CIPS L3M1 Procurement and Supply Environments Exam Practice Test

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.

Answer : C

Exchange rate - the rate at which the currencies are exchanged. This rate can vary frequently, some-times several times per hour, depending on circumstances.

The interest rate is the rate charged on loans - the cost of borrowing.

The base rate is the basic interest rate used for agreeing loans within an economy. This rate is nor-mally set by the government or the central bank. Loans within that economy will usually be at a higher rate than the base rate, often much higher.

The equilibrium rate (more commonly 'equilibrium price') is the rate at which supply and demand meet, not necessarily related to currency.

Answer : A

Shareholders are one example of a range of stakeholders in a private or public limited company.

Answer : A

This is true.

A limited company has its own legal identity.

(Your syllabus makes reference to 'unincorporated companies'. This is something of a contradiction - the term 'company' implies incorporation. Although I have not been permitted to see your actual ex-am QUESTION NO :s, it seems unlikely that you will be QUESTION NO :ed on this particular point).

Answer : B

The primary objective of private sector is to create profit(s).

While the other answers may occur in private sector, they are not the primary objective.

Answer : A, C, D

All except the self-employed tutor have a social arrangement with collective goals, and controls on performance.

The self-employed tutor may have a goal, but it is not collective; is not part of a(n internal) social arrangement and controls on performance may be entirely in their own hands, or perhaps even ab-sent altogether.

Answer : B, C

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.