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

period. 
G 
Product X has a price elasticity of demand (PED) of 0.2 
H 
Product X would be more profitable if the price was cut rather than raised 
 
(0.5 marks each, total = 2 marks) 
 
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PRACTICE MULTI-TASK QUESTIONS : 
S E CTI ON 2
K APLA N PUBLISH ING 
79 
(b) 
Consider the following micro-economics terms: 
A A 
shift 
B A 
duopoly 
C Equilibrium 
D A 
contraction 
The following sentences contain gaps which are missing a particular term from the 
list above.
 
BVO has noted that product Y’s sales have fallen in recent years due to a fall in 
disposable income of its major customers. This is evidence that _1_ in the demand 
curve for the product has occurred.
 
Required:
(i) 
Select the term that appropriately fills gap 1 above; i.e. select A, B, C or D. 
BVO sells product Z in country G. Only one other manufacturer sells a similar product 
in country G, meaning that the two companies dominate the market. Currently, 
production and sales volumes for these products has reached exactly the same levels, 
suggesting _2_ in the market for this product.
Required: 
(ii) 
Select the term that appropriately fills gap 2 above; i.e. select A, B, C or D. 
 
 
(1 mark each = 2 marks in total) 
(Total: 4 marks) 
5
 
(a) 
Y Co sells health and home insurance. Y does not have any physical stores – instead it 
has a number of call centres. Customers make contact with the company and 
purchase insurance policies over the phone. 
Y’s call centre management structure is extremely bureaucratic, with many levels of 
management. This results in Y suffering high payroll costs, leading to it having to 
increase its prices to customers, reducing its ability to compete in the insurance 
market. 
However, Y has recently started to introduce new computerised systems for its call 
centre staff, which has led to increased efficiency. Staff members are able to deal 
with significantly more calls than previously and less skill is required by the 
employees, as much of the complex work is now undertaken by the new system. 
Y is now looking to see what changes it can make to the call centres as a result of 
introducing the new IT system. It is considering the following options: 
A Delayering 
B Downsizing 
C Outsourcing 
 
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