Business Studies - FORM 3 END TERM 1 EXAMS 2020

QUESTIONS

INSTRUCTIONS

Answer all the questions in the spaces provided

1. Highlight four positive impacts of the physical environment on the operations of a business. 4mks
2. Outline four features of oligopoly power. 4mks
3. State four circumstance under which photocopying may be used to reproduce documents in a school. 4mks
4. State four reasons why diagonal communication needs to be encouraged in an organization. 4mks
5. List four characteristics of land as a factor of production which distinguish it from other factors of production. 4mks
6. Give the name of the insurance policy described in the following table. 4mks
   

   Description	Name of policy
   Covers ships while on a specified voyage and time.
   Covers a specified peril when the ship is either being loaded, offloaded or served.
   Covers cargo against loss or damage while being transported by ship.
   One policy used to cover a number of ships belonging to one organization.

7. State four benefits that a subsistence producer may get by participating in exchange of goods. 4mks
8. Study the diagram below and answer the questions that follow.
   
   State four factors that are responsible for the change in the diagram above.          4mks
9. State four circumstances under which a wholesaler and a retailer may be removed from the chain of distribution.
10. Identify the following Acts of Parliament used by the government to protect the consumer. 4mks
    

    Description		Act of parliament
    (i)	Requires that traders maintain high standards of hygiene
    (ii)	Requires that traders use correct weighing equipment
    (iii)	Requires that producers do not include harmful substances in products
    (iv)	Requires that traders only engaged in business which they are permitted

11. List four documents prepared by the buyer in home trade. 4mks
12. Give four features of economic recourses. 4mks
13. Outline four tools used by the government to influence the quantity of a product supplied in a market. 4mks
14. Highlight four factors that may be used to determine the size of a firm. 4mks
15. The diagram below shows the current demand for petrol.
    
    
    1. What is the effect of an increase in the price of cars on demand for petrol    2mks
    2. Draw a new demand curve on the diagram above to show the effect of an Increase in price of cars  2mks
16. State four reasons why few Kenyans take out life assurance policies.
17. In the table given below, give the appropriate type of advertising which suits the description. 4mks
    

    Description		Type of advertising
    a	Persuades the consumers to buy a product
    b	Promotes a particular brand of product
    c	Creates awareness about a product
    d	Promotes the name of the manufacturer

18. Highlight four disadvantages of a long channel of distribution of goods to a buyer. 4mks
19. Highlight four major challenges that may face a developing country in its quest to adopt containerization as a method of transport. 4mks
20. State four reasons why consumers have to make a choice between competing needs. 4mks
21. Identify the macro-environmental factors affecting business operations as described by the following statements. (4mks)
    1. Laws and policies that regulate business activities……………………………
    2. Affects buyer’s ability to buy commodities offered by a business……………….. 
    3. Firms selling similar products trying to outdo each other in their efforts to maximize profits   
    4. Dictates how people live and what products they consume     ……………………….
22. Outline four features of Itinerant traders. 4mks
23. Nyeri Youth Group wants to start a warehouse service business in their ward.  State any four essential factors they should consider for their warehouse to function effectively. 4mks
24. Highlight four circumstances under which a partnership business would be preferred to a sole proprietorship. 4mks
25. Define the following components of business studies. 4mks
    1. Commerce________________________________________________
    2. Accounting________________________________________________
    3. Economic__________________________________________________
    4. Office practices_________________________________________________

MARKING SCHEME

FORM THREE BUSINESS STUDIES 

MARKING SCHEME  TERM ONE 2020

1. Positive impacts of physical environment on the operations of a business.
   1. Favourable climatic conditions favour agricultural businesses.
   2. Absence of floods means goods can efficiently reach the market.
   3. Good roads and other physical infrastructure enhance trade.
   4. Land with good terrain favours production activities.
   5. A clean, healthy environment is necessary for people’ (employees) emotional wellbeing.
   6. Environment free from pollution is necessary for the health of the workers.
2. Features of oligopoly power
   1. Few firms supply the market
   2. Firm sells differentiated products in close substitution
   3. Firms are mutually interdependent
   4. Non – price competition
   5. Firms are mutually interdependent
   6. Collusion in the industry
   7. Barriers to entry
3. Circumstances under which photocopying may be used to reproduce documents in a school. 4mks
   1. When limited number of copies is required
   2. When exact photographic reproduction is necessary
   3. When copies are urgently required because it is faster
   4. Where there is no need to retype/write the original copy
   5. Where there is no need for special training for operators
4. Reason why diagonal communication needs to be encouraged in an organization
   1. Promotes teamwork in an organization
   2. It helps eliminate goal blindness
   3. Assist in development of human resource because they can freely exchange idea
   4. It creates a sense of belonging among staff thus a motivating factor.
5. Characteristics of land as a factor of production which distinguish it from other factors of production. 4mks
   1. It is a natural resource/gift of nature
   2. It supply is fixed/cannot be increased in supply
   3. It is occupationally immobile
   4. It is subject to the law of diminishing return
   5. Quality is not homogeneous
   6. Productivity can be increased
   7. Its reward is rent rates and royalties
6. Marine insurance policies
   

   Description	Name of policy
   Covers ships while on a specified voyage and time.	Mixed policy
   Covers a specified peril when the ship is either being loaded, offloaded or served.	Port policy
   Covers cargo against loss or damage while being transported by ship.	Marine cargo policy
   One policy used to cover a number of ships belonging to one organization.	Fleet policy

