WAEC SSCE - Commerce - 2016

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Risk bearing in a business organization is a function of the entrepreneur. An entrepreneur is an individual who takes on the financial risk of starting and operating a new business venture. They are responsible for making decisions regarding the allocation of resources, setting prices, and creating strategies to maximize profits. Since they have a personal stake in the success of their business, entrepreneurs are willing to take on the risk of potential losses in order to reap the rewards of potential gains. In this way, risk bearing is a critical function of entrepreneurship.

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One objective of the European Union is to eliminate all tariffs and quotas among member countries. The EU is a political and economic union of 27 member states located primarily in Europe. One of its primary goals is to promote economic cooperation among its members by eliminating barriers to trade such as tariffs and quotas. This helps to create a more integrated and efficient European market, which in turn can lead to increased economic growth and prosperity for all member states. By eliminating tariffs and quotas, goods and services can flow more freely within the EU, and member states can benefit from increased access to larger markets and a wider range of goods and services.

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Trade associations are groups of businesses that come together to promote their shared interests. They perform various functions such as representing their members, lobbying the government, and setting industry standards. However, one of the options is not a function that is typically performed by trade associations. Credit facilities are not typically provided by trade associations. While some trade associations may offer their members access to financing or credit, it is not a primary function of such associations. Instead, trade associations are primarily focused on promoting the interests of their members and improving the overall business environment in their industry.

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One disadvantage of advertising is that it could be misleading. Advertisements are often designed to make products or services appear more desirable than they actually are. This can lead to consumers being disappointed when they purchase the product or service and find that it does not live up to their expectations. Misleading advertising can also be harmful if it promotes products or services that are not safe or effective, putting consumers at risk. In addition, advertising can be costly, and if the advertisements are not effective, they can reduce sales and profits. Companies may invest a significant amount of money in advertising campaigns that do not result in increased sales, leading to a reduction in profits. Another disadvantage of advertising is that it can cause overstocking. If a company overestimates the demand for a product based on the success of an advertising campaign, they may produce or purchase too much inventory, which can lead to excess inventory and storage costs. Overstocking can also result in price reductions and lower profit margins. Overall, while advertising can be an effective way to promote products and services, it is not without its disadvantages. Misleading advertising, reduced sales and profits, and overstocking are some of the potential downsides of advertising that companies should consider when deciding whether to invest in advertising campaigns.

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The fees charged on postal orders by the post office is called "poundage." Poundage is the fee charged by the post office for the service of issuing a postal order. It is usually a percentage of the face value of the postal order and is intended to cover the administrative costs of providing the service. For example, if a postal order is issued for $100 and the poundage rate is 5%, the poundage fee would be $5.

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A clean bill of lading is so called because it shows no record of damaged goods or discrepancies in the quantity or quality of goods being transported. It is a document issued by the carrier or their agent that serves as a receipt for the goods and a contract of carriage. The term "clean" means that the goods have been received in good order and condition, and the carrier assumes full responsibility for their safe transport to the destination. It is an important document in international trade as it is used to prove ownership of the goods and to facilitate payment by the buyer to the seller.

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Specializing in the sale of one line of goods is the main feature of a chain store. A chain store is a type of retail store that operates multiple locations and focuses on selling a single line of products. This means that all of the stores in the chain sell the same type of products, such as clothing, electronics, or home goods. For example, a chain store like Gap specializes in selling clothing, while Best Buy specializes in selling electronics. This focus on a single line of goods allows chain stores to develop expertise in their chosen area, offer a wide variety of products within that area, and often offer competitive prices due to their scale and specialization. In contrast, supermarkets typically sell a wide range of products, including food, household items, and personal care products. Mail order firms sell a range of products through catalogs or online platforms, and mobile shops may sell a variety of products out of a truck or other mobile unit.

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Fidelity guarantee insurance is a type of insurance that provides protection against losses that may occur due to the dishonest actions of an employee. In other words, if an employee engages in fraudulent activities that result in financial losses for the company, this insurance can help cover those losses. For example, if an employee embezzles funds from their employer, fidelity guarantee insurance can help cover the resulting financial losses. Similarly, if an employee steals inventory or engages in other dishonest activities that result in financial losses, fidelity guarantee insurance can help cover those losses as well. It is important to note that fidelity guarantee insurance only covers losses that result from the dishonest actions of employees. It does not provide coverage for other types of losses, such as those that may result from a fire disaster or personal accident.

