Question 1

Explain two ways in which the barter system limited trade in early economies.
Answer
A common measure of value did not exist. It was difficult to ascertain the value of goods
exchanged. It therefore would hinder trade as sometimes persons would not want to feel
cheated.
A double coincidence of wants must exist for trade to take place. An individual who
wishes to trade must have what other persons want to trade his goods. If this does not
exist then trade cannot take place.
Question 2
State one advantage and one disadvantage of specialization.
Answer
An advantage of specialization is that it increases output.
A disadvantage of specialization is that it discourages quality work because of monotony.
Question 3
Show how two functions of money facilitate trade.
Answer
Money is a common measure of value. Persons can therefore determine the value of
commodities and know how much to accept in exchange for goods and services.
Money is a medium of exchange and therefore accepted by everyone. Persons will not
have difficulties to buy or sell goods and services.
Question 4
Starting a business is a lot of hard work and very costly. Why would an individual want
to start a business?
Answer
An individual may wish to gain financial independence. A successful business can earn
high levels of profits.
Using the skills and knowledge acquired to operate a profitable business.
Question 5
State the form of business organization that you believe is most advantageous to
form. Give two reasons why.
Answer
Choose one of the following:
Sole trader – Decisions are made quickly and there is little legal requirement to start the
business.
Partnership – more capital can be raised, specialization of functions is more efficient
Limited liability Company – shareholders are not liable for the company’s debts beyond
their level of investment, continuity of existence is assured.
Question 6
State two differences between the Free Market and the Planned economic systems.
Answer
In the free market economy the consumer is king i.e. the consumer determines what
goods and services are to be produced based on their demand. In a planned economy the
government makes decision concerning the distribution of goods and service.
Competition in a free market economy leads to efficiency and innovation.
However, in a planned economy, the lack of competition reduces innovation and the
motivation to produce quality output.
Question 7
Explain the roles of two stakeholders in business activities.
Answer
The role of the government is to monitor and regulate business activity to ensure that the
consumer is treated fairly.
Employees must work efficiently to create quality goods and services.
Employees must adhere to the rules and relations of the company.
Question 8
Identify a business activity within your community and discuss two contributions of this
business to your community.
Answer
Sally’s bakery produces good quality bread in various sizes to meet the requirements of
customers. The prices are also very affordable. The bakery makes it convenient for
community members as they do not have to travel a far distance to obtain this product.
Sally’s bakery also employs persons from the community. The bakery is very popular,
and so workers are paid an adequate salary to support their family.
Question 1
Explain two important activities carried out by one functional area of a business.

Answer
The marketing department promotes the firms products to encourage sales. Consumers
must be made aware of what is being offered and encouraged to buy. They also conduct
market research to identify the needs and wants of consumers. Companies depend on
consumers support for their success, and so ascertaining consumers taste is very
important.

Question 2
Outline two functions of management and say how each is important to the efficient
operation of a business.

Answer
Controlling involves the continuous assessment of the work done by subordinates. Poor
quality work is a reflection of the company and so managers must ensure that quality
work is done.

Planning involves outlining all future activities that are required to achieve the
organizations objectives. Planning activities involve all the programmes and policies that
will guide the firm’s path to success.

Question 3
Give two examples to show how managers can fulfill their responsibilities to one group
of business stakeholders.

Answer
Managers can full their responsibility to customers by proving quality goods and
services. A system that ensures standards should be implemented. Prices must also be
affordable. All measures must be taken to operate as efficiently as possible so that
production cost are kept low resulting in affordable selling prices.

Question 4
(a) Draw an organizational chart of your school or business organization.
(b) Identify the type of organizational chart drawn
(c) Identify the span of control of one person in authority on the chart
(d) Identify two persons at the same level of authority.

Answer

(a)

(b) Line organizational chart

(c) The span of control of Vice principal is the head of departments for arts and science.

(d) Two persons at the same level of authority are the heads of department for arts and
science.

Question 5
Show how two important characteristics of a good leader can improve the efficiency of a
group.

Answer
Good communication skills will foster good working relationships between workers and
managers. Workers are more effective in a comfortable environment. This also
encourages feedback from workers.

