Important CIPS L3M1 Exam Questions

Answer: B

Explanation:

The x-axis shows time. For some products, it may represent a year; for others, a century.

The other answers given could all be shown on the y-axis of the PLC, depending on circumstances.

Answer: B

Explanation:

Inflation, in this case, is created by the increased cost of production coming through into the econ-omy.

The other answers are essentially names of alternative types of inflation.

Answer: C

Explanation:

The Act was introduced in 2010. Although this is a UK-centric QUESTION NO :, it is valid for several rea-sons. Firstly, the UK was one of the first countries to introduce such a wide-ranging Act; secondly the Act is so wide-ranging that all UK managers need to be familiar with it. People who live and work outside the UK may wish to familiarise themselves with the content of the Act to have an idea of what the impact of such legislation might be like.

Interestingly, in the UK, the Act has seldom been used 'in anger'.

Answer: B, C

Explanation:

Exchange rate fluctuations and escalating materials costs can both substantially impact on a contract price. Where a contract has been drafted to allow for it, the price may be adjusted in line with some pre-agreed mechanism or formula to make the price paid more equitable.

Quality problems of the supplier's own making and shareholders seeking extra profit - neither being uncommon - are not seen as being grounds for adjusting price (upwards).

I should mention that price adjustment clauses can result in prices being adjusted either upwards or downwards, or not at all, depending on circumstances.

Answer: B

Explanation:

Competitive rivalry within an industry.

This can be quite an important point, and why I have such a dislike of the less formal title for the model - the model is about entire industries, not just about a single firm - this is commonly misun-derstood by students (and sadly, some tutors) - and the original Porter title - 'Industry Structure Analysis' - helps us understand that, I think. I find this tool of analysis to be very helpful in under-standing behaviour within sectors, despite criticism of the model and its age from some commenta-tors

The other answers shown are mere fictions.