UNIVERSITY OF CAMBRIDGE INTERNATIONAL EXAMINATIONS General Certificate of Education Ordinary Level

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1 UNIVERSITY OF MRIGE INTERNTIONL EXMINTIONS General ertificate of Education Ordinary Level OMMERE 7100/01 Paper 1 Multiple hoice May/June hour * * dditional Materials: dditional Materials (not provided by IE): RE THESE INSTRUTIONS FIRST Multiple hoice nswer Sheet Soft clean eraser Soft pencil (type or H is recommended) Ruler Protractor Write in soft pencil. o not use staples, paper clips, highlighters, glue or correction fluid. Write your name, entre number and candidate number on the nswer Sheet in the spaces provided unless this has been done for you. There are forty questions on this paper. nswer all questions. For each question there are four possible answers,, and. hoose the one you consider correct and record your choice in soft pencil on the separate nswer Sheet. Read the instructions on the nswer Sheet very carefully. Each correct answer will score one mark. mark will not be deducted for a wrong answer. ny rough working should be done in this booklet. The businesses described in this question paper are entirely fictitious. This document consists of 12 printed pages. I08 06_7100_01/4RP ULES 2008 [Turn over

2 2 1 Which of the following is a human want? 2 Why are commercial services essential to a motorcycle manufacturer? They assist the manufacturer to get the motorcycles to the consumer. They control the quality of the motorcycles produced. They organise workers needed in the motorcycle factory. They produce the raw materials necessary for making motorcycles. 3 Which of the following are aids to trade? banking and insurance importing and exporting manufacturing and construction mining and fishing ULES /01/M/J/08

3 4 The diagram shows the services offered to customers by a television retailer. 3 Which service is provided by the retailer after a television has been purchased by a customer? 5 To attract customers, a large retail organisation purchases articles at 2.50 each and sells them at 2.00 each. What is this called? bar coding credit loss-leader mark up 6 In which way is shopping on the Internet different from traditional shopping? accepts credit card payments offers cheaper prices operates without sales staff provides variety of goods ULES /01/M/J/08 [Turn over

4 7 Which statement explains why retailers offer credit to consumers? 4 decrease in retailers costs decrease in consumer incomes increase in consumer debt increase in retailers sales 8 The diagram represents a credit card statement. SWORFISH REIT R STTEMENT FOR MR.. HR FOR PRIL 2008 OUNT No REIT LIMIT Interest of 5 % is added to an outstanding balance at end of each month. Previous balance outstanding Interest of 5 % added Spending during pril XL Petrol Supergloss Ltd K Superstore TOTL Mr har wishes to pay off 20% of his credit card debt. How much will he pay? Why does a government wish to pass consumer protection laws? onsumers want a bargain when buying a product. onsumers need safeguarding from unscrupulous traders. Retailers are assisted to trade legally. Retailers can make profits from consumers. ULES /01/M/J/08

5 5 10 Mrs Moyo buys a new toaster from a shop. When she arrives home, she discovers that the toaster is faulty. ccording to consumer law, what should she do? take no action claim a replacement toaster claim compensation for her wasted time report the matter to the police who will recover her money 11 uying in bulk and selling in smaller quantities is an important service which is provided by the manufacturer for the retailer. manufacturer for the wholesaler. retailer for the wholesaler. wholesaler for the retailer. 12 What is the name of an agent who buys and sells goods on a commission basis for another person? a broker a manufacturer a retailer an underwriter ULES /01/M/J/08 [Turn over

6 13 Wholesalers has sent the following credit note to Gold Stores. 6 Wholesalers 10 ull Street Rosehill REIT NOTE Gold Stores Porth Street Port Louis 12 cases canned 100 per case 1200 goods short delivered What happens when this credit note is issued? Goods valued at 1200 will be delivered by Wholesalers to Gold Stores. Goods valued at 1200 will be delivered by Gold Stores to Wholesalers. The amount due to Wholesalers is increased by The amount due to Wholesalers is reduced by When does a trader give trade discount? when payment is received in cash when prompt payment is received when selling goods in discount stores when selling to another trader 15 Mrs Manley owns a fashion store. Her wholesaler s trade price for shirts is 20 each. She receives a 10 % discount on her purchases. She sells the shirts in her store for 27 each. What is her percentage mark-up? 35 % 38.8 % 45 % 50 % 16 Why might a company benefit from international trade? It can export goods and services into a large market. It can impose import duties on foreign goods and services. It can increase trade in the home market. It can reduce the wages paid to staff. ULES /01/M/J/08

