DISCUSSION AND GUIDELINES
1. May / jUNE2002
(a) Any two types of economic systems can be listed, for example, the free economic system and the planned economic system. This part of the question does not require any expansion or explanation.
(b) The characteristics or features of the economic systems listed can be used to show the differences between them.
Conjunctions such as whereas, on the other hand, while and however should be used to indicate your reference to the opposite feature for the other economic system. For example, in the free economy, most of the scarce resources are owned and allocated by private individuals and firms while in the planned economy, scarce resources are owned and allocated by the government.
The marks allotted for this part of the question would indicate that a minimum of two differences is required.
(c) Governments’ control of business activity can come in many forms including:
* Legislation ¬ The passing of laws that businesses should abide by.
2. MAY / JUNE 2003
a) Any TWO functions of a business can be listed e.g.to sell goods and services to satisfy people’s wants and to provide employment for people. Expansion on and explanation of the functions is not required.
(b) The TWO types of businesses can be described by defining them and /or outlining their features or characteristics. For e.g. in describing the partnership one might say that a partnership is formed with two to 20 members who pool their resources together to run a business with a view to making a profit.
Partnerships are normally required to sign a Deed of Partnership and register with the Registrar of Companies.
(c) The advantages which the Public Limited Company has over the Partnership type of business includes the fact that:
* A larger number of part owners, since the Public Limited Company has a minimum of seven shareholders and no maximum.
* More capital can be raised than in a partnership since an appeal can be made to the general public through the Stock Exchange.
* The Public Limited Company is a separate entity from the shareholder owners, therefore, the individual shareholders cannot be sued, the company must be sued.
* The Public Limited Company has a Board of Directors elected by the shareholders.
* These companies may enjoy economies of scale.
* Risk is spread over many shareholders.
Remember, you are asked to state only TWO advantages of the Public Limited Company over the Partnership.
* Price controls ¬ Government stated maximum prices for selected goods and services
* Nationalisation ¬ Direct ownership and control of industries by the Government, for example, where monopolies are exploiting consumers.
* Increased taxation ¬ To reduce monopoly profits.
Registration and other legal requirements for setting up of businesses.
* Employment of inspectors to monitor the affairs of businesses e.g. price inspectors and sanitary inspectors.
* Setting up of government agencies such as The Bureau of Standards to monitor the quality of goods produced and imported.
Remember, you are asked to suggest only two ways