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The document that contains the relationship between the company and outsiders is the memorandum of association. It is a legal document that sets out the constitution of the company and defines the company's relationship with the outside world, including its objectives, powers, and the rights of its members. The memorandum of association is one of the key documents that must be filed when a company is being registered. It is a public document that anyone can access to find out information about the company, such as its name, registered office address, and the objects for which it was incorporated.

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The document issued by a warehouse keeper for goods taken into the store is called a dock warrant. A dock warrant is a legal document that serves as proof of ownership of goods stored in a warehouse. When goods are delivered to a warehouse, the warehouse keeper issues a dock warrant to the owner of the goods, acknowledging receipt and acceptance of the goods into storage. The dock warrant contains details such as the description of the goods, quantity, and storage location within the warehouse. The owner of the goods can use the dock warrant as evidence of ownership, as well as to transfer ownership of the goods to another party, such as a buyer or lender.

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Branding is a concept of marketing. It involves creating a unique name, symbol, design or combination of these elements that identify and differentiate a product or service from those of competitors. The aim of branding is to build customer loyalty and brand equity, which refers to the added value a brand name gives to a product or service beyond the functional benefits it provides. A strong brand can increase customer recognition, improve market position, and ultimately increase sales and revenue.

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In a law of contract, a counter offer operates as a rejection. This is because a counter offer is made by the offeree in response to an offer made by the offeror, and it effectively terminates the original offer. The counter offer changes the terms of the original offer and proposes a new set of terms. Therefore, it is a rejection of the original offer and a new offer is created by the offeree. If the original offeror accepts the new terms proposed in the counter offer, a new contract is formed based on those terms.

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The Water Corporation is an example of a public enterprise. Public enterprises are organizations that are owned and operated by the government, either at the national or local level. They are created to provide essential goods and services, such as water, electricity, and transportation, to the public. These enterprises are usually established to ensure that these services are provided at an affordable cost to the general public, as well as to help stimulate economic growth and development.

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The correct answer is speculation. Speculation is the practice of buying and selling assets, such as stocks, in the hope of making a profit by anticipating the future movements of prices. In the context of the stock exchange, speculation involves taking on risk in the expectation of a reward. Speculators buy stocks when they believe the price will rise, and sell when they believe it will fall. It is important to note that speculation carries a higher degree of risk than other forms of investment, as it is based on uncertain predictions and can result in significant losses.

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When a cheque is paid on a bank on which it is drawn, the cheque is cleared. This means that the bank has verified that the account on which the cheque was drawn has sufficient funds to cover the amount stated on the cheque. Once the cheque is cleared, the bank will debit the account of the person who wrote the cheque and credit the account of the person or organization who received the payment. The funds will then be transferred from the account of the person who wrote the cheque to the account of the person or organization who received the payment. This process usually takes a few days to complete.

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The business unit that applies the principle of one man one vote is a cooperative society. In a cooperative society, every member has equal voting rights, regardless of their level of investment or ownership stake in the business. This means that each member, regardless of the number of shares or their financial contribution to the cooperative, has an equal say in the decision-making process. The one man one vote principle is a key feature of the democratic nature of cooperative societies, which are typically run for the benefit of their members.

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When an importer has been overcharged for goods supplied, the exporter issues him with a credit note. A credit note is a document issued by a supplier to their customer, indicating that the customer's account has been credited for the value of goods or services returned or for an overcharge. In other words, a credit note is a way for the supplier to rectify an error in the original invoice by giving a credit to the customer's account, which can be used against future purchases. Therefore, in this case, the exporter issues a credit note to the importer to rectify the overcharge on the goods supplied.

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The production of goods in anticipation for demand is made possible by warehousing. Warehousing is the process of storing goods until they are needed or ready to be shipped to customers. By having a warehouse to store goods, companies can produce items in advance and keep them in storage until they are needed. This allows companies to be prepared for future demand, as they can quickly ship out the goods that have been stored in the warehouse as soon as customers start placing orders. Additionally, warehousing can also help to reduce costs by allowing companies to buy raw materials in bulk and store them until they are needed for production.

