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



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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? 

Few competitors in the market 
B Undifferentiated 
products 

No major barriers to entry to or exit from the market 

Low advertising expenditure 
(2 marks)
83 
Which of the following is NOT a factor that affects price elasticity of demand? 

The amount of customer income spent on item 

Duration of the price change 

The necessity of the item to consumers 

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 

(ii) and (iii) only 

(i) and (iii) only 

(i) and (iv) only 

(ii) and (iv) only 

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