BUSINESS STUDIES PAPER 1 Marking Scheme - 2017 KITUI MOCK EXAMINATION

Advantages of using modern technology in production (4 marks)
- It leads to increased output
- It leads to high quality products
- Products can be standardized
- Reduces the cost of production as less labour is require
- Saves time as production is done faster 4 x 1 = 4 marks

Types of companies that a consumer organization may receive form consumer
- Sale of poor quality good s and service
- Unfair pricing of goods
- Non-compliance to building regulations
- Poor hygiene conditions
- Sale of harmful goods
- Incorrect weight and measures 4 x 1 = 4 marks

Features of parastatals
- Formed by an act of parliament
- Initial capital is provide by the government
- They are set up to perform certain specific functions on behalf of the government
- They have limited liabilities
- They are managed by board of directors appointed by the government 4 x 1 = 4 marks

Reasons why ethical practical is necessary in product promotion
- To encourage selling of quality goods
- To ensure compliance with existing government legislation
- To safeguard cultural practices
- To encourage disclosure of information about the product
- To curb environment degradation
- To safeguard consumers against misleading advertisement 4 x 1 = 4 marks

Advantages of hire purchase to the buyer
- The buyer acquire possession and use of goods immediately after making a down payment
- Buyer is able to buy high value and experience items easily
- Installments to be paid are pre-determined so than buyer can budget for the amount
- People with regular employment can make arrangement for monthly installment to be paid directly by employer through check off system 4 x 1 = 4 marks

Factors that may make a producer to by-pass a wholesaler when distributing goods
- When dealing with perishable good
- When dealing with goods which are technical in nature
- When the firm is located near the market
- When there is need to keep price of goods low
- When the demand for the product is very high 4 x 1 = 4 marks

Factors that would lead to unfavourable terms of trade to a country
- If the prices of imports increase while those of export decline
- If the prices of imports remain constant while those of export increase
- If the prices of export remain constant while those of imports increase
- Both prices increase but the increase in price of imports is higher than those of imports
- Both prices decrease but the decrease in price of exports is higher than that of imports. 4 x 1 = 4 marks

- Credit note issue
- Sales invoice
- Credit note received
- Cash sale receipt 4 x 1 = 4 marks

Reasons why flower exporters would transport their produce by air rather than by sea
- Air transport is faster
- Flowers perishable require a faster means
- Security of air transport is relatively high
- Flowers are light in weight
- Flowers are not bulky 4 x 1 = 4 marks

Circumstances that may necessitate re-insurance
- When the value of the property is very high
- When chances of the loss occurring through injured risk is very high
- When the insurance company has insured many similar risks which would make it difficult to compensate
- When the insurance company wishes to spread risks 4 x 1 = 4 marks

Net worth = Total asset – Total liabilities
= (300,000 + 123,000) – (125,000 + 84,500)
= 432, 700 – 209, 500
= 214, 200 (4 marks)

Problems associated with development planning
- Lack of accurate or detailed data
- Lack of qualified personal
- Existence of large substance sector
- Transfer of inappropriate development plan
- Lack of political will
- Inflation
- Lack of funds to carry out projects 4 x 1 = 4 marks

Demerits of indirect tax
- May fuel inflation as it directly increase the prices of goods services
- Its less equitableCan be avoided by people who do not consume the taxed commodity
- Uncertainty in revenue yield
- Expensive to collect 4 x 1 = 4 marks

Factors that may limit entrepreneurs in an area
- Insecurity
- Poor infrastructure
- Unfavourable government policy political instability
- Stiff competition
- Political instability 4 x 1 = 4 marks

Challenges encountered when measuring national income using the output approach
- The problem of valuation due to non-availability or inaccuracy of the output figures especially in the private sector
- The problem of deciding on the goods and service to include
- The problem of valuing output in the subsistence sector
- The problem of changing prices
- The problems of differentiating primary inputs form intermediated inputs 4 x 1 = 4 marks

Factors resulting to an increase in demand
- Possibility of decrease in price
- Possibility of income being distributed fairly
- May be there was increase in population
- May be the tastes and preferences for the product was positive
- May be the incomes of households have increased 4 x 1 = 4 marks

Basic features of a market
- Availability of buyers
- Availability of sellers
- Availability of goods and services
- Availability of medium of exchange 4 x 1 = 4 marks

External factors that may negatively influence the operation of a business
- Low consumer income which leads to low demand
- Poor infrastructure
- Negative government policies
- Adverse climatic conditions
- Low population / poor market 4 x 1 = 4 marks

Negative effects of inflation
- Reduction in profit for business
- Wastage of time as people shop around for reasonable prices
- Conflicts between employers and employees as employees demand for raise in salaries and wages
- Decline in standard of living
- Less to creditors
- Adverse effect on balance of payment 4 x 1 = 4 marks

Benefits to a business that uses its own warehouse
- The owner has full control over its operations
- The owner may design it according to his / her own specification
- The owner does not incur cost of hiring space unlike with public warehouse
- The owner is not tied down by long procedures of issuing and receiving goods 4 x 1 = 4 marks
8 x ½ = 4 marks

Reasons why hypermarkets are becoming increasing popular in Kenya
- Operates for longer hours
- Alternative and convenient for shop in
- Accept debit / credit cards
- Security is guaranteed
- Availability of auxiliary services
- Have extensive parking space 4 x 1 = 4 marks

Negative implication of the population distribution
- High dependency ratio
- High rate of unemployment
- Increased social evils
- Low labour supply
- Pressure on goods and services consumed by young population 4 x 1 = 4 marks

Measures that a manager can take to improve the working environment in an office
- Show respect to both colleagues and visitors
- Observe courtesy in dealing with people
- Be organized at work all times
- Be honest, trustful in performing duties
- Be punctual in offering services 4 x 1 = 4 marks