ZERAKI ACHIEVERS’ EXAMINATIONS (2022)
Term 2 - 2022
BUSINESS STUDIES
FORM THREE (3)
Time: 2½ Hours
Marking Scheme
SECTION A (Answer all questions)
1. Reasons why cash payment would be preferred to cheque payment. (3 marks)
a) Cash is a legal tender but cheque is not.
b) Where the debt to be paid is a small amount
c) One need not have a bank account
d) Personal cheques can easily be dishonored
e) Bank charges are incurred when cashing a cheque.
f) Takes longer to obtain cash on a cheque/process is longer/takes time.
2. Reasons for increase in demand (4 marks)
● Increase in consumers level of income
● Positive taste and preference
● Consumers expectations in price increase and shortages
● Large population size
● Reduced taxes on the commodities
3. Reasons for popularity of motorcycles. (4 marks
● Highly flexible for the consumers/Lack fixed routes
● Offer door to door services
● Convenient to the consumer, no time schedule
● Relatively fast/saves on time/no delay
● Readily available/reliable
● Can negotiate fares
4. Ways in which consumers are likely to suffer when there is no warehousing.
● Consumers will not be assured a steady flow of goods
● Quality of goods may be compromised
● Prices of goods are likely be unstable
● Consumers may not get goods in convenient quantities
● Consumers may not enjoy lower prices from economies of scale as a
result of warehousing
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5. Four roles played by an entrepreneur in the production process. (4 marks)
a) Taking risks/initiating production
b) Combining other factors of production
c) Making decisions
d) Rewarding other factors of production
e) Innovation and creativity
6. State four ways in which Kenya as a country can conserve her economic resources.
o Government appropriate policies governing exploitation of natural resources should be
put in place.
o Harmonized licencing of resource exploitation to prevent imbalanced and
overexploitation of particular resources.
o Putting in place severe penalties on those found carrying out illegal exploitation of
resources e.g. poachers, lumbers.
o Intensifying soil, forest e.t.c. conservation campaigns.
o Encouraging use of alternative sources of fuel to prevent deforestation.
o Educating people on the proper disposal of waste to prevent pollution i.e. solid, air,
water.
o Demarcating forests and wildlife reserves to prevent human settlement.
7. For each of the following descriptions, identify the corresponding method of
product promotion.
DESCRIPTION METHOD OF PROMOTION
Free promotion of a product Free publicity
Strategies to increase sales at the point Personal selling
of promotion.
Impersonal presentation of a product Advertising
through the mass media
Meant to improve the reputation of a Public relations
firm
8. Problems associated with the measurement of national income using the
output approach.
● The problem of valuing output approach sector
● The problem of deciding on the goods and services to include
● The problem of valuation due to inavailability or in accuracy of output
figure especially in the subsistence sector.
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● Problem of valuing governments output as many of its services are not
sold in the market
● Valuing illegal activities e.g drug trafficking.
9. Four advantages of franking machine. (4 marks)
a) Produce neat work
b) Can print accurate postage amounts
c) Lessens theft/misuse of loose stamps by employees
d) Minimizes loss of stamps
e) Can be used to print messages.
10. Rewards for labour as a factor of production. (4mks)
a) Salary
b) Wages
c) Commission
d) Fees
11. Factors that may hinder occupational mobility of labour. (4 marks)
a) Long training period required.
b) Lack of skills required.
c) Fear of unknown/change
d) High cost of training.
e) Lack of adequate information about opportunities in other fields.
12. Measures that a government may take to reduce the mortality rate in a country.
(4 marks)
a) Availability of better health care
b) Food security
c) Minimizing internal conflicts and wars
d) Improving environment sanitation
e) Control crime
f) Control use of drugs and alcohol
h) Disaster preparedness
i) Sensitization of public and personal hygiene/vaccination/stress/HIVAIDS
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13. Objectives of product promotion. (4 marks)
a) Give information about a product.
b) Persuade to buy.
c) Create public interest to buy.
d) Sustain public interest to continue buying.
e) Create sales.
f) Launch a new product.
g) Retain market.
14. a) Insured
b) Risk
c) Premium
d) Insure
15. State four responsibilities of a business to its customers. (4 marks)
a) Respond to their complaints
b) Proper labelling and packaging
c)) Avoid misleading advertisement
d) Right quantity
e) Fair pricing
f) Offering safe products
h) Offering advices.
16. Show the effect of each of the following transaction to capital, assets and liabilities indicating
if its increasing (+), decreasing (-) or nil (0). (4 marks)
Transaction Capital Asset Liability
a) Converted private house into business premises + + 0
b) Paid creditors in cash 0 - -
c) Sold a business car valued at sh 400,000 for sh 300,000 - - 0
on credit
d) Sold goods on credit 0 + 0
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17. Terms described by the following statements in business studies. (4mks)
Statement Term
a) Study of all activities carried out in an office Office Practice
b) All activities involved in movement of goods from the producer to Distribution
consumer
c) Systematic way of recording business transactions and Accounting
interpretation of records made.
d) Use of goods and services to satisfy human wants. Consumption
18. Ways in which the utility of a commodity may be decreased. (3mks)
a) Poor processing
b) Inadequate/Improper storage
c) Lack/ Inadequate transportation.
d) Lack of trade/exchange
19. Advantages of departmental stores
● Access to specialised goods/ service from the relevant / shops / particular
type of goods. Personalised / attention to customers.
● Access to auxiliary / after sales services - which may easily be available
within the shops.
● One can save time by shopping under one roof.
● Prices of goods are relatively low = making consumers save/ buy more .
● One can access a variety of goods under one roof.
● Use of credit or debit cards - relieving customer the need of carrying cash.
● Access new products which a customer may not have been aware of.
20. Describe five channels followed in exporting agricultural product. (10mks)
a) Farmer - marketing board -> foreign consumers
b) Farmer — agent - foreign wholesaler - foreign retailer - foreign
consumer
c) Farmer - foreign wholesaler - foreign retailer - foreign consumer
d) Farmer - foreign retailer - foreign consumer
e) Farmer - foreign farmer ‘s representative - foreign wholesaler - foreign
retailer - foreign consumer
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f) Farmer - foreign consumer
(check on any relevant channel; insist on the presence of an arrow)
21. Using a diagram illustrate the effects of a positive shift of a demand curve on the
equilibrium point, price and quantity. (10 marks)
Price D1
Do S
o
Pe1 E1
Eo
Peo
D1
So
Do
Qe1
Quantity
22. Features of land as a factor of production
▪ Basic factor of production. Production cannot take place without land.
▪ Lack geographical mobility- land cannot be moved geographically from one
location to another.
▪ Uneven in quality – the land quality differs from one place to place.
▪ Suffers from diminishing returns after some time the quality of land reduces.
▪ Quality can be improved – use of technology and fertilizers can improve the
quality of land.
23. The process of obtaining an insurance policy
a) Filling a proposal form
b) Determining the premiums to be paid;
c) Payment of the first premium;
d) Issue of the cover note (binder
e) Issuing of the policy
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