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Free CIMA BA1 Practice Exam with Questions & Answers | Set: 11

Questions 101

Which ONE of the following would tend to make the demand for a product price inelastic?

Options:
A.

Expenditure on the product accounts for a large part of total household spending

B.

There are many close substitutes for the product

C.

The product is regarded as a luxury

D.

The price changed a short while ago

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Questions 102

Which of the following events might cause the demand curve for chicken meat to shift to the right?

Options:
A.

A fall in the price of chicken meat

B.

A fall in the prices of turkey meat

C.

An outbreak of salmonella infection in chicken meat

D.

The publication of a health report urging people to eat white rather than red meats

Questions 103

Economies of scale can result from all the following except one. Which is the exception?

Options:
A.

An increase in the size of a firm's capacity and plant

B.

A bus company replacing smaller buses with larger buses

C.

A factory employing two shifts of workers rather than one shift per day

D.

Increased firm size allowing the firm to employ specialist managers

Questions 104

Firms in competitive markets can earn only normal profit in the long run because:

Options:
A.

they produce homogeneous products

B.

there are no barriers to entry into these markets

C.

production costs are the same for all producers

D.

of the absence of economies of scale

Questions 105

All of the following statements about a firms total revenue curve are true except which ONE?

Options:
A.

Because the price of a product falls as more is supplied to the market the curve is not a straight line

B.

Price elasticity of demand for the product = 1 at the highest point of the curve

C.

If price of the product rose the curve would pivot upwards

D.

The curve would be a horizontal straight line if demand for the product were perfectly price elastic

Questions 106

In the long run a firm may find its average cost of production rising because

Options:
A.

of the operation of diminishing returns to a fixed factor

B.

of the effect of diseconomies of scale

C.

over time the price of purchased inputs rises

D.

in the long run all costs are variable costs

Questions 107

XYZ plc has relocated its head office to a new site which enjoys better road communications and is close to a training college that teaches the skills needed to work at XYZ plc. Why will XYZ's costs fall?

Options:
A.

It will gain the benefits of technical economies of scale

B.

It will gain the benefits of managerial economies of scale

C.

It will gain the benefits of external economies of scale

D.

It will gain the benefits of financial economies of scale

Questions 108

There are waiting lists and shortages of a product. Which ONE of the following statements explains the cause of this?

Options:
A.

A price floor (minimum price) has been set above free market price

B.

A price ceiling (maximum price) has been set above free market price

C.

A price floor (minimum price) has been set below free market price

D.

A price ceiling (maximum price) has been set below free market price

Questions 109

All of the following will tend to increase the number of firms in any one industry except which one?

Options:
A.

Decreasing returns to scale

B.

High transport costs

C.

Low barriers to entry

D.

Product differentiation

Questions 110

If a manufacturing firm contributes to global warming as a byproduct of its production process, this is an example of

Options:
A.

A merit good

B.

An external social cost

C.

A diseconomy of scale

D.

A public good

Exam Code: BA1
Certification Provider: CIMA
Exam Name: Fundamentals of Business Economics
Last Update: Jul 12, 2025
Questions: 468

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