CXC CSEC Principles of Business — Paper 1 (Multiple Choice)
Total marks: 60 · Duration: 1 hour 15 minutes
Instructions to candidates
- Answer ALL questions.
- Each question is worth THREE marks.
- Write your answers on the separate answer sheet provided.
- Shade your answers completely using an HB pencil only.
- If you need to change an answer, erase it completely before shading your new choice.
- Silent, non-programmable calculators may be used.
- Do NOT write on this question paper.
Paper
Section A — Multiple Choice (60 marks)
1. Which of the following BEST describes a want?
A) Something that is necessary for survival
B) Something that a person desires but can live without
C) Something that must be purchased immediately
D) Something that is provided free by the government
2. A greengrocer buys mangoes from farmers in St. Vincent and sells them to consumers in Barbados. The greengrocer is operating in the
A) primary sector
B) secondary sector
C) tertiary sector
D) quaternary sector
3. Which form of business organization has unlimited liability?
A) Public limited company
B) Private limited company
C) Cooperative society
D) Sole trader
4. The main objective of a consumer cooperative is to
A) maximize profit for shareholders
B) provide goods to members at reasonable prices
C) compete with large supermarket chains
D) eliminate all middlemen from trade
5. Jason deposited $5,000 in a savings account that pays 4% simple interest per annum. How much interest will he earn after 2 years?
A) $200
B) $400
C) $408
D) $5,400
6. Which document is sent by a seller to a buyer to request payment for goods supplied on credit?
A) Receipt
B) Invoice
C) Credit note
D) Statement of account
7. The Caribbean Single Market and Economy (CSME) was established primarily to
A) eliminate all taxation in CARICOM member states
B) allow free movement of goods, services, and people within CARICOM
C) create a single currency for the Caribbean region
D) prevent migration between Caribbean countries
8. Which type of production involves changing raw materials into finished goods?
A) Primary production
B) Secondary production
C) Tertiary production
D) Direct production
9. A business that sells goods to retailers in large quantities is known as a
A) manufacturer
B) wholesaler
C) consumer
D) agent
10. The term 'caveat emptor' means
A) let the seller beware
B) let the buyer beware
C) all sales are final
D) goods cannot be returned
11. Maria owns a bakery and uses her personal savings to pay the business electricity bill when the bakery account has insufficient funds. This demonstrates
A) limited liability
B) unlimited liability
C) legal personality
D) profit sharing
12. Which of the following is a function of the Central Bank in a Caribbean economy?
A) Providing mortgage loans to individuals
B) Operating savings accounts for school children
C) Issuing the country's currency
D) Offering business overdrafts to small traders
13. Advertising that aims to inform consumers about a new product entering the market is called
A) competitive advertising
B) persuasive advertising
C) informative advertising
D) generic advertising
14. The money paid to a commercial bank for the use of borrowed funds is called
A) principal
B) dividend
C) commission
D) interest
15. Which marketing activity involves deciding on the best route for goods to reach consumers?
A) Product
B) Price
C) Place
D) Promotion
16. A horizontal merger occurs when two businesses
A) at different stages of production combine
B) in the same line of business combine
C) in completely different industries combine
D) from different countries combine
17. The Fair Trading Commission in several Caribbean countries is responsible for
A) collecting taxes from businesses
B) promoting and protecting consumer rights
C) registering all new businesses
D) setting minimum wages for workers
18. Which type of unemployment occurs when workers' skills do not match available jobs?
A) Seasonal unemployment
B) Structural unemployment
C) Cyclical unemployment
D) Frictional unemployment
19. The break-even point is reached when
A) total revenue equals total costs
B) profit is at its maximum
C) variable costs equal fixed costs
D) sales revenue is at its highest
20. An insurance policy that compensates a business for loss of stock due to fire is
A) life insurance
B) motor insurance
C) fire insurance
D) fidelity guarantee insurance