KCSE Business Studies Topical Questions and Answers

Explain five features of economic resources

10/4/2022

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Explain five features of economic resources (10mks)

Limited in supply/scarcity – they are found in small quantities compard to the many uses into which they have to be put/hence not sufficient to satisfy all human wants
Have money value/monetary value- they have a price/reward attached to them/which have to be paid for their use/transfer/for recording
Uneven distribution/unequal distribution/they are not distributed uniformly in society-hence some people, regions or countries have more of the resources than others
Complementality/combinability – they can be used in different proportions to produce goods/services/they can be used jointly
Usefulness/have utility-they are used to satisfy human wants/to produce goods/services
Transferability/they can be transferred –from one person to another in terms of ownership/possession
Mobility/some can be moved-from one region/place to another
Multi-purpose/have alternative uses-they can be put into different uses/purpose/occupation
Exhaustability/renewability-some resources get depleted/finished/restored/recycled/regenerated

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Effects of ageing population

1/4/2022

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Effects of ageing population.

Old people tend to provide a less mobile labour force.
Low labour supply.
High dependency on working population.
May lead to unemployment de to fall in demand for goods and services required by the youth.
Society may become less progressive.

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Diseconomies of scale

1/4/2022

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Diseconomies of scale

Managerial.
Increased overheads.
Inadequate raw materials.
Lack of skilled labour.
Power shortages and rationing.
Inadequate finance.
Inadequate space for expansion.
Overproduction leading to low market and profit.

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State six Characteristics of Underdeveloped Countries.

8/11/2021

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Most countries in the world are under-developed. Give six characteristics of these countries (12mks)

Characteristics of under-developed countries.

High population growth rate and dependency ratio
Have got widespread unemployment.
Have got high levels of poverty.
Usually depend on agricultural and other subsistence activities.
Have a low level of urbanization
Their natural resources are normally under-utilized.
Their income is unevenly distributed among citizens.
Spend a high proportion of their income on food and other basic necessities.
Use a low level of technology in production.

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List four factors that are likely to hinder economic development in Kenya.

5/11/2021

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List four factors that are likely to hinder economic development in Kenya. (4mks)

Four factors that are likely to hinder economic development in Kenya.

Low level of savings which leads to low investment, low productivity and low income.
Political instability which may discourage potential investors from investing.
Poor natural resource endowments in Kenya where some places are deserts and have no minerals.
Poor set up of economic institutions - poorly structured financial market, poorly set commodity markets, poorly established labour and capital markets inhibit economic development. In Kenya, cash crop farmers suffer because of this problem. Their produce is collected rate from their farms, inputs are provided much later the onset of the planting season, credit is given after a lot of struggle by the farmer and proceeds of the farmer produce is delayed and in some cases embezzled.
Lack of skilled manpower- hindering the exploitation of available natural resources.
High rates of population growth - where much of the income that is generated goes into providing basic requirements of life rather than to production activities.
Cultural beliefs and attitudes - which may prevent people from adopting modern methods of doing things and hence hindering economic development.

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Explain five factors that influence the level of natural development of a country

25/9/2021

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Factors that influence level of development of a country

Labour supply
A country with well skilled and knowledgeable labour will be more developed than a country with semi skilled labour
Capital
Most developed countries have large pool of capital. Most countries with large pool of capital will be able to use it to develop all sectors in a country
Entrepreneurship
A country with good management and coordination of the other factors of production will lead to high and effective production hence it will be highly developed
Land
These are the resources a country has. A country with a lot of natural resources will utilize them and hence developed
Level of technology
A country with latest aid modern technology will produce modern items hence have large market leading to development
Political stability
This is the main key point in a country that is politically stable will attract many industries both locally and foreign investors hence this will lead to development

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Describe the importance of the structure for economic growth

25/9/2021

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Importance of age structure for economic growth

