Subhash Dey's BST XI 2024-25 (Sample PDF

Chapter 1
EVOLUTION AND
FUNDAMENTALS OF
BUSINESS
1.2 SUBHASH DEY (Shree Radhey Publications) BUSINESS STUDIES Class XI (2024-25 Edition)
Business, Trade and Commerce

Latest CBSE Syllabus
 History of Trade and Commerce in India: Indigenous After going through this unit, the student/ learner would be
Banking System, Rise of Intermediaries, Transport, able to:
Trading Communities: Merchant Corporations, Major • To acquaint themselves with the History of Trade and Commerce
in India
Trade Centres, Major Imports and Exports, Position
• Understand the meaning of business with special reference to
of Indian Sub-Continent in the World Economy.
economic and non-economic activities.
 Business – meaning and characteristics • Discuss the characteristics of business.
 Business, profession and employment- Concept • Understand the concept of business, profession and employment.
• Differentiate between business, profession and employment.
 Objectives of business • Appreciate the economic and social objectives of business.
 Classification of business activities-Industry and • Examine the role of profit in business.
Commerce • Understand the broad categories of business activities- industry
and commerce.
 Industry-types: primary, secondary, tertiary Meaning
• Describe the various types of industries.
and subgroups
• Discuss the meaning of commerce, trade and auxiliaries to trade.
 Commerce-trade: Types-internal, external; wholesale • Discuss the meaning of different types of trade and auxiliaries
and retail and auxiliaries to trade; banking, insurance, to trade.
transportation, warehousing, communication, and • Examine the role of commerce-trade and auxiliaries to trade.
advertising – meaning • Understand concept of risk as special characteristic of business.
 Business risk-Concept • Examine the nature and causes of business risks.
Chapter-1 Evolution and Fundamentals of Business SUBHASH DEY (Shree Radhey Publications) 1.3
Chapter 1
Evolution and Fundamentals of Business
Business To Enhance Enterprising Skills
Quote
Business, more than any other occupation, is a continual dealing with the future; It is a continual calculation, an instinctive exercise
in foresight.
Topics Introduction
1.1 Business – meaning and Gloriya, Shreya, Roshni and Teena have been classmates in Class X. After their
exams are over, they happen to meet at a common friend Vrinda’s house. Just
characteristics; Business,
when they were sharing their experiences of examination days, Vrinda’s father Mr.
profession and employment
Subhash Dey intervenes and asks about their well- being. He also enquires about
– Concept
their career plans. But none of them had a definite reply. Subhash, who himself is
1.2 Objectives of business — a successful businessman, tells them about business as a career opportunity. Gloriya
economic and social; Role of gets excited by the idea and says “yes, business is really good for making lots
profit in business of money”. Subhash tells them that ‘there is a lot more to business than merely
1.3 Business risk — Concept, money’. Business activities lead to growth and development of any country, he
Nature and Causes added. He further tells them that the roots of business activities can be traced back to
ancient times and how trading helps with the prosperity of the Indian subcontinent.
1.4 Classification of business
activities — Industry and Shreya said that they had read about the Silk Route in their history textbooks.
Commerce Subhash then gets busy with his day-to-day tasks. However, the four classmates
begin raising questions.
1.5 History of Trade and
Commerce in India The conversation of the four classmates focused on how trading activities were
conducted during ancient times. How far can the roots of trading activities be
traced? Why was the Indian subcontinent referred to as ‘Swaran Bharat and Swaran
Learning Outcomes Dweep’ by the then travellers to India? What made Columbus and Vasco da Gama
undertake journeys to locate India? They decided to meet the commerce teacher of
After studying this chapter, the their school to find out answers to many such questions about the development,
learner: nature and purpose of business.
• Discusses the concept and
All human beings, wherever they may be, require different types of goods and
objectives of business;
services to satisfy their needs. The necessity of supplying goods and services has led
• Categorises business activities to certain activities being undertaken by people to produce and sell what is needed
into occupation, profession, and by others. Business is a major economic activity in all modern societies concerned
employment
as it is concerned with the production and sale of goods and services required by
• Classifies industry in different people. The purpose behind most business activities is to earn money by meeting
types; people’s demands for goods and services. Business is central to our lives. Although
• Explains Risk and Profit as a our lives are influenced by many other institutions in modern society, such as
reward of Risk; schools, colleges, hospitals, political parties and religious bodies, business has a major
• Enumerates factors for starting influence on our daily lives. It, therefore, becomes important that we understand
a business; and the concept, nature and purpose of business.
• Appreciates the contribution of
business activities in the growth
and development of an economy.
Business – Meaning and Characteristics; Business, Profession and Employment – Concept 1.1
Economic and non-economic activities
In every society, people undertake various activities to satisfy their needs. These activities may be broadly classified into two
groups — economic activities and non-economic activities.
Human Activities
Economic Activities Non-economic Activities
Basis Economic Activities Non-Economic Activities

