Total = 60 marks Time = 1 hour 30 mins Q1. Dua plans to start up her own business. She wants to produce cars and add value to cars. She is an excellent designer and has a diploma in car designing. She wants to hire specialized workers and high-quality material. One of the friends of Dua suggested that hiring specialized workers and using high quality material would increase cost and reduced sales at start but Dua disagrees with her friend’s suggestion. a) What is business activity? [2] b) Identify two factors of production that Dua could use for the new business. [2] c) Define division of labour and specialization. [2] d) Define opportunity cost with the help of an example. [4] e) Define added value & explain two ways in which Dua could add value to cars. [6] f) Identify and explain one benefit and one drawback to Dua of each ‘specialized worker and high-quality material’. [8] g) Do you think that Dua is right to disagree with her friend’s suggestion? Justify your answer. [6] Q2. Juicy Ltd is a private limited company selling fruits and vegetables. These fruits and vegetables are grown on Juicy Ltd farms and then processed, packed and sold to small scale retailers and large supermarkets. Juicy Ltd began its journey as a sole trader and converted it to private limited company later but it resulted in some problems which were recovered at early stage successfully. The directors of Juicy Ltd always produces a business plan and expanded its operations using successful business plan. Many of the stakeholders keenly observe the Juicy Ltd activities. The director of Juicy Ltd thinks that not setting objectives might cause business failure. a) Define stakeholders. [2] b) Define business plan. [2] c) Identify the two stages of economic activity in which Juicy Ltd carry out its operation. [2] d) Explain the difference between sole trader and private limited company. [4] e) Identify and explain the problems that Juicy Ltd may have faced at early stage of expansion and explain how business plan may have helped to recover problems. [8] f) Identify two stakeholders and explain why they might be interested in Juicy Ltd activities? [6] g) Do you think that director is right that not setting objective might cause business failure? [6] Best of luck!