[2025] Pass CIPS L4M5 Exam Updated 225 Questions [Q44-Q68]

Q44. Which of the following statements about oligopoly isincorrect?

A few firms play an important role in the sale of a product

Oligopolistic firms recognize their interdependence

One firm’s behaviour is a function of what its rivals do

Prices in oligopoly are predicted to fluctuate widely and frequently

Q45. A good negotiator invests time in understanding the needs of the individuals in a negotiation. Is this statement true?

Yes, because individuals’ needs always unify with their own organisation’s needs and wants

No, becausenegotiator should attempt to satisfy the needs of the other organisation only

No, because satisfying individual needs will lead to conflict of interest and unethical practices

Yes, because individual needs largely influence the outcomes of the negotiation

Q46. If the price of a good is above the equilibrium price, which of the following will happen?

The quantity demanded is equal to the quantity supplied and the price remains unchanged

There is a shortage (i.e. an excess demand) and the price will fall

There is a surplus (i.e. an excess supply) and the price will rise

There is a surplus (i.e. an excess supply) and the price will fall

Q47. Which of the following is NOT a barrier to entry in a monopolized market?

The costs of production make a single producer more efficient than a large number of producers

A single firm is very large

The government gives a single firm the exclusive right to produce some good

A key resource is owned by a single firm

:
Monopolies exist in many markets in real life for very different reasons:
Ownership of a Key Resource: When one company exerts sole control over a resource that is necessary for the production of a specific product, the market may become a monopoly. For example, the only medication deemed acceptable to treat a disease comes from a particular ingredient X, and knowledge of this ingredient X is owned by a single family owned company. The company can, therefore, be said to have a monopoly over ingredient X that is needed to cure the disease because it is the only company that can produce a product deemed acceptable.
Government Franchise: In certain instances, a monopoly may be explicitly created by the government if it grants a single company, whether private or government-owned, the right to conduct business in a particular market. For example, when a national railways transportation service is created by the government, in most cases they are granted a monopoly on the operation of passenger trains in the country. As a result, other firms are only able to offer passenger train services with the cooperation and/or permission of the government- owned provider.
Intellectual Property Protection: Extending intellectual property protection to a company in the form of patents and copyrights is yet another way in which monopolies are created. When a government does this, it is in fact giving a single company an exclusive right to provide a particular product / service to the market.
Patents and copyrights work in providing owners of intellectual property with the right to act as an exclusive provider of a new product for a specific length of time. This creates a temporary monopoly in the market with regards to new products and services.
Natural Monopoly: A market may also become a monopoly simply because it may be more cost-effective for one company to serve the whole market than to have several smaller firms in competition with one another. A company with virtually unlimited economies of scale is referred to as a natural monopoly. Such firms become monopolies due to their position and size, which makes it impossible for new entrants in the market to compete price-wise. Natural monopolies are common in industries with high fixed costs and low marginal costs of operation such as providers of television, telephone, and internet services.
In this question, ‘A single firm is very large’ is not enough to tell whether this market is monopolistic.

Q48. A procurement manager has decided to bring in a junior member of their team to a negotiation meeting.
Which of the following would be suitable roles for this junior member of the team?
Note taker
Expert
Observer
Chair

1 and 2

1 and 3

2 and 3

3 and 4

Q49. In a commercial negotiation, a procurement professional negotiates on his company’s behalf. The power of buying organisation is the only factor that influences the behaviours of the other party. Is this assumption true?

Yes, because the outcomes of negotiation are attributable to the buying organisation

No, because personal power of negotiators also attributes to the outcomes

No, because power of supplier is the only factor that influences the other party

Yes, because buyer’s brand, reputation and purchasing spend largely determine the outcomes

Q50. How contribution is calculated in break-even analysis?

Fixed costs divided by variable costs

Variable costs subtracted from price

Price minus fixed costs

Variable costs subtracted from fixed costs

Q51. Which of the following types of questions are likely to be the most effective to check facts in negotiations?

Hypothetical

Open

Leading

Closed

Q52. A buying organisation with a low spend and the reputation for paying late might be viewed by a supplier as which of the following?

Develop

Nuisance

Core

Exploit

Q53. Which ofthe following is a true statement regarding macroeconomic factors and their potential impact on negotiations?

Macroeconomic factors always directly influence the negotiations

Expectations on macroeconomic prospect are always correct

Changes in macroeconomic factors may affect businesses and individuals differently

Macroeconomic factors cannot be influenced by anyone’s expectation or sentiment

Q54. In addition to organisational power, personal power of each negotiator can influence the outcomes of a negotiation. A good negotiator can leverage different sources of power. Is this statement true?

Yes, because the good negotiator recognises his own power in a negotiation

No, because each person has only one superior source of personal power

Yes, because all sources of power have similar effectiveness in every situation

No, because only organisational power can be leveraged during a negotiation

Q55. Which of the following types of questions should be used most often in the proposing phase?

Hypothetical questions

Probing questions

Closed questions

Open questions

Q56. Which of the following are most likely to be sources of conflict that can emerge from the process of commercial negotiations? Select TWO that apply.

Differences in conflict management style

Differences in culture

Types of purchase

Standard terms and conditions

Line of the best fits

Q57. Which of the following is categorised as fixed cost?

Additional pallet hires due to higher demand in year-end season

Land rental paid in advance

Governments taxes

Raw materials for next year production

Q58. A skilled negotiator will use a range of questioning techniques in a negotiation. If they wished to explore options with the other party without making any formal commitment, which type of question style would they use?

Leading

Hypothetic

Reflective

Multiple

Q59. Information generated through Purchase Price Cost Analysis can be useful to the purchaser, by helping to identify which of the following costs relating to the supplier? Select the THREE that apply.

External costs

Profit

Material costs

Market costs

Budgeted costs

Depreciation on equipment

Q60. During a negotiation, the supplier requests for payment term shortened to 45 days from 60 days. Seeing that this proposal lies within the concession plan, the procurement manager asks for 5% discount in return. Is that right thing to do?

Yes, the procurement manager should keep that 5% for himself because that amount is a fair compensation for his effort

No, it is unethical to exploit the weakness of the other party

No, procurement should insist the payment term remains 60 days

Yes, since procurement manager has his own cost savings target to achieve and he should make use of supplier’s financial status

Q61. Which of the following are internal factors when a supplier is making its pricing decision?
Price elasticity of demand
Environmental legislation
Risk management
The stage in the product life cycle

1 and 2 only

1 and 4 only

2 and 3 only

3 and 4 only

Q62. Jane is planning for a forthcoming negotiation with a key supplier. She has learned what are important to the supplier and what are important to her company from previous contracts between them. In order to avoid negotiation deadlocks, she has set up several concession plans. But Jane has little experience in dealing with suppliers and doesn’t know when to trade these concessions. When is the best time in a negotiation to trade concessions?

In the testing phase

In the proposing phase

At bargaining stage

At opening stage

Q63. Representatives from South African Department of Health is negotiating the price of hospital drugs with US pharmaceutical companies. Which of the following are most likely to be macro factors that influence the outcomes of the negotiation? Select TWO that apply.

Forward integration

Digitalisation of medicine

Order quantity

Regulations on health and safety Switching costs of buyer

Q64. In a commercial negotiation, a procurement professional believe that the larger the order quantity from buyer, the lower the supplier’s average costs. Is this assumption true?

No, because supplier’s average costs will rise as the buyer’s demand increases

No, because the supplier may need to invest in new facility to meet buyer’s demand

Yes, because larger order quantity will bring a considerable profit to supplier

Yes, because larger order quantity will always enable the supplier to reach its economy of scale