1. Meaning Economic activities are those by which we can earn our Non-economic activities are those performed out of
livelihood. love, sympathy, sentiments, patriotism, etc.
2. Examples A worker working in a factory, a manager working in A housewife cooking food for her family, or a boy
an office, a doctor operating in his clinic, and a teacher helping an old man cross the road is performing
teaching in a school are doing so to earn their livelihoods non-economic activities since they are doing so out
and are, therefore, engaged in an economic activity. of love or sympathy.
3. Types Economic activities may be further divided into three Religious, social, parental and patriotic activities are
categories, namely business, profession and employment. non-economic activities.
A teacher teaching in a class— An economic activity A boy helping an old woman cross the road— A non-economic activity
Top Tip
The main distinction between economic and non-economic activities depends on the basic motives with which they are
performed. The same activity can be economic if it results in earning money and can be non-economic if the motive is to
serve others, not a monetary gain. For example, when a lady cooks food for a monetary gain like working in a restaurant
or a hotel , it is an economic activity. But if the same lady cooks food for her family, it is a non-economic activity. Similarly,
if a teacher is teaching in a school and gets a salary, it is an economic activity. But when he/she is teaching his/her son or
daughter at home, then it is a non-economic activity.
Competency Based Question

Which of the following is an economic activity. Give reasons for your answer.
(i) Health worker treating her patient.
(ii) Store owner sympathies with a needy elderly person and gives medicines for his ailment.
(iii) Football coach giving training in football to his daughter for forthcoming match.
(iv) Services of a housewife doing household chores at home.
(v) Donation made by a business house towards community kitchen run by an NGO for providing food,
medicines to underprivileged people and migrant workers of the society during Covid 19 pandemic.
(i) Health Worker treating her patient and (v) Donation made by a business house towards community kitchen run by an
NGO for providing food, medicines to underprivileged people and migrant workers of society during Covid 19 pandemic
are the economic activities.
Reasons:
• The health worker is providing a service (medical treatment) to her patient, which is typically compensated through
payment or covered by health insurance. It involves a professional exchange where the health worker’s skills and expertise
are utilized to diagnose, treat, and care for the patient’s health.
• While the store owner is providing medicines to the elderly person, the act is driven by sympathy rather than a business
transaction. It is a non-economic activity.
• Football coach giving training in football to his daughter for a forthcoming match is a non-economic activity. The motive
here is personal and not related to a financial transaction or professional engagement.
• Services of a housewife doing household chores at home is not considered an economic activity as services provided by
a housewife within the household, such as cooking, cleaning, and taking care of children, are not typically monetarily
compensated.
• Donation made by a business house towards a community kitchen is an economic activity. While the business house is
making a donation, it involves a financial transaction where resources are being transferred to support the community
kitchen’s operations. The donation can be seen as a contribution towards social welfare and can have economic
implications, such as tax benefits or public relations benefits for the business house.
Competency
Compete
CASE
Based
ncy Based
Barter system is an old method of exchange of goods and/or services for another set of goods and/
Question
Question
STUDY
or services. Is barter system an economic activity? Give reasons for your answer.
1.1
Discuss this in the classroom.
Concept of Business
The term business is derived from the word ‘busy’. Thus, business means being busy. However, in a specific sense, business
refers to an occupation in which people regularly engage in activities related to purchase, production and/or sale of goods and
services with a view to earning profits.
Business may be defined as an economic activity involving the production and sale of goods and services undertaken
with the motive of earning profit by satisfying human needs in society.
Definitions of Business
 “Business is an institution organised and operated to provide goods and services to society under the incentive of
private gain.” —B.O. Wheeler
 “ Business may be defined as a human activity directed towards producing or acquiring wealth through buying and
selling of goods.” —Lewis H. Haney
 “Business is any enterprise engaged in the production and distribution of goods for sale in market or rendering services
for a price.” —R.N. Ownes
 “Business may be defined as an activity in which different persons exchange something of value, whether goods or
services, for mutual gain or benefit.” —Peterson and Plowman
Business Functions at Enterprise Level

Business includes a wide variety of functions performed by different kinds of organisations called business
enterprises or firms. Financing, production, marketing and human resource management are the four major
functions which are performed by business enterprises.
• Financing is concerned with mobilising and utilising funds for running a business enterprise.
• Production involves the conversion of raw materials into finished products or generation of services.
• Marketing refers to all those activities which facilitate exchange of goods and services from producers to the
people who need them at a place they want, at a time they require and at a price they are prepared to pay.
• Human resource management (HRM) aims at ensuring the availability of working people who have necessary
skills to perform various tasks in enterprises.
Nature/Characteristics/Features of Business
In order to appreciate how business activity is different from other activities in society, the nature of business or its fundamental
character must be explained in terms of its distinguishing characteristics, which are as follows:
1. An economic activity
Business is considered to be an economic activity because it is undertaken with the objective of earning money or livelihood
and not out of love, affection, sympathy or any other emotion.
Must know!
It may be mentioned here that this activity can be undertaken either on a small and individual level, e.g. (purchase and sale by a
shopkeeper) or on a large scale at a more formal and organised level (purchase and sale by a cooperative society or company).
2. Production or procurement of goods and services

