CIPS Procurement and Supply Environments L3M1 Exam Questions

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Total 90 questions
Question 1

'The value of a commodity or service measured in terms of the standard monetary unit' describes:



Answer : B

The definition shown refers to the word 'price'. The price is what someone will pay for something - the extent to which a customer values something - and the reference to the standard monetary unit refers to, for example, a dollar, a Euro, a dinar or whatever.

The other answers are, to some extent, intended to confuse, as they use some of the words shown in the definition. Care must be taken not to jump to a conclusion here.

The response 'cost' should give pause for thought, as, in a sense, the cost of doing or making some-thing may have value. But value is determined by the customer - this definition is a reference to the value the customer would pay - the price.


Question 2

On a diagram of the Product Life Cycle, the x-axis shows:



Answer : B

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.


Question 3

Which of the following might result from increased costs of production (especially wages) without increased demand, so that producers have to increase their prices to maintain profitability?



Answer : B

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.


Question 4

In which one of the following sectors would you least expect to find seasonal unemployment:



Answer : A

Agriculture and tourism are normally associated with high levels of seasonal employment, and hence to some extent, unemployment.

Construction also often has an element of seasonality. For example, there is a saying in Alaska: 'there are two seasons - winter and construction', although in some less extreme climates construc-tion carries on year-round.

In most situations, we normally expect police employment levels to be relatively consistent through-out the year.


Question 5

Fiscal policy deals with:



Answer : C

The correct answer simply describes what fiscal policy is.

This topic is often mentioned or discussed in serious radio / TV news broadcasts.


Question 6

Shareholders of a limited company are not liable for unpaid debts'. True or false?



Answer : B

This is true: the liability of shareholders is limited to their agreed financial commitment, not beyond that.


Question 7

Thinking of Michael Porter's Industry Structure Analysis (commonly referred to as Five Forces Analysis), the content of the centre circle is about:



Answer : B

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.


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Total 90 questions