Cambridge O Level

COMMERCE 7100/13
Paper 1 Multiple Choice May/June 2022
1 hour

You must answer on the multiple choice answer sheet.

*0457471490*

You will need: Multiple choice answer sheet

Soft clean eraser
Soft pencil (type B or HB is recommended)

INSTRUCTIONS
 There are forty questions on this paper. Answer all questions.
 For each question there are four possible answers A, B, C and D. Choose the one you consider correct
and record your choice in soft pencil on the multiple choice answer sheet.
 Follow the instructions on the multiple choice answer sheet.
 Write in soft pencil.
 Write your name, centre number and candidate number on the multiple choice answer sheet in the
spaces provided unless this has been done for you.
 Do not use correction fluid.
 Do not write on any bar codes.
 You may use a calculator.

INFORMATION
 The total mark for this paper is 40.
 Each correct answer will score one mark.
 Any rough working should be done on this question paper.

This document has 12 pages. Any blank pages are indicated.

IB22 06_7100_13/3RP
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1 The diagram shows branches of production.

production

X secondary tertiary

exhaustive non-exhaustive manufacturing construction commercial Y

services

What are X and Y?

A distribution and storage

B primary and direct services
C specialisation and industry
D wholesaling and retailing

2 When individuals concentrate on certain aspects of a job, they are

A economising.
B investing.
C managing.
D specialising.

3 Which aid to trade is not important for the import of wool from New Zealand by a South African
merchant?

A advertising
B communication
C transportation
D warehousing

4 ‘Commercial services and direct services are interrelated.’

What is an example of this statement?

A a farmer paying a vet to vaccinate his cattle

B a lawyer drawing up a contract between a wholesaler and a retailer
C a teacher preparing students for an examination in Commerce
D an architect preparing plans for a new car factory

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5 The chain of distribution is not complete until the retailer

A offers goods for sale.

B persuades the customer to buy.
C purchases goods from a wholesaler.
D receives payment for goods from the customer.

6 A city has the following numbers of retail outlets.

1 department store 2 variety chain stores

3 supermarkets 22 independent stores
10 multiple chain stores 30 hawker stalls

How many large-scale retail outlets are there in this city?

A 6 B 14 C 16 D 28

7 Some supermarket chains also operate convenience stores.

Why might consumers prefer to use this method of shopping?

A cheaper prices
B close to their homes
C greater choice of food
D more checkouts

8 A student wishes to buy a laptop.

Which factor would be the least important when deciding which type of credit to use?

A immediate ownership
B length of repayment period
C number of instalments
D overall total cost

9 What is the aim of all wholesalers?

A to distribute goods directly to consumers

B to earn profits by selling goods to consumers
C to offer consumers cash and carry facilities
D to provide consumers with cold storage facilities

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10 Which intermediary guarantees payment to the seller of goods if the buyer does not pay?

A broker
B del credere agent
C export merchant
D factor

11 In which order are the following home trade documents used?

first last

A enquiry order invoice statement

B enquiry order statement invoice
C order enquiry invoice statement
D statement invoice enquiry order

12 What is the most likely reason that sellers send electronic invoices to customers’ email accounts
instead of using paper invoices?

A ensures confidentiality
B ensures delivery
C reduces operating costs
D reduces time of payment

13 Quai receives a 20% trade discount from a wholesaler. She also gets a cash discount of 5% if
she pays within 7 days. An invoice for $800 dated 8 May was paid on 30 May.

How much did Quai pay the wholesaler?

A $160 B $192 C $640 D $840

14 The table shows a country’s international trade.

exports imports
$bn $bn

visible 250 320

invisible 80 40

What is the balance of trade on its current account?

A –$70 bn B –$30 bn C +$170 bn D +$570 bn

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15 What is a function of a customs authority?

A ensuring efficient handling of imports and exports

B keeping statistical records of imports and exports
C maintaining ports and airports
D providing storage for dutiable imported goods

16 AA Ltd wishes to expand its business by exporting washing machines. The diagram shows some
difficulties it may face.

customs non-payment
duties of goods

goods damaged
difficulties use of agents
in transit

additional X
packaging

What is X?