A devoted and committed manager will lead by example. His commitment to the tasks
that are required to achieve the organizations objectives will inspire subordinates to work
hard.

Question 6
Give two differences between the autocratic and the democratic leadership styles.

Answer
An autocratic manager makes all decisions concerning the tasks to be performed by
subordinates. All directives handed down by him must be closely followed. He makes
frequent checks on output of workers. The democratic leader allows the participation of
others in decision making. He allows workers some latitude to work on their own
initiative and periodically checks output from workers.

Question 7
Outline the steps for handling grievances in the organization.

Answer
The worker lodges a complaint with his or her immediate supervisor. If worker feels that
the complaint was not adequately dealt with then he may discuss the matter with the head
of department. If the worker is still not satisfied with how the matter is being dealt with,
he along with the union representative may discuss the matter with management. It may
need to go a further stage where there is mediation from Ministry of Labour or any
independent body. The final stage is when the matter has to be taken to court.

Question 8
Explain the purpose of the collective bargaining process.

Answer
The purpose of collective bargaining is a means to reach an amicable agreement between
management and workers. Workers bargain collectively through their union
representative with management until an agreement is reached.

Question 9
Discuss two ways in which teamwork can improve the efficiency of an organization.

Answer
Teamwork gives workers the opportunity to make collaborative decisions and support
each other to accomplish tasks more effectively.

Teamwork allows for specialization in various parts of a task based on the skill of each
team member. Specialization increases output.

Question 10
Discuss two benefits that a business will derive from using Management Information
Systems.

Answer
It reduces labour costs as the computer compiles and analyses all the data. This increases
the efficiency of employees and reduces production costs. It provides timely information
that helps the business. This allows for better decision making as information is available
when needed.

Question 1
Outline three marketing activities.
Answer
Advertising
Advertising is used to make customers aware of goods and services being offered by
suppliers. It usually involves messages that persuade consumers to buy.
Branding
Brands are created to differentiate a product from its competitors. Branded products are
created to develop a loyal following.
Distribution
Distribution channels move goods from producers to consumers. A business can either sell
directly to consumers or sell goods and services through middlemen such as retailers and
wholesalers.
Question 2
Explain what is meant by the ‘marketing mix.’
Answer
The marketing mix refers to four categories of marketing activities. These categories are:
-product which includes the product design, package and brand
-place which refers to the distribution channels
-promotion which includes advertising and sales promotional method
-pricing includes various methods used to suit the target market e.g. penetration pricing.
Question 3
Outline two factors that influence consumer behaviour.
Answer
Consumers purchase products to a large extent based on their prices. Consumers seek value
for money and therefore will purchase a substitute for a product if its price increases.
Consumers taste and preferences will also determine what products they buy. Taste and
preferences will depend on culture, religion and changes in fashion.
Question 4
Differentiate between monopoly and monopolistic competition.
Answer
A market that is controlled by one supplier is a monopoly. The monopolist produces a unique
product for which there are no close substitutes. Monopolistic competition differs from
monopoly as it involves several suppliers in a market of a similar product, but each supplier
sells a particular brand. Therefore, although competition exists each supplier has a monopoly
over his own brand.
Question 5
(a) Define the term ‘demand.’
(b) Define the term ‘supply.’
(c) Explain the role these play in determining price.
Answer
(a) The demand for a particular product is the amount that consumers are willing and able to
buy at a given price.
(b) The supply of a particular commodity is the amount that firms are willing and able to
supply at a given price.
(c) In a market economy the demand and supply of particular commodities
determine their prices. Consumer will demand increasing amounts at lower prices and
decreasing amounts at higher prices. However, producers are willing to sell more at higher
prices and less at lower market prices. The market price at which both buyers and sellers
wish to trade at is the market equilibrium price.
Question 6
Differentiate between copyright, patent and trade mark.
Answer
Copyright is a one form of intellectual property right that protects creators’ expressions such
as music, painting, movie, photograph, writings etc.
Patent protects innovation by excluding others from making and selling an invention for a
number of years.
Trademark legally protects brand names by giving the seller exclusive rights to this name.
Question 7
Outline three methods of sale promotion.
Answer
Loss –Leader: This form of sale promotion is used to attract customer to a location that
offers a product for sale at an extremely low cost. The business will lose profits on this loss-
leader but it is expected that this will be made up on the high sales from other products
Bargain packs offer consumers free products or discounted products if a particular item is
purchased.
Coupons allow discounts to customers on particular items when presented at a particular
business location.
Question 8
Show how two selling techniques can be used to increase sales.
Answer
Good customer relations will encourage customers to purchase a company’s goods and
services and also make recommendations to other customers. This involves being very
helpful, efficient and polite when dealing with customers.
Offering after sales services will encourage customers to buy and they will not incur this extra
cost after buying the product. These services include: delivery, installation and warranty.
Question 9
(a) Outline two ways in which consumers may be exploited.
(b) Discuss how consumers might seek redress for each way mentioned above.
Answer
(a)Consumers are exploited when they are sold poor quality goods and services. They are also
exploited when they are not given the correct weight or measure for products as stipulated on
the package or what was asked for.
(b)To seek redress consumers may contact the offending firm concerning the complaint and
require compensation. The Fair Trading Commission may be contacted if the offending firm
does not compensate the consumer. Radio talk shows have also been very effective to obtain
redress from offending firms for consumers.
Question 10
Discuss the importance of transportation to the distribution of goods from manufacturer
through middle men to consumers.
Answer
Transportation is integral to distribution. Transportation must efficiently move goods from
manufacturers through middlemen to consumers. Goods may be transported by road rail, sea
or air. The choice of transportation is determined by the type of product, for example heavy
and bulky products are transported by rail or sea. Perishable products are transported by sea
or by road in a speedy manner.

