Acca paper F1 fia diploma in Accounting and Business Accountant in Business (AB/fab) exam kit

F operates in a market where it has only two major rivals – each of whom is roughly the 
same size as F. What type of market is F operating in? 
A Oligopoly 
B Monopolistic 
competition 
(1 mark) 
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PRA CTICE OBJE CTIVE TEST QUESTIONS : 
SECTION 1 
K APLA N PUBLISH ING 
19 
82 
Which of the following is a feature of monopolistic competition? 
A 
Few competitors in the market 
B Undifferentiated 
products 
C 
No major barriers to entry to or exit from the market 
D 
Low advertising expenditure 
(2 marks)
83 
Which of the following is NOT a factor that affects price elasticity of demand? 
A 
The amount of customer income spent on item 
B 
Duration of the price change 
C 
The necessity of the item to consumers 
D 
The initial number of units demanded 
(2 marks) 
84 
L makes a variety of different products, including windows. Which TWO of the following 
would cause a decrease in the level of supply of L’s windows? 
(i) 
An increase in the level of VAT charged by the government on windows 
(ii) A new automated assembly system for L’s products that reduces L’s window 
manufacturing overheads 
(iii) Staff negotiations, leading to window production staff adopting a shift-work 
approach which makes better use of L’s production facilities 
(iv) Staff negotiations, leading to a slight rise in the hourly rate paid to window 
production workers 
A 
(ii) and (iii) only 
B 
(i) and (iii) only 
C 
(i) and (iv) only 
D 
(ii) and (iv) only