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Exam CIMAPRA19-F03-1 Topic 2 Question 388 Discussion

Actual exam question for CIMA's CIMAPRA19-F03-1 exam
Question #: 388
Topic #: 2
A company generates and distributes electricity and gas to households and businesses.
Forecast results for the next financial year are as follows:

The Industry Regulator has announced a new price cap of $1.50 per Kilowatt.
The company expects this to cause consumption to rise by 10% but costs would remained unaltered.
The price cap is expected to cause the company's net profit to fall to:

Suggested Answer: A Vote an answer

Current revenue = $300m at $2.00/kWh # units = 300/2 = 150m kWh
New price cap = $1.50; demand rises 10% # units = 150m × 1.10 = 165m kWh New revenue = 165m × $1.50 = $247.5m Costs remain $200m # new profit = 247.5 # 200 = $47.5m profit

by Nathan at Oct 05, 2026, 08:21 AM

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