7. Benefits the subsistence producer may enjoy by participating in Exchange of goods.
   1. Earns an income
   2. Disposing of surplus
   3. Improve his skills through specialization
   4. Quality products will be produced
   5. More goods will be produced
   6. Improve his living standard through income carried
8. Factors responsible for the change of the diagram.
   1. Increase in price of the complimentary goods.  Expected fall in price of product
   2. Reduced disposable income
   3. Increase tax/reduction in subsidies/in favourable government policy
   4. Reduction in population. 
   5. Fall in price of substitutes
   6. Reduction in Taste and preference
9. Circumstantiates under which a wholesaler and a retailer may be removed from the chain of distribution. (4mks)
   1. Sale by tender
   2. Low cost of distribution
   3. Small market
   4. Technical goods
   5. Special order/custom
   6. Perishable goods
   7. Risky/dangerous goods
10. Acts of parliament used by the government to protect the consumers
    1. Public health act
    2. Weights and measures act
    3. Food and drug act
    4. Licensing act.
11. Documents prepared by the buyer
    1. Letter of inquiry
    2. Local purchase order
    3. Goods received note
    4. Goods returned note
    5. IOU
12. Features of economic resources (4 marks)
    1. They are scarce/limited in supply
    2. They have monetary value
    3. They have alternative uses/occupational mobility
    4. They are unevenly distributed from one region to another
    5. They have utility/usefulness
    6. They are transferable from one party to another/geographical mobility
    7. They can be combined to produce goods/services
13. Outline four tools used by the government to influence the quantity of a product supplied in a market. (4 marks)
    1. Imposing taxes
    2. Offer of subsidies to producers
    3. Use of quotas
    4. Use of price controls
14. Highlight four factors that may be used to determine the size of a firm. (4 marks)
    1. Volume of output
    2. Floor area covered/size of land occupied
    3. Quantity of capital invested
    4. Number of employees engaged
    5. Production methods/techniques/technology
    6. Market size served
    7. Volume of sales
15. The diagram below shows the current demands for petrol.
    
    
    1. What is the effect of an increase in the price of cars on demand for petrol? (2 marks)
       Few/less cars would be demanded and this would decrease/reduce the demand for petrol at the same price
    2. Draw a new demand curve on the diagram above to show the effect of an increase in price of cars. (2 marks)
       Check the diagram:
16. Reasons why few Kenyans take out life assurance policies.    (4 marks)
    1. Ignorance of the importance of these policies
    2. Widespread poverty/low incomes
    3. Fear of losing their money because of past experience of collapse of companies
    4. Lack of enough knowledge to interpret the clauses in the policy
    5. Corruption and embezzlement of funds by insurance company officials, resulting in delays of compensation
    6. The elaborate and time consuming procedures of claiming compensation
17. In the table given below, give the appropriate  type  of advertising which suits the description (4marks)
    

    Description		Type of advertising
    a	Persuades the consumers to buy a product
    b	Promotes a particular brand of product
    c	Creates awareness about a product
    d	Promotes the name of the manufacturer

18. Disadvantages of a long  channel of distribution of goods to a buyer. (4marks)
    1. Increases in prices of goods
    2. Perishable goods will go bad
    3. Chances of damage of goods is very high due to  handling
    4. There is high chances of delay in delivery of goods
    5. Feedback to the producer is delayed or impossible
19. Challenges Developing countries face in its quest to adopt containerization.
    1. Need for specialized machines which are expensive
    2. Need for specialized personnel to handle loading and off-loading machines
    3. Volume of business may not be big enough to warrant such an investment
    4. Containers are expensive to construct/buy
    5. Require redesigning port and port facilities to accommodate containers
    6. Lack of modern technology needed in containerization
    7. General resistance by stakeholders.
20. State four reasons why consumers have to make a choice between competing needs. (4marks)
    1. Limited resources
    2. Different  prices of goods
    3. Different  tastes, preferences or fashion
    4. Government policy on consumption of goods
    5. Unlimited wants to be satisfied
21. Macro – Environmental factor
    1. Legal – Political environment
    2. Economic environment
    3. Competitive environment
    4. Cultural environment
22. Features of interant traders
    1. Are very persuasive
    2. Their prices are not controlled
    3. Are found mainly in densely populated  areas
    4. Move around selling their goods
23. Essential factors of a warehouse
    1. Specialized buildings
    2. Conveniently located
    3. Installation of handling equipments
    4. Security systems to safeguard the goods from theft or damages by weather or people
    5. Qualified human resources to run the warehouse
    6. Good road and other communication network.
    7. Compliance with the law of the land
24. Circumstances when partnership is more preferred than soleproprietorship
    1. Where there is possibility of raising more capital in a partnership
    2. Where the partners bring in different talents and skills enhancing specialization
    3. Incase the partner can share the workload
    4. If it ensures that when losses occur partners shall share them
    5. Where it leads to better decision making due to discussion of decisions by partners before implementation.
    6. Where the partnership ensures limited liabilities for most partners
25. Define the following components
    1. Commerce: It is the study of trade and aids to trade
    2. Accounting: This refers to systematic way of recording business activities for decision making
    3. Economics: Study of how human being satisfies their wants by use  of  limited resources.
    4. Office practice:     This refers to activities and the