Bud 003 Theories Of Commerce Question Paper
Bud 003 Theories Of Commerce
Course:Diploma In Business Management
Institution: Kca University question papers
Exam Year:2014
UNIVERSITY EXAMINATIONS: 2013/2014
STAGE II ORDINARY EXAMINATION FOR THE
CERTIFICATE/DIPLOMA IN BUSINESS MANAGEMENT
BUD 003 THEORIES OF COMMERCE
DATE: APRIL 2014
TIME: 1 1/2 Hours
INSTRUCTION: Answer any THREE questions
QUESTION ONE: (20 MARKS)
a) Outline the role of commerce in satisfying human needs and wants.
(3 Marks)
b) Discuss the role of the following trade facilitators as used in commerce and trade
i. Warehousing. (2 Marks)
ii. Transport (2 Marks)
c) “Land is the most basic factor of production”. Discuss.
(2 Marks)
d) Identify the other factors of production explaining the reward of each factor.
(4 Marks)
e) Explain the following forms of business combinations.
(3 Marks)
i. Amalgamation
ii. Price rings
iii. Oligopoly
f) Explain reasons as to why a government could restrict international trade.
(4 Marks)
QUESTION TWO: (20 MARKS)
a) What is industry localization? Explain 5 advantages of industry localization.
(6 Marks)
b) Identify 5 factors that bring about industry delocalization
(5 Marks)
c) Retail trade is categorized as small scale and large scale retail. Outline any 5 factors that
differentiate between the two
d) Explain the following principles of insurance
(5 Marks)
(4 Marks)
i. Indemnity
ii. Insurable interest
iii. Subrogation
iv. Average clause
QUESTION THREE: (20 MARKS)
a) Discuss five factors that determine the choice of a distribution channel for a given product.
(5 Marks)
b) How does a distribution channel enable the following?
i. Risk sharing
ii. Marketing
iii. Product matching
iv. Breaking bulk
v. Information gathering
(5 Marks)
c) Differentiate between balance of payments and balance of trade. (2 Marks)
d) Explain the importance of balanced payments in an economy (6 Marks)
e) Differentiate between open cheque and crossed cheque. (2 Marks)
QUESTION FOUR: (20 MARKS)
a) Identify any three services of wholesalers to
i. Retailers. (3 Marks)
ii. Manufacturers. (3 Marks)
b) Explain 5 differences between fixed deposit account and savings account. (5 Marks)
c) Why is current account popular with business men over savings or fixed deposit
accounts?
(6 Marks)
d) Explain each of the following economic conditions.
i.
ii.
iii.
Inflation
Deflation
Depression.
(3 Marks)
QUESTION FIVE: (20 MARKS)
a) Explain how the following mechanisms are used by central bank to control volume of
money in circulation.
i. Cash ratio
ii. Liquidity ratio
iii. Bank rate.
(3 Marks)
b) What is a negotiable instrument of trade? Identify 5 characteristics of the negotiable
instruments.
(6 Marks)
c) Explain the following operations to a bill of exchange
i. Discounting the bill
ii. Endorsing the bill
iii. Noting the bill
d) List any 5 problems encountered in international trade.
(3 Marks)
(5 Marks)
e) Explain how the following can be used to restrict international trade.
i. Customs duty
ii. Quota system
iii. Licensing
(3 Marks)
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