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The internal environment of a business includes factors that are within the organization's control. Therefore, the person who is part of the business internal environment is an employee. Employees are individuals who work for a company and are essential to its operations. They can include managers, staff, and workers, among others. The actions and decisions of employees can have a significant impact on the success of the business. The other options, such as suppliers, creditors, and customers, are part of the business's external environment, as they are not part of the organization itself.

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The principle applicable where a number of insurance companies are liable under one policy is "contribution". Contribution means that each insurer is liable to contribute a proportionate amount to the loss covered by the policy. This applies in cases where multiple insurers have provided coverage for the same risk, and ensures that the insured is fully compensated for the loss without any one insurer having to bear the entire burden. The amount each insurer is required to contribute is generally determined by the terms of the policy, and is proportional to the amount of coverage each has provided.

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The verbal means of communication involves the use of spoken words to convey a message. Therefore, the option that best fits this description is the telephone. The other options listed are all written means of communication. Telex involves sending written messages over a network, express mail and business reply service involve sending written documents or letters, while the telephone involves using spoken words to communicate in real-time.

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A general tax which applies at each point of exchange of goods and service is called "Value Added Tax" or "VAT". It is an indirect tax that is levied on the value added to goods and services at each stage of production and distribution. VAT is based on the increase in value of the product or service at each stage of production or distribution, rather than on the final selling price. The tax is usually a percentage of the value added, and is paid by the consumer at the point of purchase. VAT is a common form of taxation used by many countries around the world.

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The component of the marketing mix that is put in a consumable form to satisfy the consumer is the "product". A product is any tangible or intangible thing that a business offers to its customers to satisfy their needs or wants. It can be a physical item like a car, a book, or a piece of clothing, or it can be a service like a haircut, a massage, or an insurance policy. The product is the heart of the marketing mix, as it is the main reason why customers will choose to do business with a company. It must be designed and developed with the customer in mind, and it must provide value and benefit to the customer in order to satisfy their needs or wants. In summary, the product is the component of the marketing mix that is put in a consumable form to satisfy the consumer, as it is the tangible or intangible thing that a business offers to its customers to meet their needs or wants.

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The process of buying, selling and distribution of goods and services is referred to as "commerce". It involves activities such as advertising, promoting, selling, and delivering products or services to customers, as well as managing the relationships between buyers and sellers. Commerce includes different types of transactions such as buying and selling of goods, services, or ideas. The process of commerce involves a wide range of activities such as production, distribution, transportation, warehousing, and retailing. Therefore, commerce is a vital aspect of any economy, as it facilitates the exchange of goods and services between producers and consumers, leading to economic growth and development.

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Production ends when goods and services reach the final user. This means that the products have been manufactured, packaged, labeled, and sold to the end-user or consumer. The production process involves converting raw materials into finished goods or services that are ready for consumption. Once the products are sold to the final user, the production cycle is complete, and the process of creating new products can begin again.

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The legislation that aims primarily at the protection of consumers is the Trade Description Act. This law requires that any product or service being sold must be described truthfully and accurately. It prevents businesses from deceiving consumers through false advertising or making misleading claims about their products or services. This helps consumers make informed decisions and protects them from being taken advantage of by unscrupulous businesses. The other laws listed, such as the Law of Contract, the Companies Act, and the Partnership Act, do not focus specifically on consumer protection, although they may have some provisions that offer consumer protection indirectly.

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The correct answer is "nationalization". Nationalization is a government policy where private businesses and industries are taken over and run by the state. This policy is usually implemented in strategic industries such as energy, telecommunications, or transportation to ensure that the government has control over key sectors of the economy. Nationalization aims to achieve a number of objectives such as enhancing efficiency, promoting social welfare, and reducing the influence of private interests in the economy. By owning the businesses, the government is able to control the production, pricing, and distribution of goods and services, which can have a significant impact on the overall economy.

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The organized efforts of consumers to protect themselves against the unfair practices of businessmen is consumerism. Consumerism refers to the social movement that aims to protect and inform consumers about their rights and interests in the marketplace. In other words, consumerism is the collective effort of consumers to demand fair treatment and better products from businesses. This can include efforts to inform consumers about product safety, to advocate for consumer protection laws, and to hold businesses accountable for unethical practices. Consumerism can take many forms, including consumer advocacy groups, product boycotts, and protests against businesses that engage in unfair practices. Ultimately, the goal of consumerism is to promote a fair and equitable marketplace that benefits both consumers and businesses.