A buying spare parts

B climate change
C disposal of surplus goods
D language differences

17 What is an example of informative advertising?

A advertisement by a trade association

B appeals to human emotions
C includes dates of future trade shows
D offers product samples

18 Which type of business is likely to use television as an advertising medium?

A airline
B farm
C newsagent
D quarry

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19 Many businesses use social media for communication.

Which advantage would a business have if it uses social media?

A connects only with local consumers

B high cost of advertising
C informative feedback on its products
D time used to update content

20 What is not an effect of the increase in global communication?

A Buyers and sellers are brought together more easily.

B Contracts can be sent and received instantly.
C Goods are transported around the world more efficiently.
D Information on overseas markets is updated quickly.

21 A business has to send important legal documents to a supplier.

Which postal service should it use?

A express mail
B letter post
C poste restante
D registered post

22 Which product will be transported by sea?

A emergency supplies
B jewellery
C newspapers
D sand

23 What is a responsibility of a port authority?

A checking the movement of people into and out of a country

B maintaining runways and hangars for aircraft
C providing office space and warehouses
D supervising the movement of imported and exported goods

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24 Flowers are sent by cargo plane from Asia to the UK.

Which document is completed as evidence of the contract of carriage?

A advice note
B air waybill
C bill of lading
D delivery note

25 What is an effect of logistics in the distribution of goods?

A Customs duties are reduced.

B Delays caused by congestion are less.
C Delivery times are improved.
D Perishables can be stored longer.

26 What is the most important function of warehousing for a manufacturer of seasonally demanded
goods, such as umbrellas?

A to enable continuous production to take place

B to prevent a steady supply of goods to retailers
C to prevent goods from deteriorating
D to provide a place where goods can be packaged and labelled

27 The diagram shows the pooling of risk.

profit

insurance costs (e.g. wages, rates,

company lighting and heating)

What does X represent?

A claims
B interest
C loans
D transfers

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28 Which insurance policy covers an employer against losses from employees stealing company
funds?

A consequential loss
B employer’s liability
C fidelity guarantee
D public liability

29 Which insurance principle stops the insured from profiting by under-insuring property?

A indemnity
B insurable interest
C proximate cause
D utmost good faith

30 An insurance company estimates 3000 people will be insured and that 30 of them will make
claims. The total of claims and costs to the company will be $420 000.

What is the minimum premium per person the company could charge?

A $30 B $100 C $140 D $2700

31 What is an inflow of funds into a customer’s bank account?

A dividends on investments
B standing orders for regular payments
C transfers of money to other banks
D withdrawals of cash

32 Which factor influences where a market stall is located?

A amount of storage space needed

B availability of raw materials
C cheap land
D closeness to centres of population

33 A public limited company sold 10 000 shares. At the end of the year, the company declared a total
dividend of $300 000.

What was the dividend paid per share?

A $10 B $30 C $3000 D $30 000

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34 Which factor will decrease a franchisee’s profits?

A franchisee’s capital investment

B franchisee’s royalty payments
C franchisor’s expert advice
D franchisor’s share of advertising costs

35 The diagram shows the relationship between a company and its shareholders.

buy ordinary
shareholders company
shares

invests share capital

sells goods / services

pays
to shareholders makes X
dividends

What is X?

A bonus
B commission
C interest
D profit

36 Which business is most likely to have the highest rate of inventory turnover?

A a bookshop
B a fruit stall
C a jewellery shop
D a motor car dealer

37 What is a political factor that affects commercial activity?

A healthcare
B pollution
C taxation
D technology

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38 The development of ecommerce means more packages are being delivered directly to
customers, resulting in

A a decrease in courier services.

B a reduction in global warming.
C an expansion of retail shops.
D more vehicle emissions.

39 What is an example of a sustainable activity?

A buying envelopes made from recycled paper

B cutting down forests to make furniture
C driving a vehicle fuelled by diesel
D using plastic to package goods

40 The table shows terms relating to consumer protection and their definitions.

Which pair is not correct?

term definition
A consumer claims court settles money-related disputes
between employers and employees
B fit for purpose does what it is supposed to do
C warranty promises to replace or repair products
the consumer is not satisfied with
D weights and measures regulations guarantee accurate measures
of goods

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