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

71 B 
The employee is responsible for his or her own health and safety. The employer has a duty 
to provide a safe working environment, etc. 
72 D 
Goods would not typically have to be reasonably priced. 
73 D 
Simple contracts can be verbal, or even implied by the actions of one of the parties. In 
addition, consumer legislation often also covers the provision of services. 
74 
A – TRUE 
This is known as ‘intention to create legal relations’. 
 
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P AP E R F 1 ( F A B )
: A CCOU N TAN T IN B US INES S
 
132 
KA P LA N P UBL I SH IN G 
EXTERNAL ANALYSIS – ECONOMIC FACTORS 
75 B 
Equilibrium is the selling price at which supply exactly equals demand. The number of units 
demanded by the market will usually fall as the price rises (as per the demand curve) – this 
is nothing to do with the equilibrium point itself. 
76 A 
XED
= % change in demand for one product/% change in price of the other product
= 4/5 = 0.8 
Given the products are substitutes, the XED must be positive. 
77 
A – TRUE 
By definition. A price change will cause movement up or down the demand curve. A change 
in the conditions of demand (i.e. tastes or population) will shift the entire curve either left 
or right. 
78 C 
The fact that the units sold fall by more than the price increase indicates that this product is 
relatively elastic. This would give a PED of more than 1. 
79 A 
Expansion and contraction in demand will occur when the price charged by H for the 
GHF300 changes. A reduction in the selling price is likely to mean that more people want to 
buy the vehicle and demand will expand. 
The other three options will all create a shift in the demand curve, where more units of the 
product will be sold, even if the company maintains its current prices.