Question 1
(a) Identify two responsibilities of government to an economy.
(b) Show how the government of your country carries out these two responsibilities.
Answer
(a) Protection and general welfare of citizens, and protecting the environment.
(b) The government of my country protects vulnerable citizens through welfare programms.
These include food stamps and cash grants.
The government of my country protects the environment by legislation to prevent
degradation of wetlands and the extinction of certain species.
Question 2
Give two reasons why government should be the chief guardians of the environment.
Answer
For the well-being of citizens; health issues can be a consequence of pollution. This is very
costly for the economy.
Eco-tourism is a market niche that can earn foreign exchange for an economy.
Question 3
Discuss two consequences of unregulated business activity in an economy.
Answer
If businesses are not regulated by government agencies then consumers may receive poor
quality goods and services. Acceptable standards are outlined by government agencies which
business must abide by.
Businesses may also overcharge for goods such as basic food items. If basic food items are
unaffordable to the very poor and vulnerable, the consequence might be malnutrition.
Question 4
List two consumer protection laws.
Answer
The Standards Act and The weights and measures Act.
Question 5
Identify two purposes of taxation and discuss the importance of each.
Answer
Taxation may be used to discourage behaviour. Taxing firms that pollute the atmosphere,
rivers and seas will reduce pollution. Also taxing the consumption of harmful goods such as
cigarettes will reduce its consumption.
Taxation can also redistribute income by providing welfare programs and cash grants to the
very poor and vulnerable in the society.
Question 6
Differentiate between direct and indirect taxes and give two examples of each.
Answer
Direct taxes are paid by individuals directly from income earned or on the value of assets
owned to the income tax department. Examples of direct taxes are: income tax, corporate tax
and capital gains tax. Indirect taxes differ from direct taxes as they are paid to the income tax
department through the suppliers of goods and services. These taxes are levied on
consumption and therefore are paid by individuals when purchasing commodities. Examples
of indirect taxes include: value added tax, purchase tax and excise and custom duties tax.
Question 7
Distinguish between progressive and regressive taxation.
Answer
A progressive tax system levies a higher percentage of tax on high income earners compared
to lower income earners. This ensures that higher income earners pay a larger proportion of
their income in taxes than lower income earners. However, a regressive tax system allows
higher income earners to pay a smaller proportion of their income compared to low income
earners who pay a higher proportion of their income in taxes.
Question 8
The regressive tax system is unfair and places a greater burden on the lower income earners.
Discuss.
Answer
An examples of a regressive tax is a value added tax where each persons pays a fixed
percentage on the cost of a good or service. Therefore, if $10 is the tax amount to be paid for
a particular item charged, a high income earner who receives $1000 will pay 1% of his
income in taxes while another income earner who receives $100 will pay 10% of his income
in taxes. The regressive tax system is unfair as low income earners will pay a higher
proportion of their income in taxes than a high income earner.
Question 9
Outline two ways in which governments provide assistance for businesses.
Answer
Governments assist small businesses with soft loans. They provide loans at low interest rates
through financial institutions and government agencies.
Governments also provide information, training and advice through various agencies for
small business.
Question 10
Discuss the importance of the provision of one social service by a government.
Answer
Education is a very important social service. High levels of literacy, numeracy, and skills will
increase productivity. A highly skilled workforce is also attractive to international investors
who seek new locations to expand their businesses.

