Duration: 2:30 Hours


  1. This paper consists of sections A, B and C with a total of seven (7) questions.
  2. Answer all questions
  3. All answers must be written in the spaces provided.
  4. All writing must be in blue or black ink.
  5. Calculators, cellular phones and any unauthorized materials are not allowed in the examination room.
  6. Write your Examination Number at the top right corner of every page.

SECTION A (30 Marks)

Answer all questions in this section

1. For each of the following items (i) – (ii), choose the correct answer and write its letter in the box provided.

(i) What will be the order point of Mr. Cassel if his daily sales are 500 bags of sugar, the delivery time being 15 days and minimum stock of 200 bags?

  1. 7,700 bags
  2. 3,300 bags
  3. 3,500 bags
  4. 4,500 bags

(ii) The process through the customer exchange information with the shop keeper about the availability of rice in his shop is expressed as

  1. Transaction
  2. Advertising
  3. Communication
  4. Retailing.

(iii) Why is it necessary to use demand schedule in drawing a demand curve?

  1. It shows the quantity demanded
  2. It shows the price of the quantity demanded.
  3. It shows the price and quantity demanded.
  4. It shows the price changes for a commodity.

(vi) Why internal motivation important in an entrepreneurship?

  1. It creates environment for carrier development
  2. It creates competition among the entrepreneurship
  3. It creates the working spirits to experts.
  4. It helps to overcome the business challenges.

(v) In which category does Madam Mashenge be grouped if she produced green vegetables in large quantity and sells them in bulk to retailers who will then sell them to final users?

  1. Wholesaler
  2. Retailer
  3. Customer
  4. Producer

(vi) The main elements of commerce comprises of

  1. Home trade and foreign trade
  2. Wholesale and retail trade
  3. Trade and aids to trade
  4. Import trade and export trade.

(vii) Which of the following units of carriage in transport is most suitable in carrying delicate and perishable goods over a long distance?

  1. Ships
  2. Train
  3. Car
  4. Aeroplane.

(viii) Petrol stations which sell petrol and diesel obtained from the same producer are the examples of

  1. Tied shops
  2. Departmental stores
  3. Single shops
  4. Mobile shops.

(ix) The following are benefits of self – employment to an entrepreneur except

  1. Ability to generate extra income
  2. Sharing decision and business ideas with the boss.
  3. Ability to make his/her own decisions.
  4. Becoming boss of his/her own business.

(x) Mr. Makiku is a large scale local rice producer who invested a capital of Tsh.300 million in production. What reward is he deserve as a return of his capital?

  1. Rent
  2. Salary
  3. Profit
  4. Interest.


A wholesaler who operates on a very large scale business and supplies goods to retailers in all parts of the country is known as:

  1.   nationwide wholesaler
  2.  specialized wholesalers
  3. general wholesaler
  4.  regional wholesalers

 Which of the following presents a disadvantage of barter system?

  1.   Double coincidence of wants
  2.  Divisibility
  3.  Standard of deferred payments
  4. Indivisibility

(iii)       An official document used to correct undercharge of an invoice is called

  1.  debit note     
  2.  credit note
  3.  consignment note 
  4.  delivery note

(iv)     Which of the following group presents a broad classification of occupations ?

  1. Trade and production
  2. Industrial, commercial and tertiary.
  3.  Extractive, manufacturing and constructive industries 
  4. Trade, aids to trade and industrial.

(v)       Prices below equilibrium price reflect:

  1. excess demand
  2. excess supply 
  3.  decrease in demand D
  4. increase in supply.

(vi)     An agent who sells goods of his principal in his own name is called

  1.  commission agent
  2.  broker
  3.   factor
  4.  del-credere agent

(vii)   Which of the following presents the main feature of multiple shops?

  1.  Many shops selling different kind of goods owned by one       person
  2. Many shops selling the same kind of goods and owned by one person
  3.  Many shops under one building selling different kind of goods
  4. Many shops selling similar products from different producers

(viii)Examples of free goods are

  1. Tanzania Broadcasting, ITV and Star TV
  2. refrigerator, tractors and tailoring machine 
  3.  roads, public hospitals and public schools 
  4. rainfall, sunshine and air.

(xi) Which ofthe following is not included in commerce flow chart?

