BUSINESS STUDIES FORM 1 TERM 1 2018 TIME 2hrs

Instructions
Answer all questions in this paper in the spaces provided after each question

1. Define the following terms. (4 mks)

(a) Business Studies (1mk)

(b) Distribution (1mk)

(c) Production (1mk)

(d) Entrepreneurship (1mk)

2. State any five types of Business Activities and in each case give an example. (10 mks)
Type of business activity Example
a)
b)
c)
d)
e)

3. Classify each of the factors as either Internal or External Business Environment. (5mks)

Factor Enviroment
a. Business properties
b. Social-cultural beliefs
c. Government policies
d. Decisions by business management
e. Competition brands of washing detergents

4. Outline four characteristics of human wants. (4 mks)

a)
b)
c)
d)
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5. Highlight four limitations of direct production. (4mks)
a)
b)
c)
d)

6. Classify each of the wants below as either basic or secondary wants (4mks)

Want Type of want

a. Playing football
b. Cooking food doe school children
c. Putting on clothes
d. A tourist going to Maasai Mara National park.

7. List down four characteristics of Economic resources. (4mks)

a)
b)
c)
d)

8. Write down four advantages of division of labour. (4mks)

a)
b)
c)
d)

9. State four factors of production and state the reward for each. (8mks)
Factor of Production Reward given
a)
b)
c)
d)

10. Classify each of the following into generic or enterprise competition. (2mks)
(a) A coffee seller competing with tea seller……………………………………..………………..
(b) Television shown with a radio station in entertaining customers………..…………………….

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11. Outline four differences between goods from services. (4mks)

Goods Services
i) (i)
ii) (ii)
iii) (iii)
iv) (iv)

12. Classify each of the following activities into its appropriate level of production. (5mks)
a) Fishing ……………………………………………………
b) Oil refining……………………………………………….
c) Advertising……………………………………………….
d) Lumbering…………………………………………………
e) Teaching …………………………………………………..

13. State four characteristics of labour as a factor of production. (4mks)

a)
b)
c)
d)

14. Identify the following services as either direct or commercial services. (12mks)
Services Classification
a) Transport cargo on the sea
b) Legal services
c) Hair dressing
d) Tele-Communication services
e) Entertaining guests during a prize giving day
f) Providing security to citizens
g) Storing goods in a go down
h) Advertising new products in the market
i) Guidance and counseling sessions offered to students
j) Insurance offered for businesses
k) Offering banking services to businesses
l) Accounting and auditing services

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15. State and explain four forms of utilities. (8mks)

16. Explain five external environment factors that will affect the operations of a business. (10 mks)

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BUSINESS STUDIES FORM 1 MARKING SCHEME TERM 1 2016

1. Defining terms in business studies

(a) Business studies; a subject that examines various business activities carried out in an economy
(b) Distribution; movement of goods and people from producers to consumers
(c) Production; creation of goods and services/ increasing utility in goods/ increasing the
usefulness of a product
(d) Entrepreneurship; process of generating business ideas/

2. Type of business activities

Type of business activity Example
a) Extractive Mining, Fishing, Forestry/ Lumbering, Quarrying, Fruit gathering,
Hunting, Farming
b) Processing Copper Smelting, Cotton Ginning, Fruit processing, saw milling,
flour milling,
c) Manufacturing Chemical manufacture, cement making, baking, pulp making, dress
making, tailoring, shoe making,
d) Constructive Plumbing, masonry, carpentry and joinery, road making, bridge
making, ship building, car assembling
e) Distribution of goods Transporting, advertising, communication, insuring,
f) Trade Wholesaling, retailing,
g) Provision of services Teaching, nursing, catering, entertaining, police work, legal services,
counseling,

3. Business environment.

Factor Environment
a. Business properties Internal
b. Social-cultural beliefs External
c. Government policies External
d. Decisions by business management Internal
e. Competition brands of washing detergents External

4. Characteristics of human wants.

a) Insatiable/ unlimited/ endless/ many in number f) Habitual/ addictive
b) Essential g) Competitive
c) Repetitive/ recurrent h) Universal
d) Vary in intensity, urgency, age, time, gender, and situation i) Complimentary
e) Require resources to be satisfied