Individuals do not contribute equally to production
Supply of labour depends on the proportion of the workforce
Economically active in population depend on the age structure
Age structure assist the government in planning
The proportion of dependants influence the pace of economic growth

Describe the importance of the structure for economic growth

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Explain five disadvantages of progressive taxes

25/9/2021

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Disadvantages of progressive taxes

This taxes are difficult to understand
They are also difficult to measure utility
It’s a way of punishment to hard ward
It breeds corruption for it can be evaded
It hampers social welfare
It can lead to scope of tax evasion
It doesn’t encourage capital formation

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Outline four characteristics of underdevelopment

22/9/2021

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Characteristics of underdevelopment

High level of poverty
Disparity in income distribution
Low levels of savings and investments
High population growth rate
Dominance of subsistence sector
Problem of unemployment
Under utilization of natural resources
Dependence on the developed countries
Low labour productivity
Poor infrastructure

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Explain five factors that may hinder economic development in Kenya.

21/12/2020

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Explain five factors that may hinder economic development in Kenya.

Factors that may hinder economic development in Kenya include:

Inaccessibility to appropriate technology leading to low quality/quantity.
Inadequate research data. .
Poor development planning.
Inadequate skilled labour force.
inadequate natural resource endowment.
Brain drain-skilled man power seeking greener pastures elsewhere.
Low demand for goods/services.
Negative socio-cultural practices.
Inadequate/lack of foreign exchange.
Poor governance/corruption.

Explain five factors that may hinder economic development in Kenya.

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Highlight four benefits that a country would get by developing her infrastructure.

21/12/2020

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Highlight four benefits that a country would get by developing her infrastructure.

Benefits that a country would get by developing her infrastructure include:

Attraction of foreign investment.
Creation of employment opportunities.
Improved security.
improved health.
increased production levels.
Enhanced movements of goods and services.
Increased per capital! income.
Increased exploitation of available resources.
Increased entrepreneurial activities.
Easier/faster communication.
Reduced cost of production.
Equitable development.

Highlight four benefits that a country would get by developing her infrastructure.

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Highlight four problems of development planning that a country may experience.

20/12/2020

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Highlight four problems of development planning that a country may experience.

Problems of development planning that a country may experience include:

Inadequate data on economic performance.
Unreliable data which may not be useful in planning.
Less qualified personnel to cope with the tasks of development planning.
Private sector activities are not easily coordinated.
Political rigidity.
Inappropriate use of technology.
Unplanned population.
Over-reliance on donor funding.

Highlight four problems of development planning that a country may experience.

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State four forms of economic integration that may exist between countries.

20/12/2020

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State four forms of economic integration that may exist between countries.

Forms of economic integration include:

Common Markets - to have a common currency to increase free trade and full mobility of factors of production.
Free Trade Areas - where barriers such as tariffs and quotas are removed.
Customs Unions - member countries charge common external tariffs.
Economic Union - where common economic institutions like banks are set to deal with monetary policy.

State four forms of economic integration that may exist between countries.

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Discuss causes of unfavourable balance of payment for most developing countries,

17/12/2020

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Discuss causes of unfavourable balance of payment for most developing countries,

Causes of unfavourable balance of payment for most developing countries include:

Reliance on primary products for export. Most developing countries mainly export primary agricultural products which fetch low prices in the international market.
Heavy importation of finished goods. Most developing countries import finished manufactured goods whose value are very high hence spend more on them.
Low levels of technology. Most developing countries rely on low levels of technology in production which compromises the quality of their exports and also lowering their value.
Too much reliance on foreign borrowing. Most developing countries finance their development projects through heavy borrowing yet such loans are repaid with heavy interests.
Susceptibility to natural calamities. Many developing countries are easily affected by natural disasters like drought which adversely affect their production.
Preference towards foreign goods. Most consumers in developing countries prefer goods manufactured in foreign countries in the belief that they are of better quality.
Unfavourable world economic order. The developing countries have very little say in international trade forums and cannot influence the world economic order in their favour.