  1. Insurance
  2.  Warehousing 
  3.  Production
  4.  Transportation.

(x) What is the correct formula used to calculate working capital of the business?

  1.  Opening stock plus closing stock divide by two.
  2. Current assets less current liabilities
  3. Current assets less current liabilities plus fixed assets
  4. Total assets less current assets.


Warehouses which belong to manufacturers, wholesalers or individuals are categorized as:

  1. bonded warehouses
  2. specialized warehouse
  3.  private warehouses 
  4.  public warehouses

The appropriate channel to distribute perishable goods to final consumers is from:

  1.  producers, wholesalers, retailers to the final consumers
  2. producers, wholesalers to final consumers
  3. producers, large scale retailers to final consumers
  4. producers, small scale retailers to final consumers.

(iii)     Which of the following is considered as disadvantage of division of labour?

  1.  Unemployment
  2. High degree of choice
  3.  Employment opportunity 
  4.  Efficiency

(iv)    The exchange of goods and services is referred as:

  1.   Aids to trade
  2.  Trade
  3. Barter trade 
  4. Commerce

(v)      Demand curve normally slopes from

  1.  left to right upwards 
  2.  right to left downwards 
  3.  right to left upwards
  4.  left to right downwards

(vi)    Which of the following is an example of retailers who do not have permanent premises?

  1.  Single shop
  2. Tied shop 
  3.  Mobile shop
  4.  Multiple shops.

(vii)  Which of the following is a reward for capital as a factor of production? 

  1.  Wage.
  2.  Interest
  3. Profit 
  4.  Rent

(viii)If the price elasticity of demand is greater than I, the demand is said to be.

  1. elastic
  2. perfectly elastic
  3. inelastic 
  4.  unitary

(ix)    Which of the following is a good example of perishable goods?

  1.  Processed coffee
  2.  Wheat flour
  3. Natural flowers
  4.  Processed vegetables

(x)      If the average stock is shs. 120, 000 and cost of sales is shs.

       480,000, the stockturn rate     be•.

  1.   0.25times 
  2.  Shs 600,000
  3. Shs 360, 000
  4. 4 times


The process of selling goods and services to other countries is called:

  1.  Horne trade
  2.  International trade
  3.  Retail trade
  4.  Export trade

(ii)      The movement along a demand curve is caused by:

  1.  change in price of a commodity
  2. change in consumers income
  3.  change in quantity demanded 
  4.  change in consumers taste

(iii)    Which ofthe following is the best feature ofthe multiple shops?

  1. Providing self services to customers.
  2. Stocking variety goods from different producers.
  3.  Stocking similar goods and often similar in appearance.
  4. Stocking similar goods under one roof and one management.

(iv)    The main branches of production are:

  1. Commerce, industry and trade
  2. Commerce, industry and public service
  3. Commerce, industry and direct services
  4. Commerce, industry and personal services

(v)      The shops which sell products of one manufacturer only are called:

  1. Supermarket shops
  2.  Tied shops
  3.  Single shops
  4.  Mobile shops

(vi)    Which of the following is a reward for land as a factor of production?

  1. Interest
  2.  Profit
  3. wage
  4. Rent

(vii)  A warehouse where imported goods are kept waiting for customs clearance is called

  1.  Specialized warehouse
  2. Bonded warehouse
  3. Public warehouse
  4. Private warehouse

(viii)Which of the following service is normally rendered by wholesalers to the consumers?

  1. Providing capital.
  2.  Providing transport. 
  3. Providing advice.
  4.  Providing variety of goods.

(ix)    An art of making goods and services known to the public is known as:

  1.  marketing
  2. sales promotion
  3. advertising
  4.  communication

(x)      Any price above equilibrium price for a given commodity leads to:

  1. excess supply
  2. decrease in supply
  3. decrease in demand
  4.  excess demand


Commerce involves all activities that enable goods and services to be moved from the producer to the:

  1.  final consumer
  2.  manufacturer
  3. retailer
  4.  wholesaler

If a great change in price brings about a small change in the quantity demanded then the price elasticity of demand is:

  1.  constant 
  2. elastic
  3. inelastic 
  4. unitary

(iii)     A tractor used in agricultural activities is in the category of:

  1. consumer goods
  2. domestic goods 
  3.  luxury goods
  4. producer goods

(iv)     The stock level when new goods are required in the warehouse is:

  1.  average stock
  2. maximum stock
  3.  minimum stock 
  4.  order point

(v)       The exchange of money value of a good and services:

  1.  brakeage
  2. commission
  3. interest
  4.  price

(vi)     Marginal cost is defined as:

  1.   a change of fixed cost per unit of output
  2.  a change of total output due to additional unit of cost 
  3. a change in total sales due to additional unit of cost
  4. distribution of total cost per unit of output.

