SECTION A: MULTIPLE CHOICE (20 MARKS)

1. Commerce is…
A. An aid to trade
B. Industry and production
C. Trade
D. Trade and aids to trade
2. What are aids to trade?
A. A reward for trading
B. The buying and selling of goods
C. The service that help to make trade possible
D. The buying and selling of goods and services with a view to make profit
3. What is meant by direct production?
A. Production of goods for one’s use
B. Production of goods for sale
C. Provision of land and capital
D. Provision of services by teachers and doctors
4. Which of the following is a benefit of taking entrepreneurship as a career?
A. Higher social status
B. A lot of skills and knowledge is acquired
C. Raising capital
D. Hard work
5. … is an expression of willingness to contract on certain terms with an intention that it
becomes binding.
A. Acceptance
B. Consent
C. Consideration
D. Offer
6. Which of the following contract would not be legally binding?
A. Contract to build a school
B. Contract to work in government
 C. Contract to sell a car
D. Contract with a minor
7. … is a disadvantage to a consumer of large scale retailing.
A. Provision of self-service
B. One-stop shopping
C. Decline in personal service
D. Convenient opening hours
8. Why would a country impose a tariff in foreign trade? To…
A. Encourage importation of beers and wines
B. Collect excise duty
C. Control bonded warehouses
D. Protect local industries
9. Which of the following is not provided by a wholesaler?
A. Buying in bulk
B. Breaking the bulk
C. Extending credit facility
D. Offer personal service to customers
10. In a partnership, a partner may…
A. Be dormant
B. Buy debentures
C. Earn a dividend
D. Purchase preference shares
11. Which of the following is not an advantage to a sole trader?
A. Easy to form
B. Lacks continuity
C. Less documentation involved
D. Make quick and spot decisions
12. A… is a type of business unit which starts operating only after a certificate of
incorporation is issued.
A. Partnership
B. Private limited company
 C. Public corporation
D. Public limited company
13. … are the two main types of business units.
A. Home trade and foreign trade
B. Private and public enterprise
C. Retailers and wholesalers
D. Sole trader and partnerships
14. The following are traded at the stock exchange except…
A. Bonds
B. Shares
C. Stock
D. Treasury bills
15. Which one of the following is a function of the Lusaka Stock Exchange (LUSE)? It…
A. Facilitates the privatization of state owned companies
B. Is a market for goods and services
C. Acts as a source of information for consumers
D. Provides loans to the government
16. Which among the following is the odd one out?
A. Barclays bank
B. Atlasmara bank
C. Bank of Zambia
D. Bank ABC
17. A bank facility used when making regular payments of fixed amounts such as rentals is
known as…
A. Credit transfer
B. Standing order
C. Bank loan
D. Bank overdraft
18. The bank can refuse to cash a cheque for several reasons. Which statement is not one of
the reasons for refusing to cash a cheque?
A. Lack of funds in the drawer’s account
 B. If a cheque is presented for payment a day after it is signed by the drawer
C. If a cheque has an amount in words different from amount in figures
D. Alterations not signed for by the drawer
19. … is an example of a method one can use to send money through the post office.
A. Money order
B. Courier service
C. Reply coupon
D. Telegram
20. Which of the reasons below is not an advantage of advertising on the radio?
A. It is cheaper than television
B. It gives wide coverage
C. The advertisement is in color
D. Radios are cheap to buy

SECTION B: SHORT ANSWERS (40 MARKS)

1. Three of the statements below are correct and two are incorrect. Write the correct
statements in the spaces provided.

S/N STATEMENT
A. Production improves people’s standard of living
B. Commerce is trade and aids to production
C. An invitation to treat is a request for offers
D. The reward for labour is interest
E. Climate change is one of the effects of production on the environment

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2. a) Give three features of the mail order business.
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b) Mwaka bought 10 bags of Mealie meal at K150.00 per bag. She was given a 5% trade
discount and on paying promptly, received a cash discount of 2%. Calculate how much
she paid.
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3. Match the items in column A with those in column B.

COLUMN A COLUMN B
i. Bill of lading i. Difference between visible exports and visible
imports
ii. Quotas ii. Document used when a ship is hired
iii. Charter party iii. Document used when goods are carried by sea
iv. Balance of trade iv. One of the difficulty faced by traders in foreign
trade
v. Trade barriers v. Restriction in a number of goods entering the
country

COLUMN A COLUMN B
i. Bill of lading i.

ii. Quotas ii.

 iii. Charter party iii.
iv. Balance of trade iv.

v. Trade barriers v.

[5]

4. Complete the sentences below by using the following: Partnership, Sole trader, Private
sector, Public limited company, public corporations.
a) …………………………………………….. is the type of business unit that requires less
documentation. [1]
b) One example of a business unit in a public sector is……………………………………… [1]
c) A………………………………………………………………. is a company that raises its capital by
the issue of shares. [1]
5. Briefly describe the functions of a broker when he or she acts as a dealer on the stock
exchange. [3]
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6. Emmanuel is a business man in Chisamba. Explain briefly why banking is important to
Emmanuel. [3]
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7. From the following banking services, identify only the functions performed by the
Central bank and write them in the spaces provided.
 (i) Provides international business people with traveler’s cheques to enable them
transact abroad.
(ii) Printing and minting of money
(iii) Supervising the banking system
(iv) Financing businesses in form of loans and overdrafts
(v) Lender of the last resort
(vi) Issuing bank notes and coins
(vii) Servicing the national debt
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8. Write short notes on cash with order. [4]
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9. What are non-insurable risks? [3]
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10. Give reasons why a bonded warehouse is important. [5]
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[40 Marks]
SECTION C: ESSAY TYPE QUESTIONS (40 MARKS)

1. Industry is divided into three classes; extractive, manufacturing and construction.

a) List any four examples of natural resources. [4]
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b) (i) Give a brief description of the three forms of production. [3]
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(ii) Explain what is meant by direct production. [3]
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c) Zambeef is a company engaged in the selling of fresh meat. Outline how any five
commercial activities would help Zambeef carry out its business. [10]
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2. a) (i) Describe four modern trends that have taken place in retailing. [4]
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(ii) Under what circumstances would a manufacturer find it suitable to sell to sell
directly to the consumer? [2]
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b) (i) Explain the role played by the wholesaler in the distribution of goods. [4]
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(ii) Describe the features of deferred payment. [4]
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c) (i) What is trade discount? [3]
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 (ii) Calculate how much a merchant in domestic trade would pay if she bought 600m
of chitenge materials from Japhet Wholesalers at K11.00 per meter. She was allowed
a 12% trade discount and 2% cash discount as she pays promptly. [3]
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3. a) Explain the factors to consider when choosing a site for a retail business. [10]
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b) Outline reasons countries trade with each other. [10]
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4. a) Discuss the disadvantages of a public limited company. [10]
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b) Why is the stock exchange necessary in commerce? [10]
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5. a) Explain five main functions of the central bank. [10]
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b) Describe the characteristics of a small scale retailer. [10]
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