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If a business uses part of its profit to develop the area where it operates, it is fulfilling its social responsibility. Social responsibility refers to a business's ethical obligations to consider the interests of society, including the community, the environment, and its employees, beyond its legal and economic obligations. Fulfilling social responsibility often involves initiatives such as community development, charitable donations, and environmentally friendly practices.

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An agreement that is enforceable in law is a contract. A contract is an agreement between two or more parties that creates legal obligations between them. In other words, it is a legally binding agreement that can be enforced through the courts. To be a valid contract, there must be an offer, an acceptance, a consideration, and an intention to create legal relations. Once all of these elements are present, the parties are bound to fulfill their respective obligations as outlined in the contract. Therefore, a contract is the only option among the given choices that fits the definition of an enforceable agreement in law.

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The value at which one country obtains another country's currency is called the exchange rate. It is the rate at which one currency can be exchanged for another currency. For example, if someone wants to exchange US dollars for Japanese yen, the exchange rate will determine how many yen they can get for each dollar. The exchange rate is influenced by various factors, such as the supply and demand for each currency, inflation rates, interest rates, and political stability. The exchange rate can have a significant impact on trade between countries. If one country's currency is strong relative to another country's currency, it can make the first country's exports more expensive and less competitive in the second country's market. On the other hand, a weak currency can make a country's exports more affordable and attractive to foreign buyers.

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The main emphasis of regarding the consumer as the king who must be satisfied is the marketing concept. The marketing concept is a business philosophy that focuses on meeting the needs and wants of customers while also achieving organizational goals. The marketing concept recognizes that the key to achieving organizational success is to understand the needs and wants of customers and to deliver products and services that satisfy those needs and wants better than the competition. Therefore, the marketing concept places a strong emphasis on customer satisfaction and is often summarized as "the customer is king." By prioritizing customer satisfaction, companies can build strong relationships with customers, generate repeat business, and ultimately achieve long-term success.

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Endowment policy is an example of life insurance. It is a type of insurance policy that provides both life insurance coverage and a savings component. The policyholder pays regular premiums over a set period of time, and upon the policy's maturity or in the event of the policyholder's death, a lump sum payment is made to the beneficiary. The savings component of the policy can be used to pay for future expenses such as college tuition, retirement or any other financial goals.

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A dishonoured cheque is also known as a bounced cheque. This is because when a cheque is dishonoured, it means that the bank has refused to pay the cheque amount to the beneficiary due to insufficient funds in the account of the drawer of the cheque. As a result, the cheque "bounces" back to the beneficiary and is considered invalid.

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A person or firm to whom money is owed is called a creditor. This means that someone else owes them money and they have the right to receive payment from that person or entity. For example, if you borrow money from a bank, the bank becomes your creditor and you become the debtor because you owe the bank money. Similarly, if you buy goods or services from a supplier on credit, the supplier becomes your creditor until you pay them back.

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(a) Five features each of the following business units

Cooperative Society

1. Open and voluntary membership: Anyone who is willing may join, and members are free to leave.
2. Democratic control: Each member has one vote regardless of the number of shares held (one member, one vote).
3. Ownership by members: The society is owned and financed by its members through shares and contributions.
4. Distribution of surplus by patronage: Profits are shared among members in proportion to their patronage or dealings, not according to shares held.
5. Service motive: Its main aim is to promote the welfare of members rather than to maximise profit.

Mail Order Business

1. Selling by post/online: Goods are ordered and delivered through the post office or courier without the buyer visiting a shop.
2. Use of catalogues and advertisements: Customers select goods from catalogues, price lists or advertisements.
3. No shop or showroom is needed: The trader operates from a warehouse or office, saving rent on a prime shop.
4. Wide geographical coverage: It reaches customers in distant and rural areas who have no access to large shops.
5. Payment before or on delivery: Customers usually pay in advance or on delivery (cash on delivery).

