Term: Date:

Subject: Name:
Class:
Score Percentage (%) Teacher’s Signature Parent’s Signature

INSTRUCTIONS
 Write your name on the space provided above
 Read and analyze each question.
 Each question has four possible answers a, b, c, and d.
 Choose the correct letter of your answer and write it on the space provided.

Part I. Multiple Choice

_____ 1. What business activity happens in the primary sector?

a. Sourcing of raw material c. Manufacturing of products
b. Providing of products/services to customers d. Retailing of goods

_____ 2. Which is NOT a part of the primary sector of economy

a. Mining c. Forestry
b. Retail d. Fishing

_____3. Which among the choices is an output of a tertiary sector of industry?

a. Mr. Farrel selling guitars
b. Coach provides lessons for different sports
c. Mr. Cartier supplies eggs to the bakeshop
d. Ms. Miller bakes cake and sell it to the café

_____4. What is meant by “production”?

a. Changing raw materials into goods and services
b. Selling candies in the retail stores
c. Recycling of products to minimize waste
d. Harvesting of crops
_____5. Which among the choices does NOT belong to a public sector?
a. Country’s defence system c. shopping mall

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 b. Public transport d. Public school

_____6. Which industry/sector does an advertising agency belongs?

a. Primary sector c. public sector
b. Tertiary sector d. secondary sector

_____7. A car is an example of ___________?

a. A service c. A product
b. An opportunity costs d. A material

_____8. An entrepreneur will most likely to become successful if he possesses the

following characterisctics, EXCEPT for one.
a. Risk taker c. Pessimistic
b. Innovative d. Hardworking

_____9. Which does not belong to the factors of production that an entrepreneur
needs to start a business?
a. Capital c. labour
b. Asset d. enterprise

_____10. It is a situation where there are no enough goods and services to meet the
wants of the population.
a. Scarcity c. opportunity costs
b. Needs d. capital

_____11. All of the following are factors of production, EXCEPT

a. Land c. Labour
b. Capital d. Product

_____12. These are goods and services which people would like, but not essential for
living.
a. Needs c. Wants
b. Scarcity d. Opportunity costs

_____13. This combines the factors of production to make goods and services to
satisfy peoples wants and needs.
a. Capital c. Business
b. Scarcity d. Opportunity costs
_____14. Production is split into separate and different tasks, wherein each worker
specialize in one task.
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 a. Specialisation c. Division of labour
b. Privatisation d. Production

_____15. A phenomena in business sector from which there is a decline in the

importance of the secondary,manufacturing industry.
a. Industrialisation c. Specialisation
b. De – industrialization d. De – specialization

_____16. Is someone who organizes, operates and takes the risks for a new
business venture.
a. Manager c. President
b. Entrepreneur d. Worker

_____17. Expansion of business through merging or taking over another business.

a. Internal Growth c. Conglomerate
b. External Growth d. Integration

_____18. The following are the benefits of being an entrepreneur, EXCEPT

a. Sacrificing own time and money in doing business
b. able to put own ideas into practice
c. may become famous and successful if the business grows
d. able to make use of personal interests and skill

_____19. The following are the disadvantage of being an entrepreneur, EXCEPT

a. May lack knowledge and experience in starting and operating a business
b. May experience opportunity cost – lost income from not being an employee
of another business
c. May be profitable and the income might be higher than working as an
employee for another business
d. The risk that the businesses fail, especially if there is poor planning

_____20. Being able to put new ideas into practice in an interesting and different way
is being ________________.
a. Innovative c. Optimistic
b. Risk – taker d. Creative

_____21. Contents of a business plan that provides brief history and summary of the
business, and the objectives of the business.
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 a. The market c. Financial Information
b. Description of business d. Products and services

_____22. Which is NOT a reason why a business start – up is being supported by the
government?
a. To increase unemployment c. So small business Can grow further
b. To benefit society d. To increase competition among business owners

_____23. What reason does the government have in wanting to know the size of the
business?
a. To compare their size and importance with other firms.
b. To determine different tax rates for small and large businesses.
c. To have some idea of how many people they might be working with.
d. To see how important a loan to the business is compared to its overall size.

_____24. What reason do banks have in wanting to know the size of the business?
a. To compare their size and importance with other firms.
b. To determine different tax rates for small and large businesses.
c. To have some idea of how many people they might be working with.
d. To see how important a loan to the business is compared to its overall size.

_____25. What reason do competitors have in wanting to know the size of the
business?
a. To compare their size and importance with other firms.
b. To determine different tax rates for small and large businesses.
c. To have some idea of how many people they might be working with.
d. To see how important a loan to the business is compared to its overall size.

