WAEC Commerce 2023 Theory — Question 2

Model answer

(a) Problems of sole proprietorship: (i) Unlimited liability — one of the major problems of the sole proprietor is that he bears all the liability of the business alone. (ii) Limited capital — the capital enjoyed in a partnership business is higher as a result of joint contribution when compared with a sole proprietor. (iii) Limited expertise — a sole proprietor's success is limited to his own ideas alone. (iv) Lack of investors — a sole proprietorship business does not attract an investor as much as a partnership business. (v) Limitation in access to loans — there will be limited loans that the sole proprietor will be able to attract to his business. (b) Positive effects of tourism: Economy: it will improve the country's foreign exchange earning; it will create employment for the locals. Society: it will promote conservation of cultural heritage; it will also promote cultural exchange among tourists and residents. Environment: it may lead to proper sanitation of the environment from time to time; it will reduce urban congestion.