1.a)Explain FIVE benefits a person gets as a result of taking a whole life policy with an insurance company.

b)A commodity X has an abnormal demand curve and a normal supply curve. With an aid of a diagram explain the effects on the equilibrium quantity and price caused by an increase in supply.

2.a)Explain FOUR circumstances when a manufacturerwouldprefer promoting sales of his products using personal selling method.

b)Maendeleo Traders have the following information in their books of account on 31st December 2002.

Kshs.

Stock (01/01/20026,000

Sales100,000

Return-in2,000

Return-out2,800

Carriage-in1,000

Carriage-out1,500

Purchases88,000

Stock (31/12/2002)4,000

Commission earned3,500

Discount allowed2,200

Sundry expenses4,000

Discount received4,400

Postage800

Stationery1,200

REQUIRED

(i) Prepare trading profit and loss account for Maendeleo Traders10mks

(ii) Calculate-up

(ii)- ROSTO

3.a)Explain FIVE differences between public corporations and co-operative societies

b)Explain FIVE sources of monopoly.

4.a)Explain FIVE factors that can contribute to the expansion of firms in a given industry.

b)Highlight FIVE principles of taxation.

a)Below are the national income estimates of country Q during the year 2004.

Value in Kshs. 000,000

EXPORTS-125,000

Consumption expenditure-312,000

Investment-150,000

Government spending-208,000

Imports-105,000

Depreciation-5,000

Net indirect taxes-25,000

Given that the country has a population of 30 million people,

i)Calculate the GNP per capita of the country.

ii)Outline FOUR limitations of using GNP per capita in measuring the standards of living in a country.

b)Explain FOUR services offered by wholesalers to producers.8mks

6.a)Discuss FIVE functions of the central Bank.

b)Highlight FIVE factors that have contributed to the continued popularity of postal service in Kenya.

1. (a) Explain FIVE services offered by commercial banks to business people. ( I0mks)

(b) Describe FIVE factors that affect the elasticity of demand.

(ii) With a reason, state whether the firm is operating in the short run or long run. (lmk]

(b) Kenya's development plans are praised world wide. Highlight FIVE problems that hinder their implementation.

3. (a) Explain FIVE ways traders can adopt to prepare goods for sale.

(b) Explain FIVE benefits that Kenya is likely to get from free trade.

4. (a) Describe FIVE circumstances under which limited liability companies can be liquidated.

(b) Discuss FIVE: insurance policies that a wholesaler in Lodwar town can take. [l0mks]

5. (a) Highlight FIVE measures that a government may use to control inflation. (10mks]

(b) Discuss FIVE causes of under employment in Kenya. [ l0mks]

6. (a) Explain FIVE circumstances under which one may use signs in communication(b) The following information has been extracted from the books of Otieno Traders on 3 Ist may, 2006. Shs. Salaries 15 000 Discount received 16 000 Purchases 195 000 Returns inwards 4 970 Returns outwards 3 000 Sales 268 970 Stock ( Ist June 2005) 24000 Stock (31st May 2006) 46000 Discounts allowed 5 000 Insurance 14000 Commission earned 30 000 General expenses 11 000 Mortgage loan 80 000 Additional information: (i) Interest on mortgage loan 20% p.a. (ii) Outstanding salaries Shs. 5 000 (iii) Prepaid insurance Shs. 4 000 Prepare: A trading profit and loss account for the year ended 31st May 2006.