_____26. It is a method of determining the size of the business from which total
value of capital invested into the business should be determined.
a. Value of output c. Value of capital employed
b. Value of sales d. Value of investment

_____27. An external growth from which one firm merges with or takes over another
one in the same industry at the same stage of production.
a. Horizontal integration c. Conglomerate integration
b. Vertical Integration d. external integration

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_____28. When one business merges with or takes over a business in a completely
different industry. This is also known as diversification.
a. Horizontal integration c. Conglomerate integration
b. Vertical Integration d. external integration

_____29. The following are benefits of horizontal integration, EXCEPT for one.
a. The merger reduces the number of competitors in the industry.
b. There are opportunities for economies of scale. »
c. The combined business will have a bigger share of the total market than
either business before the integration
d. The merger gives an assured outlet for its product.

_____30. Which among the benefits listed below is a result of conglomerate

integration?
a. Information about consumer needs and preferences can now be obtained
directly by the manufacturer.
b. The combined business will have a bigger share of the total market than
either business before the integration
c. The merger gives an assured outlet for its product.
d. There might be a transfer of ideas between the different sections of the
business even though they operate in different industries.

PART II - Paper 1 Short Answer and Data Response

1. WLT manufactures carpets. It exports 40% of its products. Globalisation has

created opportunities and threats for WLT. Its method of production allows WLT
to use specialisation. All of its 60 employees understand that quality assurance is
important. WLT’s directors are considering the best way to increase efficiency.

(a) Define ‘specialisation’.

_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
___________________________________________________________________[2]

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(b) Identify two stages of production involved in the manufacture of carpets.
Stage 1: _____________________________________________________________

_____________________________________________________________________

Stage 2: _____________________________________________________________

___________________________________________________________________[2]

(c) Outline two ways from which we can measure the business size of WLT.
Way 1: _______________________________________________________________

_____________________________________________________________________
Way 2: ______________________________________________________________

___________________________________________________________________[4]

(d) Explain one advantage and one disadvantage of implementing specialisation.

Advantage: ___________________________________________________________

_____________________________________________________________________
Explanation: ___________________________________________________________

_____________________________________________________________________
_____________________________________________________________________

Dissdvantage: _________________________________________________________

_____________________________________________________________________
Explanation: ___________________________________________________________

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_____________________________________________________________________
___________________________________________________________________[6]

(e) Do you think it is efficient for WLT to apply the idea of division of labour among
its 60 employees in the production of carpet? Justify your answer.

_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
___________________________________________________________________[6]

2. BKH is a large public limited company. It has 2,000 employees across 18 locations.
BKH sells a range of insurance products including house and car insurance. BKH’s
shareholders want the business to increase profit. The Managing Director knows
increasing profit can conflict with the objectives of other stakeholder groups. She
said: ‘Private sector businesses have different objectives to public sector
organisations.’ BKH is also planning to expand by taking over another insurance
company.

(a) Define ‘public sector’.

_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
___________________________________________________________________[2]

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(b) Define ‘Tertiary sector’.
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
___________________________________________________________________[2]

(c) Identify the four reasons why owners of businesses may want to expand their
business.
Reason 1: ____________________________________________________________
_____________________________________________________________________
Reason 2: ____________________________________________________________
_____________________________________________________________________
Reason 3: ____________________________________________________________
_____________________________________________________________________
Reason 4: ____________________________________________________________
___________________________________________________________________[4]

(d) With BKH’s plans to expand their business by taking over another insurance
company an internal growth or external growth? Justify your answer.
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________

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_____________________________________________________________________
___________________________________________________________________[6]

(e).Do you think taking over another insurance company is beneficial for BKH’s plan
of expansion? Justify your answer [6]

_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
___________________________________________________________________[6]

Part III - Paper 2 Case Study

Furniture Outdoors (FO)

FO has been a private limited company for 20 years. It is owned and run by the Chan
family and is located in country Z. In country Z the secondary sector has become
relatively more important as the country has developed. FO is a manufacturer of
wooden furniture that is suitable for outdoor use. Its products include tables, chairs
and other outdoor furniture.

Customers order online from the FO website. The furniture is then delivered to
customers in country Z using FO’s own delivery vehicles. However, FO is considering
changing to selling its furniture through either wholesalers or large retailers in
country Z.

The Chan family have the business objective of contributing to sustainable

development. FO only uses sustainably sourced wood when making furniture. This is
Page 9 of 17 Sekolah Pelita Bangsa
from local forests in country Z and the wood is more expensive than imported
alternatives.

For many years FO shareholders have reinvested profits to provide the finance for
growth. FO recently took over 2 other furniture businesses in country Z and plans
further takeovers. The Chan family plan to continue to control and manage FO after
this expansion.

