Factors that may cause an increase in demand for a commodity and other business paper 1 questions and answers.

Factors that may cause an increase in demand for a commodity.

  • Increase in consumer income.
  • Decrease in price of compliments.
  • Increase in price substitutes.
  • Increase in consumer income.
  • Favourable/positive changes in tastes/fashions/preference of consumers.
  • Favourable/positive government policies such as reduction in taxes/income in subsidies.
  • Increase in population.
  • Future expectation of an increase in price/shortage of the commodity.
  • Favourable seasonal changes towards the commodity.
  • Favourable terms of sale such as discounts.

Circumstances under which each of the following means of payment may be used:

(i) Cheque.

  • Where security/safety is required.
  • When the amount of money invoked is large.
  • When distance between the drawer and payee is long/far.
  • Where cheque is not against the policy of the paye.
  • Where the trader wants to avoid carrying cash.
  • Where the trader operates a bank account.

(ii) Cash

  • When settling small debts.
  • Where the payee requires cash urgently.
  • Where he wants to avoid expenses associated with other means.
  • Where the payee only accept cash as a means of payment.
  • When he/she has no banks account and cheque is crossed.
  • When the seller and buyer are transacting for the first time and the seller fear the cheque may be dishonoured.
  • Where the seller had been issued with a cheque which was dishonoured.

Benefits that a consumer may get by joining a consumer co-operative society.

  • Would be able to buy goods on credit.
  • Would be assured of getting right quality/standards goods.
  • Would get regular and reliable supply of basic goods.
  • Eliminates exploitation by other traders.
  • Can get a chance to be selected to management committee.
  • Would enjoy dividends/interest.
  • Would get goods at relatively lower prices

Circumstances under which stock of a business may change.

  • When the business purchases goods.
  • When the business sell goods.
  • When customers return goods.
  • When the business return goods to the suppliers

Factors that a trader may consider when choosing a means of communication.

  • Cost of the means.
  • Confidentiality of the message.
  • Availability of the means.
  • Distance/destination.
  • Urgency/speed.
  • Need for record/evidence/reference.
  • Reliability of the means.
  • Effectiveness of the means.
  • Accuracy of the means.
  • Size of the firm.
  • Length of the message

Characteristics of mail order stores.

  • Sell goods through post office.
  • Advertise through means like print media, electronic media, journals and cinemas.
  • Customers do not visit the selling premises.
  • Transactions are carried out through the post office.
  • Goods are dispatched on the basis of cash with order or cash on delivery.
  • May have large warehouses.

Circumstances under which high population growth rate may be desirable.

  • When there is need for market demand.
  • Where enough labour supply is needed.
  • Where there is need for technological advancement.
  • Where export promotion is necessary.
  • If there is need for protection/defense or country’s territory/geographical boundary.
  • Where it is necessary to fully exploit local resources/maximize use of resource.
  • Where optimum population is desirable in sparsely populated areas.
  • When there are enough public utilities.

Reasons why a business may decide to locate near the source of raw materials.

  • Where the raw materials are bulky/heavy and difficult to transport.
  • Where the raw materials are highly perishable or fragile in order to minimize spoilage/damage.
  • Where constant supply of the raw material is required.
  • Where the competition for raw material is high to ensure easy access.
  • Where the firm want to save on transport/handling costs on raw materials.
  • Where the government requires the industries to locate near raw materials.
  • Where the government is giving incentives to set up industries near the source of raw material.
  • Where the firm wants to maintain the quality of raw material to ensure the production or right quality.

Disadvantages of specialization.

  • Leads to monotony of work hence boredom.
  • Hinders creativity f worker.
  • Makes a worker dependent on one trade.
  • Encourages use of machines leading to unemployment.
  • Makes a country to be dependent on other countries.
  • Brings many people together leading to social problems such as crimes and prostitution.
  • Lack of pride in the final product.
  • Production can stop due to a technical fault.
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