Question 1
- Explain five factors to consider when choosing office equipment.
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Explain the causes and remedies of the following types of unemployment.
i) Seasonal unemployment
ii) Structural unemployment
iii) Disguised unemployment
iv) Residual unemployment
v) Involuntary unemploymen
Answer
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i. Cost; this refers the initial, maintenance and running cost of the equipment. Organization will choose an equipment they
can afford based on amount of capital available.
ii. Adaptability; this is the ability of the equipment to cope with future changes and development. An organization will choose an equipment that will adjust to any future changes without becoming obsolete.
iii. Possibility of hiring rather than buying; one has to consider the cost and convenience of buying an equipment as opposed to hiring. If hiring is expensive than buying, then the organization will have to buy.
iv. Durability; this refers to the lifespan of equipment. The organization will acquire an equipment that will last long.
v. Effect on staff morale; this refers to staff attitude towards the equipment. The organization will acquire an equipment that will motivate the staff to use. Staff members should be involved in deciding which equipment to acquire. -
i. Seasonal unemployment; it is experienced whereby products loses demand and responsible labor force is laid off.
Solution; introduction of variety of economic activities
ii. Structural unemployment; it occurs where jobs are available but one does not have the required skills to handle the jobs. Solution; provision of relevant education training opportunities to ensure necessary skills required by the labor market.
iii. Disguised unemployment; occurs where the number of people employed exceeds those that are required. The workers full capability is not completely utilized. Solution; initiating more projects that would create more jobs.
iv. Residual unemployment; occurs when the physically or mentally challenged members of population are not offered job opportunities by employers. Solution; ensuring the implementation of policy of affirmative action.
v. Involuntary unemployment; it occurs where people are actively searching for job opportunities at any existing wage rate but couldn’t find. Solution; initiate economic activities that could spur economic growth to create more job opportunities.
Question 2
- Explain five importance of insurance to an economy.
- Explain four unethical practices in product promotion.
Answer
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i. Creation of employment. Insurance provides employment to individuals as actuaries and sales persons.
ii. Creating confidence in investors. Compensation in the event of occurrence of loss encourages investors to invest in risky ventures.
iii. Revenue to the government. The government receives revenue from license fee and taxes from the insurance profits.
iv. Continuity of business. Business that could close down because of loss due to event of a risk will continue to operate because of compensation from the insurance companies.
v. Spreads risks. Pooling of risks ensures that the few who suffer loss are indemnified. -
i) Give false information about a product; misleading consumers/making wrong claims about their products
ii) Not disclosing side effects of a product; so as to increase sales
iii) Overpricing of goods;
iv) Cheating on ingredients of goods;
v) Advertising with negative effects on the environment;by littering the /making excessive noise/using environmentally unfriendly promotional materials.
Question 3
- Explain five features of oligopoly.
- Explain the difference between partnerships and cooperative societies forms of business units.
Answer
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i. Firms are interdependence in decision making/ firms keenly observe each other’s action s/ decisions hence acting in
any way triggers (counter) reactions (from other firms)
ii. Firms deals with products that are homogeneous / similar / the products are close substitutes (of each other) but are only differentiated in terms of aspects like colour/packaging/shapes/prices/branding
iii. Firms may engage in non-price competition / the firms under oligopoly may avoid price wars hence only compete via other means like (aggressive) advertise/after sales service/market segmentation / fixing products
iv. Unpredictability / uncertainty of behavior since firms( under oligopoly) keep reacting to market changes differently (depending on actions taken by other firms within the market/firms may be taken by surprise
v. The market is made up of a few (large) firms since firms (operating under oligopoly) tend to have a large capital outlay / make (extensive) use of modern technology (in their production activities) / control substantial share of the market -
Question 4
- Explain five reasons for continued existence of small firms in an economy.
- Outline five channels that can be appropriate for the distribution of exporting tea to France.
Answer
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i. Need for personalized services such as hair cutting makes them to thrive.
ii. Flexibility. Small scale firms can be changed when need arises.
iii. Less capital requirement. They require relatively less capital to start and operate unlike large firms.
iv. Ease management. Small firms are easy to manage and control compared to large firms.
v. To keep away from rigorous legal process associated with starting of large firms. -
i. Local producer → foreign → Agent → Wholesaler → Retailer → foreign consumer
ii. Local producer → foreign Wholesaler → foreign Retailer → foreign consumer
iii. Local producer → foreign Manufacturer’s representative → foreign wholesaler → foreign Retailer → foreign consumer
iv. Local producer → foreign Wholesaler → foreign consumer
v. Local producer → foreign retailer → Foreign consumer
Question 5
- Explain five reasons for government involvement in business.
- Explain five documents sent by the buyer to the seller in Home trade.
Answer
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i. To attract foreign investment by initiating major business projects
ii. To prevent foreign dominance of the economy by investing in areas where the locals are not able to.
iii. To provide goods and services which are too sensitive to be left in the hands of the private sector e g fire arms.
iv. To provide essential goods and services in areas where private individuals and organizations are unwilling to venture due low profits or/and high risks.
v. To provide essential goods and services which private organizations are unable to provide due high initial capital required. -
i. Letter of inquiry. A request by a prospective buyer for information about the goods dealt in by a seller.
ii. Order. List of goods a potential seller is required to supply the buyer with.
iii. Goods received note. Sent to inform the seller that goods sent have been received.
iv. Goods returned note. Sent to the seller to inform him/her that goods have been returned
v. I owe you. Is a written acknowledgement of debt.