(b) Five ways by which a partnership could be brought to an end (dissolved)

1. Death of a partner: The partnership is dissolved on the death of a partner unless the agreement provides otherwise.
2. Bankruptcy/insolvency of a partner: If a partner becomes bankrupt, the firm may be dissolved.
3. Mutual agreement: The partners may agree among themselves to end the business.
4. Expiry of the agreed term or completion of the venture: A partnership formed for a fixed period or for a particular project ends when the time expires or the project is completed.
5. By order of the court: The court may dissolve the firm where a partner becomes insane, is guilty of misconduct, or the business can only be carried on at a loss.

(Other valid ways: withdrawal or retirement of a partner, and the business becoming illegal.)

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(a) Five reasons road transport would be preferred to rail transport

1. Door-to-door service: Vehicles can pick up and deliver goods right at the sender's and receiver's premises, whereas trains only move between fixed stations.
2. Flexibility of route and timing: Road vehicles can use many different routes and travel at any time, while trains are tied to fixed tracks and timetables.
3. Lower cost for short distances and small loads: Road transport is cheaper for conveying small quantities of goods over short distances.
4. Wider coverage/accessibility: Roads reach remote villages and interior areas that railway lines do not serve.
5. Suitability for perishable and urgent goods: Road transport is faster and more direct for short trips, so it is good for perishable and urgent consignments.

(Other valid reasons: it requires less capital to start than a railway, and loading/offloading is quicker.)

(b) Five functions of the Airport Authority

1. Construction and maintenance of airports: It builds, equips and maintains runways, terminals and other airport facilities.
2. Provision of air-traffic control: It guides aircraft during take-off, flight and landing to ensure safety.
3. Ensuring security and safety: It screens passengers and cargo and provides security to protect lives and property at the airport.
4. Provision of navigational and communication aids: It supplies weather information, radar and radio facilities to assist pilots.
5. Regulation of airport operations and collection of charges: It controls the activities of airlines at the airport and collects landing, parking and other charges as revenue.

(Other valid functions: provision of firefighting and emergency services, and provision of passenger facilities such as lounges.)

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(a) Four features of a self-service shop

1. Goods are openly displayed on shelves with prices clearly marked (pre-packed and price-labelled).
2. Customers pick the goods themselves into baskets or trolleys without the help of shop attendants.
3. Payment is made once at a central checkout (cash) point near the exit.
4. There are few sales assistants; the shop relies on a wide variety of goods and self-selection by customers.

(b) Four disadvantages of a self-service shop

1. There is a high risk of shoplifting/pilfering since goods are openly displayed.
2. It requires large capital to set up the shelves, wide stock and checkout facilities.
3. There is no personal attention or advice to guide customers on their choice.
4. Customers may waste time queuing at the checkout during busy periods, and there is difficulty selling goods that need demonstration or bargaining.

(c) Four importance of working capital to a business

1. It is used to purchase stock and raw materials needed for daily trading.
2. It enables the business to pay running expenses such as wages, rent and utility bills.
3. It allows the business to grant credit to customers and still meet its obligations, keeping the business solvent and liquid.
4. It helps the business take advantage of cash discounts and settle its short-term debts promptly, ensuring smooth day-to-day operations.

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Five ways in which commerce is important in the life of a nation

1. Distribution of goods and services: Commerce, through trade and its aids, moves goods from producers to consumers, ensuring that goods produced in one part of the country or world reach those who need them elsewhere.
2. Creation of employment: The many branches of commerce (trade, banking, insurance, transport, warehousing, advertising) provide jobs for large numbers of people, raising incomes and living standards.
3. Encourages large-scale production and specialisation: By providing a wide market and efficient distribution, commerce enables firms and regions to specialise and produce in bulk, which lowers cost and raises output.
4. Source of government revenue and foreign exchange: Import and export duties, and taxes on trading activities, provide revenue to the government, while exports earn foreign exchange used to import needed goods.
5. Raises the standard of living: By making a wide variety of goods and services available at the right time, place and price, commerce satisfies consumers' wants and improves welfare.

(Other points: it promotes international relations and cooperation through international trade; it aids industrial and economic development by linking industries with markets and finance.)

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The following are business documents used mainly in the movement and transport of goods.

1. Consignment Note

A consignment note is a document that accompanies goods sent by road or rail. It is prepared by the sender (consignor) and gives details of the goods, the sender, the receiver (consignee) and the carriage charges.

