Explanation

(a)The following are the effects of higher purchase on the buyer;

(i) He is able to beat any future increase in price by buying now in hire purchase.

(ii) Buyer will find it convenient paying by installments

(iii) He gets the goods for use, though full payments have not been effected.

(iv) He could lose through repossession in the event of -default.

(v) Buyer pays more for the goods

(vi) He is encouraged to mortgage his future income / to live- beyond his income.

(vii) He enjoys increased standard of living.

(viii) He can return the goods after paying 50% of the price.

(ix) The buyer can be sued in case 9f defaults.

(b) Effect of hire purchase on the Seller

(i) There will be increase in sales.

(ii) Seller gets more profit selling on credit as hire purchase price is more than the cash price.

(iii) Hire purchase encourages faster sales of durable expensive goods.

(iv) It also increase in bad debts as a result of debtors running away.

(v) Repossessed goods may be so badly used that it is not possible to dispose of them.

(vi) He will incur additional cost to collect the necessary installments (keeping records)

(vii) He can only repossess the goods 'through the courts after 2/3 of the price has been paid

(viii) In hire purchase, seller can repossess his goods.

Correct Answer: C. money market

Correct Answer: B. marketing

Correct Answer: B. letter of credit

Correct Answer: B. interest

Explanation

The reward for capital is interest. Interest: Interest is the reward or compensation paid to lenders or investors for the use of their capital. It is commonly associated with loans, bonds, or other debt instruments. Lenders or investors receive interest payments as a percentage of the principal amount lent or invested.

Correct Answer: C. OPEC

Explanation

A cartel is a group of independent market participants who collude with each other in order to improve their profits and dominate the market e.g OPEC

Explanation

(a) The granting of permission to pay at a future date for something of value received now is called credit. It is defined as the granting of the use of possession of goods and services without immediately paying for them.

(b) Three ways by which banks grant credit to customers are:

(i) Loan: Banks can give loans to their customers for a short period which includes interest charges. It is usual for banks to require collateral security before they can give loans. Collateral securities are assets which can be converted to cash upon default by customers.

(ii) Overdraft: An overdraft is a facility granted to a customer who operates a current account. This enables him to draw cheques to an agreed maximum over the amount outstanding to his credit in his current account. For example, if he has #600 in his account, he may withdraw #1000. Banks charge interest on overdraft.

(iii) Discounting bills of exchange: Commercial banks discount bills of exchange, that is, they pay cash for bills of exchange before the bills mature.

(c) Advantages of Credit Sales are:

(i) Credit sales enables many firms to meet temporary needs for cash.

(ii) Credit sales brings higher profit.

(iii) There is increase in sales or turnover.

(iv) It reduces the risk of holding stock.

(v) Credit sales makes it possible for consumers to have immediate possession of the goods and services they need even though they do not pay at once.

Disadvantages of Credit Sales are:

(i) Credit customers pay higher than cash customers.

(ii) There is risk of non -payment by the customers.

(iii) The credit customer may be tempted to buy more than what he can afford.

(iv) Credit sales involve a lot of book keeping processes

Correct Answer: D. producers' cooperatives

Correct Answer: C. advertising

Correct Answer: B. job security