Level 3

Advanced Certificate in Procurement and

Supply Operations

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AC1 - Procurement and
supply environments

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EST
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EXAM EXEMPLAR QUESTIONS
MULTIPLE CHOICE QUESTIONS AND ANSWERS
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The correct answer will be identified as the [KEY]

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20 ICAT
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Page 1 of 6 AC1 Exam Exemplar Questions Mar2013

Q1 Question

The classical theory of the firm deals with the ‘primary objective’ of commercial organisations.

Which of the following does the theory assume?

Answers

(a) Their aim is to increase market share

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(b) Their aim is to maximise sales

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(c) Their aim is to maximise profits [KEY]

(d) Their aim is to maximise stakeholder satisfaction.

Learning outcome: 1.1

CIPS study guide reference: Chapter 1, section 1.7

Q2 Question

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Which of the following explains how a public sector organisation obtains its funds?

Answers
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(a) From direct and indirect taxes [KEY]

(b) From money invested by shareholders

(c) From donations made by the public

(d) From sales in overseas markets.

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Learning outcome: 1.3

CIPS study guide reference: Section - 2.1
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Page 2 of 6 AC1 Exam Exemplar Questions Mar2013

Q3 Question

Which of the following is a key characteristic of a ‘third sector’ organisation?

Answers

(a) Profits from operations are distributed to shareholders

(b) Service satisfaction is not measured readily in financial terms [KEY]

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(c) Shares in the organisation are traded on a stock market

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(d) They are classified by the European Union as ‘manufacturing enterprises’.

Learning outcome: 1.4

CIPS study guide reference: Chapter 1, section 6.9

Q4 Question

Answers

(a) Monopoly
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Which of the following describes an economic market that is controlled by two main suppliers?
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(b) Price competition

(c) Duopoly [KEY]

(d) Perfect competition.

Learning outcome: 2.1

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CIPS study guide reference: Chapter 3, section 1.7

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AC1 Exam Exemplar Questions Mar2013 Page 3 of 6

Q5 Question

Which of the following explains the term ‘equilibrium price’?

Answers

(a) The level of price in a market that will be acceptable to customers and shareholders

(b) The level of price in a market that allows a company to recover all its costs

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(c) The price at which the level of supply in a market exceeds the level of demand

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(d) The price at which the level of supply in a market matches the level of
demand. [KEY]

Learning outcome: 2.2

CIPS study guide reference: Chapter 4, section 1.3

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Q6 Question

Which of the following is a stage within the ‘product life cycle’?

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(a) Maturity [KEY]

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(b) Profitability

(c) Abandonment

(d) Regeneration.

Learning outcome: 2.3

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CIPS study guide reference: Chapter 4, section 3.7

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Page 4 of 6 AC1 Exam Exemplar Questions Mar2013

Q7 Question

A ‘PEST’ analysis is conducted on which of the following of an organisation’s environments?

Answers

(a) Internal environment

(b) Market environment

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(c) Historical environment

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(d) Macro environment. [KEY]

Learning outcome: 3.1

CIPS study guide reference: Chapter 5, section 3.1

Q8 Question

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(a) Good Documentation Practice

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Which of the following explains the acronym ‘GDP’?
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(b) Gross Depreciation Percentage

(c) Gross Domestic Product [KEY]

(d) Gross Discounted Price.

Learning outcome: 3.2

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CIPS study guide reference: Chapter 6, section 2.5

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AC1 Exam Exemplar Questions Mar2013 Page 5 of 6

Q9 Question

Which of the following is a direct benefit to an organisation of implementing a successful health and
safety policy?

Answers

(a) Improved stock management

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(b) Fewer absences [KEY]

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(c) Better cash flow

(d) Flatter organisational structure.

Learning outcome: 3.3

CIPS study guide reference: Chapter 8, section 5.3

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Q10 Question

An organisation’s equal opportunities policy should be concerned with which of the following?

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(a) Age discrimination [KEY]

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(b) Opportunity costs

(c) Globalisation of supply

(d) The balanced scorecard.

Learning outcome: 3.4

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CIPS study guide reference: Chapter 8, section 4.6

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Page 6 of 6 AC1 Exam Exemplar Questions Mar2013