Discuss causes of unfavourable balance of payment for most developing countries,

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Explain six factors that may hinder the development of a country.

17/12/2020

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Explain six factors that may hinder the development of a country.

Factors that may hinder the development of a country include:

Low demand for goods and services which discourages production activities hence interfering with development.
Inadequate capital which leads to low levels of development
Negative sociocultural practices which may hinder production and consumption of certain goods and services.
Inadequate foreign exchange which limits access to imports hence affecting production and consumption.
Limited entrepreneurial abilities resulting into inefficiency in production.
Poor management of resources arising from inadequate skills, corruption and poor governance which limit the extent of growth and development.
Poor nutrition and disease prevalence which renders some of the people unproductive as well as channeling much of the income into provision of health care instead of investment.
Use of inappropriate technology which compromises the quantity and quality of goods and services produced.

Explain six factors that may hinder the development of a country.

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State four reasons why economic development is desirable to a country.

16/12/2020

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State four reasons why economic development is desirable to a country.

.Reasons why economic development is desirable to a country include:

improve standard of living of the citizens
improve infrastructure
create employment
increase life expectancy
reduce rural-urban disparity
improve the social welfare of citizens

State four reasons why economic development is desirable to a country.

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Outline four ways in which government expenditure may stabilize the economy of a country.

16/12/2020

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Outline four ways in which government expenditure may stabilize the economy of a country.

Ways in which government expenditure stabilizes the economy of a country include:

Provision of security - This creates an enabling environment for economic activities.
Creation and maintenance of administrative departments. These are created for effective operation of a country’s economy.
Social services - This enhances the welfare of the population for effective participation in economic activities.
Spending on infrastructure - It improves efficiency in production and distribution of goods and services in the economy.
Advancement of non-interest earning capital to entrepreneurs during economic recess.
Provision of basic goods and services through subsidies
Promoting local industries by giving them incentives.

Outline four ways in which government expenditure may stabilize the economy of a country.

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Many countries in Africa, Latin America and Asia are considered to be under-developed. Outline four characteristics they have in common. (4 marks)

15/12/2020

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Characteristics of Under-Developed Countries/Nations

Characteristics of underdevelopment that are common among countries in Africa, Latin America and Asia include:

Low per-capita income.
High population growth rate.
Poor standards of living.
Low literacy levels.
High levels of unemployment.
Poor health care.
Low life expectancy.
Over reliance on primary level of production/high levels of subsistence production.
High dependency ratio.
Poor infrastructure.
Low technological levels.
Large income disparities.
Low levels of labour productivity.

Characteristics of Under-Developed Countries/Nations

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Discuss five reasons why less developed countries are reluctant in implementing free trade agreement. (10mks)

12/12/2020

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Discuss five reasons why less developed countries are reluctant in implementing free trade agreement.

Reasons why less developed countries are reluctant in implementing free trade agreement.

Avoid unfair competition from developed countries with superior products as it may/could lead to loss of market for their products.
Prevent dumping of inferior goods by developed countries which may have adverse effects on the economy.
To safeguard local employment this may suffer due to free entry of imports.
Reduce balance of payments deficits; as a result of payment for imports exceeding receipts form exports.
Safeguard against government revenue otherwise earned through taxation of exports/imports.
Safeguard against government revenue otherwise earned through taxation of exports/imports.
Avoid erosion of cultural values arising from unrestricted interruption in free trade
Avoid over exploitation of resources which may be depleted/exhausted due to increase demand in free trade.
Avoid imported inflation which may be caused by inflow of highly priced imports.
Prevent entry of harmful goods/ services which may have adverse effects on the health of the people/accept examples if harmful goods as explanation.

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State four factors that could hasten the economic development of a country. (4mks)

11/12/2020

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State four factors that could hasten the economic development of a country.