5. Disadvantages of direct production.

a) Goods are of low quality e) Low output of goods
b) Poor technology is employed f) Encourages individualism
c) Can be very tiring g) No invention/innovation
d) Time wasting moving from one job to another

6. Human wants

Human want Type of want

Playing football Secondary
Cooking for school children Basic
Putting on clothes Basic
Tourist going to Masai Mara park Secondary

7. Characteristics of Economic resources

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 a) They are scarce g) They have monetary value
b) They have utility h) They are unevenly distributed
c) They have alternative uses i) They are complimentary
d) They can be combined in different proportions to produce goods
e) They can change ownership/ transferable from one person to another
f) Some are exhaustible while others are renewable

8. Advantages of division of labour.

a) Output per worker is greatly increased h) Workers are placed in their best suited jobs
b) It encourages innovation and inventions i) High quality goods are produced
c) Increases production/ large quantities/ mass production
d) Promotes team work j) It facilitates managerial control
e) Increases employment k) Promotes use of machines
f) Worker’s skills are greatly improved
g) It makes work easier as worker expend less energy

9. State four factors of production and state the reward for each. (8mks)
Factor of Production Reward given
a) Land Rent / rates / royalties
b) Labour Wages / salaries / commissions
c) Capital Interest / dividends
d) Entrepreneurship Profits

10. Classify each of the following into generic or enterprise competition. (2mks)
a. A coffee seller competing with tea seller. Generic competition
b. Television shown with a radio station in entertaining customers. Enterprise competition

11. Outline four differences between goods from services. (4mks)

Goods
a. Are tangible( can be seen, touched, physical) (a) Are intangible (cannot be seen, untouched,
b. Can be stored for future use
c. Can be standardized in terms of quality
d. Can change possession / ownership
e. Are separable from the producer
f. Payment is made for ownership/ possession
g. Not always perishable some are durable
h. Can change in value over time
Services
non physical)
(b) Cannot be stored for future use
(c) Cannot be standardized
(d) Cannot change possession or ownership
(e) Are inseparable from the provider
(f) Payment is made for experience
(g) Highly perishable/ unused service is wasted
(h) Cannot change in value overtime

12. Classify each of the following activities into its appropriate level of production. (5mks)
a) Fishing …………………………. Primary
b) Oil refining………………………. Secondary
c) Advertising………………………. Tertiary
d) Lumbering………………………. Primary
e) Teaching …………………………. Tertiary

13. State four characteristics of labour as a factor of production. (4mks)

a) It is a basic factor of production g) Cannot be stored for future use
b) It is human capable of getting annoyed h) Labour is inseparable from the labourer
c) Labour sells his services but not himself
d) It is highly mobile both occupationally and geographically
e) Quality of labour can be improved through training
f) The reward for labour is wages / salaries
14. State and explain four forms of utilities. (8mks)
a) Form utility: changing the physical or chemical form of a product to make usable / converting raw
materials into finished goods e.g through manufacturing, etc

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 b) Place utility: involves moving the goods and services from producers to consumers eg through
transportation, etc
c) Time utility: involves keeping goods until the time they are required by users, eg through storage etc
d) Possession utility: changing the ownership of the product from one person to another eg thru echange/
buying and selling, etc

15. Explain five external environment factors that will affect the operations of a business. (10 mks)
a) Customers environment: these are people who buy from the business
b) Suppliers environment: these are businesses / persons that supply the business unit with inputs
c) Competitive environment: these are other businesses producing similar/ substitute goods
d) Legal environment : these are laws or government polices that businesses must adhere to
e) Political environment: this involves politics by law makers that ususaly affect businesses
f) Socio cultural environment: these are customs, norms, beliefs, religion, traditions of the people
g) Demographic environment : this refers to the entire population that affect the business
h) Economic environment: this are conditions existing in the economy
i) Technological environment: this refers to the technical know how / advances made in technology
j) Physical/ geographical environment: this is the landscape, infrastructure, climate,
k) International environment: international trade relations between countries affect business directly
l) Publics / community / pressure groups: surrounding community within which the business lives