CIMA BA1 Exam Questions Free Practice Test

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Questions # 131:

Which of the following are reasons why the principal-agent problem is so critical for businesses? Select ALL that apply.

Options:

It limits the control of one layer of management over another

It can lead to dubious managerial practices within the company

It leads to higher profits which ultimately benefit a business

Higher sales means the business will perform well regardless of managerial practice

Co-ordination needs to be good in order for multiple layers of management to function well

Expert Solution

Questions # 132:

A regressive tax is defined as one where:

Options:

The amount of tax paid by a taxpayer falls as income rises

The rate of tax is different for different income levels

The proportion of income paid in tax rises as income falls

The tax is levied on expenditure not income

Expert Solution

Questions # 133:

The Competition and Markets Authority is a regulatory body in the UK. In 2017, the CMA found the proposed merger of Heineken and Punch Pubs in breach of its competition laws. Heineken and Punch Pubs have agreed

to divest in pubs in areas where they are the two dominant pub companies.

Which of the following are ways in which consumers might directly benefit from this decision?

Select ALL that apply.

Options:

Heineken/Punch Pubs will not be able to charge excessive prices for alcoholic beverages served at their pubs

There will be a greater variety of pubs for consumers to choose from in certain areas

Heineken will divest in a certain number of pubs where the merger would have created monopolies

The companies' divestment of pubs in certain areas could lead to the closure of the majority of pubs in said area

The CMA will use this decision as a precedent for others in the future

Expert Solution

Questions # 134:

In fiscal policy, the term automatic stabilizer refers to any factor that

Options:

Operates to reduce cyclical fluctuations in output without active government policy.

That causes aggregate demand to rise in recession and fall in booms.

Prevents the government budget from moving too far into surplus or deficit.

Prevents recessions and booms by ensuring that aggregate demand remains constant.

Expert Solution

Questions # 135:

Miss Ruby designs and makes large ornaments for grand buildings. She is informed that her range of candle sticks have a price elasticity of-1.2

Which of the following plans would be most appropriate?

Options:

Produce more candlesticks

Create more ornate candlesticks which have a higher cost per product

Run an expensive ad campaign in an interior design magazine

Increase the price of candle sticks

Expert Solution

Questions # 136:

Which THREE of the following businesses are more likely to fare belter during a recession?

Options:

A construction company specialising in road infrastructure

A producer of rice, a staple good

A producer of automobiles, a durable good.

A producer of security equipment, a counter-cyclical good

A retailer specialising in fashion, a cyclical good.

A construction company specialising in private residential accommodation

Expert Solution

Questions # 137:

The manger of a branch of retailer Brilliant Buys wants to calculate the correlation between employee happiness and productivity. He has ranked each of the 10 employees at his branch in both fields, as shown to the left.

Question # 137

What degree of correlation is there between productivity and happiness at Brilliant Buys, using Spearman's coefficient?

Options:

High correlation

Moderate correlation

Low correlation

No correlation

Expert Solution

Questions # 138:

The government has set a maximum house price due to a massive house price rise in the last decade. This is denoted by the line Q1Q2 on the graph.

Question # 138

Which of the following may occur in light of the introduction of the maximum house price as it appears on the graph?

Select ALL that apply.

Options:

There will be a shortage of housing supply in Lingford.

A 'black market' may develop in housing, meaning the maximum price is ignored.

There will be a surplus of housing supply in Lingford.

Landowners will continue to build residential properties at the same rate as before the maximum price was implemented.

It is not likely that the maximum house price will need some sort of reform in the near future.

Expert Solution

Questions # 139:

Brilliant Buys Local is a subsidiary of Brilliant Buys, and operates a number of smaller stores in local neighbourhoods.

The managing director of Brilliant Buys Local, Mr Davidson, has been given a scatter diagram with sales of each store based on the size of the local population.

Which of the following options outlines the best ways to interpret this diagram in this context?

Select ALL that apply.

Options:

Use Pearson's coefficient to accurately draw a line of best fit

Draw a line of best fit by eye and estimate how much of a correlation there is between store sales and population

Rearrange the data points on the scatter diagram so that it shows any correlation more clearly

Use the diagram to interpret that two of the stores with the highest sales are in areas with a medium-sized population

Use the diagram to interpret that the store with the lowest sales was in an area with a population of 5000

Expert Solution

Questions # 140:

Betsy's Fish Foods Pic. has issued shares in a prospectus.

Which of the following are benefits of selling shares in this manner?

Select ALL that apply.

Options:

It allows companies to open up its investor base

It allows more investors to receive profits in the form of dividends from the company

It allows the company to sell shares at a discounted price

It allows the company to sell shares to larger private firms who can invest more money into the company

It allows the company to sell second-hand shares

Expert Solution

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