Factors hasten economic development in a country include

Industrialization
Infrastructure/ social amenities
Research and developing / planning
Education and training
Use of modern technology/ capital
Good medical facilities
Good governance/ government goodwill
Economic endowed / natural resources
Presence of a strong entrepreneurial culture

State four factors that could hasten the economic development of a country. (4mks)

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Outline four goals of development to a country. (4 marks)

9/12/2020

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Goals of development to a country

Goals of development in a country include:

Alleviation of poverty
Attainment of high and sustainable economic growth.
Provision of adequate social amenities e.g.. health facilities.
Diversification of the economy to reduce over-reliance on a few products.
Alleviation of unemployment.
Attainment of more equitable distribution of incomes.
Enhancement / upholding of human freedom, rights and self esteem/democracy.
Provision of security.
Maintenance of political stability/good governance.
Attainment of food security for population.
Alleviation of illiteracy.
Technological advancement.
Elimination of harmful cultural practices.

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State four problems that a planner may encounter in development planning. (4mks)

8/12/2020

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Problems that a planner may encounter in development planning.

Lack of adequate information.
Bureaucratic rigidities.
Inadequate political good will.
Inadequate financial resources.
Inadequate human resource.

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Outline four goals of development to a country. (4 marks)

4/12/2020

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Goals of development to a country

Alleviation of poverty
Attainment of high and sustainable economic growth
Provision of adequate social amenities e.g. health
Diversification of the economy to reduce over-reliance on a few products
Alleviation of unemployment
Attainment of more equitable distribution of incomes
Enhancement / upholding of human freedom, rights and self esteem /democracy
Provision of security
Maintenance of political sustainability / good governance.
Attainment of food security for population
Alleviation of illiteracy
Elimination of harmful cultural practices
Improvement of infrastructure e.g. transport, communication, water

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Describe five forms of economic integration that countries may join to promote international trade. (10 marks)

25/11/2020

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Forms of economic integration that countries may join to promote international trade

Forms of economic integration that countries may join to promote international trade include:

Preferential Trade Area.
In this form of integration, trade barriers are reduced among the member nations while the barriers are applied at normal rates for trading activities with non-member nations.
Free trade area.
This is economic integration where all trade barriers are removed between the member countries while each country retains its own barriers towards non-members.
Customs union.
In this form of integration, tariffs and other trade barriers are removed between member countries while their trade policies are harmonized with regard to treatment of trade with the rest of the world.
Common market.
This integration goes beyond harmonizing trade policies and removal of trade barriers but also allows for free movement of labour and capital among member nations.
Economic union.
In this form of integration, member countries set up common institutions like central banks, adopt use of common currency (monetary system) and have common public services like railways network.
Duty-free zones.
Member countries allow importation of raw materials without charging duty. Exports from these zones to member countries also attract no excise duty.
Political union.
In this form of integration, several states form a central government through which, share a central bank, the defense and core ministries that run their affairs.

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​​Explain five features of economic resources (10mks)

Effects of ageing population.

Diseconomies of scale

Most countries in the world are under-developed. Give six characteristics of these countries (12mks)

​List four factors that are likely to hinder economic development in Kenya. (4mks)

Explain five factors that may hinder economic development in Kenya.

Highlight four benefits that a country would get by developing her infrastructure.

Highlight four problems of development planning that a country may experience.

State four forms of economic integration that may exist between countries.

Discuss causes of unfavourable balance of payment for most developing countries,

Explain six factors that may hinder the development of a country.

State four reasons why economic development is desirable to a country.

Outline four ways in which government expenditure may stabilize the economy of a country.

Characteristics of Under-Developed Countries/Nations

Discuss five reasons why less developed countries are reluctant in implementing free trade agreement.

State four factors that could hasten the economic development of a country.

Goals of development to a country

Problems that a planner may encounter in development planning.

Goals of development to a country

Forms of economic integration that countries may join to promote international trade

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Explain five features of economic resources (10mks)

List four factors that are likely to hinder economic development in Kenya. (4mks)