Two uses:

• It serves as evidence of the contract of carriage between the sender and the carrier.
• It gives the receiver full details of the goods being delivered so that they can be checked on arrival.

2. Delivery Note

A delivery note is a document sent by the seller along with the goods to the buyer, listing the goods being delivered. The buyer signs a copy to acknowledge receipt.

Two uses:

• It enables the buyer to check that the goods delivered agree with the goods ordered.
• The signed copy serves as proof (evidence) that the goods were actually delivered and received.

3. Bill of Lading

A bill of lading is a document used in sea transport. It is issued by the shipping company to the exporter and acknowledges that the goods have been received on board for shipment.

Two uses:

• It is a document of title to the goods, so whoever holds it can claim the goods at the port of destination.
• It serves as a receipt for the goods shipped and as evidence of the contract of carriage by sea.

4. Bill of Sight

A bill of sight is a document that an importer presents to the customs authorities when he does not have full details of the goods he is expecting. It allows the goods to be landed and inspected before duty is finally assessed.

Two uses:

• It enables the importer to inspect goods of unknown description before paying the correct duty.
• It allows the customs to grant provisional clearance so that the goods can be examined and the accurate duty determined.

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The following are classes (branches) of insurance:

(a) Marine insurance

This is insurance that covers risks connected with the sea and sea transport. It protects against loss of or damage to the ship (hull), the cargo it carries, and the freight, arising from perils such as storms, collision, sinking and piracy. It may cover the voyage or a period of time.

(b) Accident insurance

This class covers a wide range of risks not connected with marine, fire or life. It includes cover against personal injury or death by accident, motor accidents, burglary, theft and employer's liability. The insurer pays compensation when the insured suffers loss or injury from the accident insured against.

(c) Group insurance

This is a single policy that covers a number of people, usually the employees of one organisation, under one master contract. The lives or persons of the whole group are insured together, often paid for by the employer, and each member enjoys cover without taking out a separate individual policy.

(d) Fidelity Guarantee insurance

This protects an employer against loss caused by the dishonesty, fraud or embezzlement of his employees, especially those who handle cash or goods. If such a trusted employee defrauds the employer, the insurance company makes good the loss.

(e) Consequential Loss Insurance

Also called loss-of-profit or business-interruption insurance, this covers the loss of profit and continuing standing expenses (such as rent and salaries) that a business suffers because its operations are interrupted after an insured event such as fire. It compensates for the indirect losses that follow the direct damage.

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(a) Five media of public relations

1. Print media: newspapers, magazines and journals carrying press releases and feature articles.
2. Electronic media: radio, television and cinema broadcasts, interviews and jingles.
3. Posters and handbills.
4. The internet: websites, social media and company web pages.
5. Seminars, workshops and conferences (sponsored events and exhibitions are also acceptable).

(b) Five types of after-sales services

1. Advice on product usage.
2. Home delivery of the goods bought.
3. Installation of industrial equipment.
4. Demonstration of how to use the product.
5. Maintenance and repair services, including free replacement of a faulty part under guarantee or of the entire product under warranty.

(c) Five benefits of after-sales services

1. They retain customers who patronise a particular seller.
2. They offer a guarantee, in the form of repair or routine maintenance, which creates goodwill and confidence in the buyer.
3. They are used as a competitive tool by sellers to attract more patronage.
4. They help the buyer to cope with the greater complexity of the goods being manufactured.
5. They assure the consumer that the seller will support the product being sold, and give the buyer the opportunity to ask questions not asked at the time of purchase.

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A courier firm is a private organisation that offers fast, secure and specialised delivery of documents and parcels from one point to another, while a telecommunication firm provides the transmission of information (voice, data and images) over a distance.

(a) Four functions rendered by a courier firm

1. Speedy delivery of documents and parcels: It conveys letters, contracts and small packages from the sender to the receiver within a very short time, often faster than the ordinary post.
2. Door-to-door collection and delivery: The firm picks up items directly from the sender's premises and delivers them to the receiver's doorstep, saving the customer time and travel.
3. Tracking of consignments: It provides a reference or tracking number so that both sender and receiver can monitor the movement and current location of the item until it is delivered.
4. Safe custody and insurance of items: Goods are handled with care and are usually insured against loss or damage, so the sender is compensated if anything goes wrong in transit.
5. Provision of proof of delivery: The receiver signs for the item, giving documentary evidence that the consignment reached its destination.

