Certified Professional Public Buyer (CPPB) Practice Test

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Which market condition is characterized by short-run fluctuations?

Stable market
Unstable market
Predictable market
Consistent market

The correct answer is: Unstable market

The characteristic of an unstable market is defined by its susceptibility to short-run fluctuations. In such a market, prices, supply, and demand can change rapidly due to various factors, including economic conditions, market sentiment, or external shocks. These fluctuations can create uncertainty for buyers and sellers, as market dynamics can shift unexpectedly, leading to volatile pricing and varying availability of goods or services. In contrast, a stable market is typically characterized by little to no fluctuation in prices and steady supply and demand, making it easier for participants to predict market conditions. A predictable market implies a degree of reliability regarding trends and patterns, which is not present in an unstable market. Similarly, a consistent market suggests uniformity and reliability in performance over time, rather than the erratic behavior found in unstable conditions. Thus, the defining aspect of short-run fluctuations clearly aligns with the nature of an unstable market.