(vii)    A retail outlet which sells a product of only one manufacturer is termed as:

  1.  itinerant trader
  2.   multiple shop
  3.  tied shop 
  4.  top shop

(viii)  Which ofthe following is NOT normally done by the wholesaler?

  1.  Breaking the bulk
  2. Buying goods from producers
  3.  Market research
  4. Selling goods to consumers

(ix)     Home trade is divided into:

  1.  export trade and import trade
  2. foreign trade and international trade
  3.  retail trade and wholesale trade 
  4.  trade and aids to trade

(x)       An agent who sells goods at a public auction is:

  1.  a broker
  2. a del-credere agent
  3. a factor
  4. an auctioneer


The role of commerce in the process of production is to make:

  1. direct services reach ultimate consumers
  2.  distribution of goods and services to retailers
  3.  distribution of goods and services to wholesalers
  4. goods and services produced to reach ultimate consumers

 When there is an increase in supply, the supply curve always shifts.

  1.  downwards
  2. from left to right
  3.  from right to left 
  4. upwards

(iii)      Goods produced create utility when they:

  1. are stored in a warehouse
  2.    reach the final consumers
  3.   reach the manufacturers shop
  4. reach the retail shop

(iv)      ... ... ... includes all the activities necessary in bringing goods and services into the market:

  1.   market event
  2.  marketing
  3. market research 
  4. market price

(v)       One of the following is the quality of the retailer:

  1.   being honest
  2.  making payments
  3.  producing goods
  4. transporting goods

(vi)      A profit percentage which is calculated on sales is called:

  1. gross profit
  2. margin
  3. mark up
  4. net profit

(vii)    The art of transmitting information and ideas by word of mouth, writing or by other means is called:

  1.  advertising
  2.  communication
  3. insurance 
  4. transport

(viii)   Portability can be defined as ability to:

  1.   carry things easily
  2.  keep things
  3.   pull things easily
  4.  store things

(ix)      A document which contains a list of goods offered for sale by traders is called:

  1.  an invoice
  2.  an order
  3.  catalogue 
  4.  price tag

(x)       Steps through which goods reach the consumers are termed as:

  1.  chain of distribution 
  2. chain of production
  3.  means of carriage
  4.  means of production


(i) Which of the following activities is not involved in the study of commerce?

  1. A study of auxiliary services
  2.   A study of how factors of production can be utilized to the optimal point so as to achieve more goods and services.
  3.  A study of how best the bank clerks could be organized so as to satisfy the needs of a consumer
  4.  A study of trade and the principal activity in the distribution of goods

(ii)   The last person in the distribution chain is:

  1.   consumer
  2. consumer and retailer
  3. manufacturer
  4.   retailer

(iii)The ability of goods and services to satisfy human wants is known as:

  1.  production
  2. specialization
  3.  subsistence
  4.  utility

(iv)Distinguishing mark attached to the product and which cannot be used by any other producer is called:

  1. brand name
  2. kite mark
  3. producer mark
  4.  trade mark

(v)    A retailer may prefer to deal with a wholesale firm because:

  1.  there is less likelihood of loss through damage
  2. they break bulk and re-pack the goods
  3.  they offer a large choice of goods from different manufacturers
  4.  they provide storage for goods until the retailer needs them.