Question 1
Discuss the importance of one natural resource to the survival, economic growth and
development of your Caribbean country.
Answer
Bauxite is a natural resource found in Guyana and Jamaica. The bauxite industry provides
employment for thousands of workers. It is also a main export product and foreign exchange
earner. The growth of this industry will impact on the growth and development of these
countries.
Question 2
Explain the importance of productivity to a business organization and state two ways by
which productivity can be achieved.
Answer
Productivity is measured by the output of each worker. If workers are very productive, output
will rise and unit cost of production will decline. This will result in higher profit margins for a
business. Workers can be made more productive by training to improve skill and by the
introduction of machinery and equipment to increase output.
Question 3
State one positive and one negative effect of external migration.
Answer
External migration deprives Caribbean countries of nationals who are professionals and
those who posses a high level of skill. However, an advantage of external migration is that
foreign exchange is remitted to Caribbean countries.
Question 4
Discuss the importance of two factors of production to the production process.
Answer
Capital is very important to the production process. Machinery, tools and equipment are
needed for production as they increase the efficiency of workers.
Labour as a factor of production is also important. Labour combines raw materials and
machinery to create goods and services. Methods applied to increase the productivity of
labour will increase output.
Question 5
Differentiate between subsistence and surplus levels of production and explain the
importance of surplus level production to an economy.
Answer
Subsistence level of production refers to a level of output that is just enough to ensure
survival. However, surplus production refers to a production level that is greater than what is
demanded locally.
Surplus production is important as it allows countries to export and earn foreign exchange.
Foreign exchange earned can be used to import goods and services that are not produced
locally.
Question 6
Give two examples of items made by cottage industries in your country and explain
how these activities contribute to your economy’s growth.
Answer
Handcraft jewellery and T-shirt are popular cottage industry products in my country. Both
these items are sold locally in many popular boutiques and therefore provide income for
producers and retailers. They are also sold to visiting tourists and thus contribute to foreign
exchange earnings. Output from cottage industries contributes to the GDP of the economy
and thus economic growth as these industries expand to meet rising demand.
Question 7
State three factors to be considered when identifying a suitable location to set up a new
business and give a reason for each.
Answer
Proximity to ones customers – A new business should be located where it will be seen by its
most likely customers.
Available supply of labour- A new business will require the best quality workers to ensure
that it makes a positive impact on the market.
Adequate infrastructure- A new business will need to be located in an area that is supported
by infrastructure such as good roads, communication and transportation services so that
customers and suppliers will have easy access.
Question 8
Differentiate between a forward and a backward linkage and give one example of each in
your country.
Answer
A forward linkage refers to the industries that are linked in such a way so that the finished
product of one becomes the raw material of another. For example, lumber from saw mills are
used in the construction of houses and furniture.
A backward linkage refers to industries that are established to meet the needs of other
already established industries. For example, hotels will backward link to the entertainment
and transportation industries.
Question 9
Explain the importance of mechanization for the growth of small businesses in the
Caribbean.
Answer
Mechanization is the use of mainly machinery in a production process. Machinery increases
output. This will mean lower cost of production and therefore higher profits. Small
businesses owners should endeavour to mechanize in order to increase output and be more
competitive with large and medium sized business.
Question 10
What are the social and economic implications of mechanization and automation on
Caribbean countries?
Answer
Mechanization increases the productivity of workers. High productivity as a result of
machinery may cause job losses as fewer workers will be needed to produce the levels of
output required. Automation also results in job losses as this process involves little human
intervention.