending and are affected by economic conditions, making the food industry the correct answer.
• The cement industry, which is closely tied to the construction industry, is also sensitive to business cycles, further supporting the food industry as the correct answer.
About This Chapter: Business Cycles
Paper
Paper 4: Business Economics
Weightage
5%
Key Topics
Phases, Features, Causes
Business Cycles describe the recurring fluctuations in economic activity — Expansion, Peak, Recession, and Trough. This chapter covers the phases, features, and causes of business cycles, along with theories explaining why economies go through regular boom-bust patterns.
View Official ICAI SyllabusExam Strategy Tip
This is a lower-weightage chapter but easy to score. Focus on memorizing the four phases and their characteristics. Questions are usually straightforward.
Key Concepts to Understand
Related Comparison Tables
More Questions from Business Cycles
The lowest point in the business cycle is referred to as the:
Which of the following is not an example of coincident indicator?
Features of Business Cycles include:
Which one is an external cause of business cycles?
During expansion phase, employment:
Economic recession shares all of these characteristics except:
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