Appendix 1 - FO website advertisement

Appendix 1
FO website advertisement

FO - the only business to go to when you need new outdoor furniture for
your garden.
FO produce a range of high quality furniture to meet all your needs for fashionable,
well designed outdoor furniture. Be reassured our furniture is only made from the
highest quality wood from sustainable forests.
Our furniture is only available online so order today and have your furniture
delivered in the next few weeks. Email any questions to us and we will reply quickly.

Appendix 2
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 Extract of cost, selling price and sales data
for one of FO’s products
Fixed cost per month $10 000
Variable cost per table $125

Selling price per table $250

Forecasts sales for tables per month 100

Appendix 3
Newspaper article from the Daily News April 2021
Sustainable production needed to save the planet
A report from the International Committee for the Planet states that
manufacturers must find more sustainable ways to produce their products as global
warming is becoming more of an issue.
The report suggests three main ways manufacturers can change:
• Only use raw materials from sources that replace what they have used. This
is estimated to raise variable costs by 20%
• Only use packaging that can be recycled. Costs are estimated to increase but
the selling price may not rise by more than 10%
• Only use electric vehicles to deliver products. The cost of buying electric
vehicles is more than petrol or diesel vehicles. Using electric vehicles could
enable variable costs to be reduced by 5%.

3. (a) Explain four reasons for changes in the relative importance of the primary,
secondary and tertiary sectors in a country.
Reason 1: ______________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________
Reason 2: ______________________________________________________________

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_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________
Reason 3: ______________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________
Reason 4: ______________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
____________________________________________[8]

(b) Considering the important contents of business plan, how were the FO’s description
of business, the market, business location and how product will reach the
customer and its financial information presented? Will the information affect the
banks decision to lend them a loan? Justify your answer.

Description of business: ___________________________________________________

_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________
The Market: _____________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________

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_______________________________________________
Business Location and How product will reach the customer: ______________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________
Financial information: _____________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________
Recommendation: ______________________________________________________
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
__________________________________________________________________[12]

4. (a) Explain how will FO may be able to solve possible problem resulting from their
taking over 2 furniture businesses in country Z as well as their plans for further taking
over of other furniture businesses.

Problem 1: ______________________________________________________________
_______________________________________________________________________Ways to
overcome Problem 1: ______________________________________________
_______________________________________________________________________________
_______________________________________________________________
Problem 2: ______________________________________________________________

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_______________________________________________________________________Ways to
overcome Problem 2: ______________________________________________
_______________________________________________________________________________
_______________________________________________________________
Problem 3: ______________________________________________________________
_______________________________________________________________________Ways to
overcome Problem 3: ______________________________________________
_______________________________________________________________________________
_______________________________________________________________
Problem 4: ______________________________________________________________
_______________________________________________________________________Ways to
overcome Problem 4: ______________________________________________
_______________________________________________________________________________
_______________________________________________________________
___________________________________________________________________ [8]

(b) Considering the four main causes for business failure that FO might encounter
when expanding its business such as lack of management skills, changes in business
environment, liquidity problems or poor financial management and Over-expansion,
justify how each of these causes might result to business failure.

Lack of management skills: ________________________________________________

_______________________________________________________________________________
_______________________________________________________________Justification:_____
_______________________________________________________________________________
_______________________________________________________________________________
________________________________________
Changes in business environment: __________________________________________

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_______________________________________________________________________________
_______________________________________________________________Justification:_____
_______________________________________________________________________________
_______________________________________________________________________________
________________________________________
liquidity problems or poor financial management: ______________________________
_______________________________________________________________________________
_______________________________________________________________Justification:_____
_______________________________________________________________________________
_______________________________________________________________________________
________________________________________
Over – expansion: ________________________________________________________
_______________________________________________________________________________
_______________________________________________________________
Justification:____________________________________________________________________
_______________________________________________________________________________
________________________________________________________

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Level Descriptions Marks
Sound application of knowledge and understanding of relevant business
concepts using appropriate terminology.

3 Detailed discussion of two or more elements of the business activities. 9-12

Well-justified conclusion of the most important element of the business
activities.
Sound application of knowledge and understanding of relevant business
2 concepts using appropriate terminology. 5-8
Judgement with some justification/some evaluation of choices made.
Limited application of knowledge and understanding of relevant business
concepts. Limited ability to discuss the elements of the business activities
1 with little/no explanation. 1-4
Simple judgement with limited justification/limited evaluation of choices
made.

Level Descriptions Marks

3 Sound application of knowledge and understanding of relevant business 4-5
concepts using appropriate terminology.

Detailed discussion of two or more elements of the business activities

Well-justified conclusion of the most important element of the business
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 activities.
Sound application of knowledge and understanding of relevant business
2 concepts using appropriate terminology. 2-3
Judgement with some justification/some evaluation of choices made.
Limited application of knowledge and understanding of relevant business
concepts. Limited ability to discuss the business activities.
1 1
Simple judgement with limited justification/limited evaluation of choices
made.

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