(b) Six functions rendered by a telecommunication firm

1. Provision of telephone services: It enables people and businesses to make voice calls to one another locally and internationally.
2. Internet and data services: It provides access to the internet, enabling e-mail, web browsing, e-commerce and video conferencing.
3. Transmission of text messages: It carries short message service (SMS) and multimedia messages between subscribers.
4. Broadcasting support: It provides the links and networks used by radio and television stations to transmit programmes.
5. Facsimile (fax) transmission: It allows the electronic sending of copies of documents from one machine to another over the network.
6. Money transfer and mobile payment services: Modern telecom firms support mobile money, allowing subscribers to send, receive and pay for goods and services electronically.

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(a) Four functions of money

1. Medium of exchange: Money is generally accepted in payment for goods and services, so it removes the difficulties of trade by barter.
2. Measure of value (unit of account): Money provides a common standard for expressing and comparing the value of different goods and services.
3. Store of value: Money can be saved and kept for future use because it retains its value over a reasonable period.
4. Standard for deferred payments: Money makes it possible to buy now and pay later, so debts, wages and future obligations can be fixed in money terms.

(b) Six advantages of payment by cheque

1. Safety: Payment by cheque avoids the risk of carrying large sums of cash that could be lost or stolen.
2. Convenience: A single cheque can be used to settle a very large debt without counting bundles of notes.
3. Proof of payment: The paid (returned) cheque and the counterfoil serve as evidence that payment was made.
4. Crossing gives extra security: A crossed cheque can only be paid into a bank account, so it cannot easily be cashed by a thief.
5. Stopping payment is possible: The drawer can instruct the bank to stop payment on a cheque if the need arises, for example if it is lost.
6. Payment can be made at a distance: A cheque can be sent by post to a creditor in another town, avoiding the need to travel with cash.

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(a) What is entrepôt trade?

Entrepôt trade (also called re-export trade) is a form of international trade in which goods are imported into a country not for consumption within that country but for the purpose of re-exporting them to other countries, usually after some processing, sorting, grading or repackaging. The goods pass through the intermediary country's warehouses and are then shipped abroad. Such a country is called an entrepôt or a re-export centre.

(b) Three advantages and three disadvantages of international trade

Advantages

1. It enables specialisation: Countries concentrate on producing what they can make best and cheapest, then exchange for what they lack.
2. It widens the range of goods available: Consumers can enjoy goods and services that cannot be produced at home, such as machinery and foreign foods.
3. It is a source of government revenue and foreign exchange: Import and export duties provide revenue, while exports earn the country foreign currency.

Disadvantages

1. It can lead to over-dependence: A country may rely too heavily on others for essential goods, which is dangerous in times of war or crisis.
2. It may ruin infant/local industries: Cheap imported goods can outsell and destroy young home industries.
3. It encourages the dumping of harmful or substandard goods: Foreign firms may flood the market with inferior or dangerous products.

(Other valid points include unfavourable balance of trade/payments and the spread of harmful cultural influences.)

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(a) What is market segmentation?

Market segmentation is the process of dividing a large, varied market into smaller groups (segments) of buyers who have similar needs, tastes or characteristics, so that the seller can design products and marketing programmes to suit each group. Markets may be segmented on the basis of age, sex, income, taste, geographical location or occupation.

(b) Six functions of marketing

1. Buying: Marketing involves buying goods and raw materials in the right quantity and quality for resale or production.
2. Selling: It involves persuading customers to purchase goods and services, which brings in revenue to the business.
3. Transportation: Marketing moves goods from the place of production to where they are needed by consumers, creating place utility.
4. Storage (warehousing): It involves keeping goods safely from the time of production until they are demanded, creating time utility.
5. Grading and standardisation: Goods are sorted into grades of uniform quality and size so that buyers can order by description.
6. Advertising and sales promotion: Marketing informs and persuades customers about goods and services to create and increase demand.

(Other valid functions: financing, risk-bearing, and market research.)

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(a) Four functions of a wholesaler to a retailer

1. Breaking bulk: he buys in large quantities and sells to retailers in the smaller quantities they can handle.
2. Granting credit: he supplies goods to trusted retailers on credit, helping them trade with little capital.
3. Provision of storage: by warehousing goods, he saves the retailer the cost and risk of storing large stocks.
4. Provision of information and advice: he informs retailers about new products, prices and market conditions, and delivers goods to them.