7 7 17 The graph shows the values of visible imports and visible exports for country X during the period 2002 to million year visible imports visible exports What was the balance of trade in 2007? -1 million -2 million +2 million +4 million 18 What is the main advantage of a trading bloc for its member countries? free trade between member countries guaranteed prices to producers increased revenue from customs duties more trade with non-member countries 19 Why might a government impose a quota on imports? to increase imports to prevent smuggling to protect local industries to raise tax revenue 20 Why might advertising lead to lower prices? dvertising costs are deducted from product prices. dvertising costs are lower than production costs. ompetition with other manufacturers might be reduced. Increased sales reduce unit costs of production. ULES /01/M/J/08 [Turn over

8 8 21 company plans to introduce a new product. Which method of advertising would reach the greatest number of people? advertising on television displaying the goods at a commercial show giving free samples to customers in supermarkets sending a leaflet to existing customers 22 What is the main reason for the growth of advertising on the Internet? dvertisers websites are very cheap to set up. onsumers can order goods 24-hours-a-day on the Internet. Every household now has access to the Internet. Internet users like watching the advertisements on the Internet. 23 Why is communication important in the global economy? to advertise and promote goods nationwide to enable companies to contact customers worldwide to move goods required urgently to transport people over long distances 24 n exporter in India wishes to contact, urgently, in writing, a new customer in ustralia. What would be the best method of communication to use? fax mobile phone teleconferencing ULES /01/M/J/08

9 25 The picture shows a service offered at post offices for people to collect their mail. 9 What is this service called? night safe poste restante private box special delivery 26 What would an exporter not consider when choosing a suitable form of transport to carry his goods? the cost of transporting the goods the duty payable in the importer s country the quantity of goods to be exported the time within which the products are required 27 What is the advantage of using containers in transport? ability to carry any cargo faster turn-around fixed timetables need for special handling equipment 28 Which statement applies to an air waybill? acts as a contract gives title to the goods is a negotiable instrument made up of four copies ULES /01/M/J/08 [Turn over

10 10 29 What is an advantage of warehousing? It makes goods available when they are wanted. It provides after-sales service to customers. It prevents the destruction of goods by fire. It allows changes in price when there is a change in fashion. 30 When are imported goods released from bonded warehouses? when a warehouse receipt is issued when the goods have been branded when the owner has paid duty when the warehouse owner receives rent 31 Why do supermarkets need warehouses? to avoid paying customs duties to increase profits to prevent shortages arising from high turnover to reduce high advertising costs 32 What does public liability insurance cover? faulty products injury to customers injury to employees at work theft by employees 33 Mrs John s property was insured against fire for Later, the property was totally destroyed by fire and the loss was estimated at How much compensation will Mrs John receive? ULES /01/M/J/08

11 34 ommercial banks offer a number of services to their customers. Which service is not usually offered? 11 advice on consumer protection cheque facilities based on a current account investment advice for savers loans for house purchase through mortgages 35 What is an advantage of using a debit card to buy goods? bank charges payable high interest paid no need to carry cash payment at a later date 36 Mr Soon has an overdraft limit of His current account has a credit balance of 300. If he draws further cheques totalling 2000, what will be the overdrawn balance on his account? What happens when a business organisation becomes a public limited company? It becomes part of the public sector of business. It changes to a government agency. It expands into a partnership. It offers shares for sale to the general public. 38 What is a person who owns a small business and works for himself called? employee manufacturer shareholder sole trader ULES /01/M/J/08 [Turn over

12 39 What is the most suitable source of finance for purchasing supplies for a shop? 12 bank loan factoring overdraft trade credit 40 Mrs li owns a general store. Her figures for a year s trading are shown below. stock value at cost January 1st stock value at cost ecember 31st purchases January ecember sales January ecember expenses January ecember What is Mrs li s net profit for the year? Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible. Every reasonable effort has been made by the publisher (ULES) to trace copyright holders, but if any items requiring clearance have unwittingly been included, the publisher will be pleased to make amends at the earliest possible opportunity. University of ambridge International Examinations is part of the ambridge ssessment Group. ambridge ssessment is the brand name of University of ambridge Local Examinations Syndicate (ULES), which is itself a department of the University of ambridge. ULES /01/M/J/08