(vi)Variable cost is that which varies with:

  1. company position
  2. output
  3.  technology
  4.  time

(vii)         The exchange of goods and services among different countries is called:

  1.  barter trade
  2. domestic trade
  3. foreign trade
  4.  internal trade

(viii)       Re-order level is the level:

  1. necessary to safeguard against delays
  2. when new stock is to be sold
  3.  when new stock is to be ordered
  4.  when supplies are received

(ix)An aid to trade that safeguards goods and trade against loss is called:

  1.   advertising
  2. communication
  3.  insurance
  4. warehousing

(x)    A building which is usedto store goods on payment:

  1.  bonded warehouse
  2. private warehouse
  3. public warehouse
  4. goods warehouse


(i) The main purpose of commerce is to bridge the gap between:

  1. Manufacturers and wholesalers
  2. Producers and consumers 
  3.  Retailers and consumers
  4. Wholesalers and Retailers

Demand curve normally slopes from:

  1. left to right downwards 
  2.  left to right upwards 
  3.  right to left downwards 
  4. right to left upwards

(iii)     The process of making goods for ones own use is termed as:

  1.  direct production
  2. indirect production 
  3.  level of production
  4. types of production

(iv)      One of the main features of a supermarket is:

  1.  cash payments
  2. giving cash discount
  3.   selling on credit 
  4.  self services

(v)       Retailing does not include:

  1. bonded warehouse
  2. kiosks
  3.  mobile shops
  4.   market stalls

(vi)      The resources in the form of money or property that a person or an organization has for establishing and running a business is referred to as:

  1.   capital
  2. coins
  3.  fund
  4.  materials

(vii)    Domestic trade involves:

  1. Buying goods within the country
  2. Buying and selling goods with other countries
  3.  Buying and selling goods within the country 
  4.  Selling goods within the country

(viii)  The production process ends when goods reach the:

  1. Consumers
  2. Producers
  3. Retailers
  4.  Wholesalers

(ix)      Barter trade is the system of exchanging goods for:

  1.  coins
  2.  goods
  3. further productions 
  4.  services

(x)       What will be the effect of an increase in supply?

  1.  Decrease in price and increase in quantity demanded
  2. Decrease in price and decrease in quantity demanded
  3. More goods in the Market
  4.  Rise in price and decrease in quantity demanded


(i) The exchange and distribution of goods and services is referred to as:

  1.  commerce
  2.  production
  3.  stock control
  4. trade

Which of the following set represents the branches of production?

  1. Industry, Commerce and Aids to Trade
  2. Industry, Commerce and Direct services
  3. Industry, Commerce and Services and Direct Services
  4. Industry, Trade and Direct Services

(iii)    When a commodity is used for two or more purposes the demand for such a commodity is called:

A.         competitive demand

B.         composite demand

C.         derived demand D. joint demand

(iv)    The quantity of a commodity supplied usually increases when the:

  1.  income of consumer falls
  2. price of that commodity remains constant
  3. price of that commodity falls
  4.  price of that commodity rises

(v)      The following are the functions of retailers except:

  1.  giving advice to customers
  2.  holding stock in small quantities
  3.  holding stock in large quantities 
  4.  selling goods to customers

(vi)    Which of the following is not a function of a wholesaler?

  1.  Auditing
  2. insurance
  3. Market research 
  4. warehousing

(vii)  Trade means:

  1.  buying and selling of goods and services
  2.  buying of goods and services
  3.  selling of goods and services
  4. selling of goods and factors of production

(viii)Which level is reached after receiving new delivery?

  1. Average stock
  2.   Maximum stock
  3.  Minimum stock 
  4.  Stock taking

(xi) Which of the following is not a function of the warehousing in preparing goods for sale?

  1. Breaking
  2.  Manufacturing
  3. Packing 
  4.  Sorting

(x) The art of making goods and services from production to be known by the whole public is called:

  1. advertising
  2.  broadcasting
  3.  communicating
  4. publishing


The main purpose of Commerce is to bridge the gap between:

  1. producers and consumers
  2.  retailers and consumers
  3. manufactures and wholesalers 
  4.  wholesalers and retailers

(ii)       Making goods for ones own consumption is termed as:

  1. direct production
  2.  indirect production
  3. self employment
  4.  self services

(iii)     If a small change in price brings about a greater change in quantity demanded, then the price elasticity of demand is said to be:

  1. constant
  2. elastic
  3.  inelastic 
  4.  unitary

(iv)     When there is an increase in supply, the supply curve always:

  1.  remains constant
  2.  shifts from left to right
  3.  shifts from right to left 
  4.  shifts upward

(v)       One of the following is a quality of the retailer:

  1. being honest
  2.  making payments
  3. producing goods
  4.  transporting goods

(vi)     A wholesaler obtains goods from:

  1. consumers
  2.  producers
  3.  retailers
  4. manufacturers

(vii)   A bonded warehouse is used to store:

  1.  goods against theft
  2.  goods which are dangerous or inflammable
  3. imported goods of a particular manufacturer only 
  4.  imported good till duty is paid on them

(viii)Domestic trade involves:

  1. buying goods within the country
  2. selling goods within the country
  3.  buying and selling goods within the country
  4. buying and selling goods with other countries

(ix)     The cost of production which changes as the output changes is called:

  1.  Average cost
  2. Fixed cost
  3. Total cost
  4.  Variable cost

(x)      Breaking the bulk means:

  1.  cutting down large quantities into small lots
  2. cutting down small quantities into large ones
  3. giving cash discount
  4. raising prices of commodities


(i)       Which of the following statements is true?

  1. Economics is part of Commerce 
  2.  Commerce is part of Economics
  3. Commerce includes production
  4. Commerce is the study of exchange only

(ii)      A warehouse which is used to store goods on payment is called:

  1. Public warehouse
  2. Private warehouse
  3. Bonded warehouse
  4.  Waiting room

(iii)    The point where demand and supply curves intersect is known as:

  1.  centre point
  2. equilibrium point
  3. zero point
  4.  mark-up point

(iv)    The distinguishing marks attached to products and which cannot be used by any other producer are called:

  1.  trade marks
  2.  approval seals
  3.  copy rights 
  4.  kite marks

(v)      The following do not posses permanent business premises:

  1. itinerant traders
  2.  tied shop traders
  3. chain stores
  4. multiple shops

(vi)    One of the main features of a supermarket is:

  1.  selling on credit
  2.  raising commodity prices
  3. shopping by post 
  4.  self-service

(vii)  A service that takes care of risks involved in trade is:

  1.  insurance
  2.  banking
  3. a police station 
  4.  warehousing

(viii)Production ends when:

  1. manufacturing process ends
  2. goods finally reach retailers
  3. goods are stored in bonded houses 
  4. goods reach final consumers

(ix)    Marginal cost is defined as:

  1.  a change in total output due to additional unit of cost 
  2.  distribution of total cost per unit of output
  3. a change in total cost due to additional unit of output 
  4. distribution of fixed costs per unit of output

(x)      The level reached after receiving new delivery is called:

  1.  minimum stock 
  2.  average stock
  3. maximum stock
  4. stock taking


(i)       Which of the following is not an aspect of commerce?

  1.  Provision of information about goods and services
  2. Keeping hens to lay eggs for family consumption
  3.  Distribution of goods 
  4.  Insurance

(ii)      The qualities of a good retailer is:

  1.    Not pleasant in his dealing
  2. Not a good administrator
  3. No delay but makes prompt payment 
  4. No stealing from his account

(iii)    Which of the following is an example of primary production?

  1. Agriculture
  2.  Textile manufacturer
  3.  Road construction
  4.  Space exploration

(iv)    Demand curve is that which moves from the:

  1.  Right to the left upward
  2. Left to the right upward
  3. Right to the left downward
  4. Left to the right downward

(v)      Which ofthe following is notafunction of stock administration?

  1. Issue of stock
  2.  Care of stock
  3.  Profit making
  4. Receiving goods

(vi)    Tea and coffee form what type of supply?

  1.  Composite supply
  2. Joint supply
  3. Competitive supply 
  4. Derived supply

(vii)  Which of the following function is not normally done by wholesaler to retailer?

  1. Breaking the bulk
  2. Storage
  3. Market research 
  4. Transportation

(viii)Departmental store refers to:

  1. A number of shops in one roof
  2.  A number of similar shops scattered at different areas
  3. A store that sells different types of goods
  4. A store that sells one variety of goods only

(ix)    Industries which assemble already manufactured goods are

known as:

  1. Producing industries
  2. Constructive industries
  3. Extractive industries
  4. Manufacturing industries

(x)      C.O.D is an abbreviation which stands for:

  1. Cash On Demand
  2.  Cash On Delivery
  3. Credit On Demand
  4. Care Of Drawer

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