(b) Five advantages of small-scale over large-scale retail business

1. Small capital requirement: it needs little capital to start and run, so it is easy to set up.
2. Personal contact with customers: the owner knows his customers personally and can give them individual attention and advice.
3. Flexibility: it can quickly adjust its stock and adapt to changes in customers' tastes and local demand.
4. Nearness to customers: it is usually located within the neighbourhood, making it convenient for buyers.
5. Granting of credit and quick decisions: the owner can readily give credit to known customers and take prompt decisions since he manages the business himself, and running costs are low.

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(a) Distinction between a broker and a factor

A broker is a mercantile agent who brings buyers and sellers together to make a contract but does not take possession of the goods and does not sell in his own name. He earns a commission called brokerage. A factor (also called a commission agent) is a mercantile agent who is given possession of the goods and sells them in his own name, often on credit, in return for a commission.

(b) Three duties of an employer to an employee

1. Payment of agreed wages/salary: The employer must pay the worker as and when due.
2. Provision of a safe working environment: The employer must ensure the workplace is safe and healthy.
3. Provision of work and tools: The employer should provide the work to be done and the necessary tools or equipment.

(Other acceptable duties: payment of compensation for injury sustained at work, and provision of leave and other entitlements.)

(c) Four duties of an employee to an employer

1. Obedience to lawful instructions: The worker must carry out reasonable and lawful orders given by the employer.
2. Faithful and honest service: The employee must serve diligently and not defraud the employer.
3. Proper care of the employer's property: The worker should use the employer's tools and materials carefully and avoid waste.
4. Keeping trade secrets confidential: The employee must not disclose the employer's business secrets to outsiders.

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(a) What is turnover in commerce?

Turnover is the total value of sales made by a business within a given period, usually one year. It may also be described as the rate of stock-turn, that is, the number of times the average stock of a trader is sold and replaced within a trading period. It is calculated as:

\[ \text{Rate of stock-turn} = \frac{\text{Cost of goods sold}}{\text{Average stock at cost}} \]

A high turnover generally means goods are selling quickly.

(b) Six factors that determine the turnover of a product

1. Price of the product: Goods that are reasonably priced tend to sell faster and record higher turnover than over-priced goods.
2. Quality of the product: Good-quality, durable and attractive goods sell more quickly than inferior ones, raising turnover.
3. Nature of the product: Perishable and everyday necessities (such as bread and vegetables) have a faster turnover than durable goods (such as furniture).
4. Advertising and sales promotion: Effective advertising creates awareness and demand, increasing the rate at which goods are sold.
5. Location of the business: A shop sited in a busy, densely populated area attracts more customers and sells more than one in a remote area.
6. Level of income of consumers: When people's incomes are high, they buy more, so turnover rises; low income reduces sales.

(Other valid factors include the level of competition, seasonal changes in demand, and the efficiency of the sales staff.)

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(a) Four reasons people still engage in hawking

1. Small capital requirement: Hawking needs very little money to start, so it is attractive to poor people who cannot rent a shop.
2. Unemployment: Many people take to hawking because they cannot find paid jobs, and it offers a means of survival.
3. Goods are brought to the buyer's doorstep: Hawkers move about with their goods, making it convenient for customers who have no time to visit the market.
4. No overhead costs like rent and rates: Since hawkers do not operate from fixed premises, they avoid shop rent, electricity bills and other running costs.

(Other reasons: quick sale of perishable goods, and flexibility to move to areas where demand is high.)

(b) The four factors of production

1. Land: This refers to all the natural resources or free gifts of nature used in production, such as the soil, forests, rivers, mineral deposits and climate. Its reward is rent.
2. Labour: This is the human effort, both physical and mental, applied to production. It includes the work of the farmer, teacher, doctor and factory worker. Its reward is wages or salary.
3. Capital: This refers to all man-made assets used to produce other goods and services, such as machinery, tools, factory buildings and money invested in business. Its reward is interest.
4. Entrepreneur (organisation): This is the person who organises and coordinates the other three factors, bears the risk of the business and takes major decisions. His reward is profit.