Before goods are offered to people for consumption, these must be either produced or procured by business enterprises. Thus,
every business enterprise either manufactures the goods it deals in or acquires them from producers, to be further sold to
consumers or users.
KEY TERMS
Goods Goods may consist of consumable items of daily use, such as sugar, ghee, pen, notebook, etc., or capital
goods, like machinery, furniture, etc.
Services Services may include facilities offered to consumers, business firms and organisations in the form of
transportation, banking, electricity, etc.
3. Sale or exchange of goods and services

Directly or indirectly, business involves transfer or exchange of goods and services for value. If goods are produced not for the
purpose of sale but for personal consumption, it cannot be called a business activity. Cooking food at home for the family is
not business, but cooking food and selling it to others in a restaurant is business.
One essential characteristic of business is that there should be sale or exchange of goods or services between the seller and the
buyer.
4. Dealings in goods and services on a regular basis

Business involves dealings in goods or services on a regular basis. One single transaction of sale or purchase, therefore, does not
constitute business. Thus, for example, if a person sells his/her domestic radio set even at a profit, it will not be considered a
business activity. But if he/she sells radio sets regularly either through a shop or from his/her residence, it will be regarded as a
business activity.
5. Profit earning
One of the main purposes of business is to earn income by way of profit. No business can survive for long without a profit.
That is why, businessmen make all possible efforts to maximise profits, by increasing the volume of sales or reducing costs.
6. Uncertainty of return
Uncertainty of return refers to the lack of knowledge relating to the amount of money that the business is going to earn in a
given period. Every business invests money (capital) to run its activities with the objective of earning profit. But it is not certain
as to what amount of profit will be earned. Also, there is always a possibility of losses being incurred, despite the best efforts
put into the business.
7. Element of risk
Risk is the uncertainty associated with an exposure to loss. It is caused by some unfavourable or undesirable event. Risks
are related with factors, like changes in consumer taste and fashion, changes in method of production, strike or lockout at
workplace, increased competition in market, fire, theft, accidents, natural calamities, etc. No business can altogether do away
with risks.
Business, Profession and Employment

Economic activities may be divided into three major categories viz., Business, Profession and Employment.
ECONOMIC ACTIVITIES
1.
3.
BUSINESS
EMPLOYMENT
Business refers to an
occupation in which people Employment refers to the occupation
regularly engage in in which people work for others and
activities related to 2. get remuneration (wages/salaries) in
purchase, production return. Those who are employed by
and/or sale of goods and
PROFESSION
others are known as
services with a view to Profession includes those economic employees/workers.
earning profits by satisfying activities which require application of Examples:
the needs of other people. special knowledge and skills in the People who work in factories
People engage in business
occupation. In every profession, receive wages,
to earn income in the form
guidelines or codes of conduct laid Bank employees get salaries, etc.
of profit.
down by professional bodies have to
be followed. Those engaged in
professions are known as
professionals.
Professions Professionals Professional bodies

Medical Doctors Medical Council of India
Legal Lawyers Bar Council of India
Accounting Chartered Accountants Institute of Chartered Accountants of India
Competency
Compete
CASE
Based
ncy Based Categorise the following into business, profession and employment.
Question
STUDY
Question (i) A farmer (ii) An advocate
1.2 (iii) A clerk (iv) A doctor
(v) A hawker selling toys for children (vi) A person repairing scooters by the roadside
Discuss this in the classroom.
Comparison of Business, Profession and Employment

Basis Business Profession Employment
1. Mode of Entrepreneur’s decision Membership of a professional Appointment letter and service
establishment and other legal body and certificate of practice agreement
formalities, if necessary
2. Nature of work Provision of goods and Rendering of personalised, Performing work as per service
services to the public expert services contract or rules of service
3. Qualification No minimum Qualifications, expertise and Qualification and training as
qualification is necessary training in specific field as prescribed by the employer
prescribed by the professional
body is a must
4. Reward or return Profit earned Professional fee Salary or wages
5. Capital Capital investment Limited capital needed for No capital required
investment required as per size and establishment
nature of business
6. Risk Profits are uncertain and Fee is generally regular and Fixed and regular pay; no or little
irregular; risk is present certain; some risk risk
7. Transfer of Transfer possible with Not possible Not possible
interest some formalities
8. Code of conduct No code of conduct is Professional code of conduct is Norms of behaviour laid down by
prescribed to be followed the employer are to be followed
9. Example Shop, factory Legal, medical profession, Jobs in banks, insurance companies,
chartered accountancy government departments
Multiple Choice Questions (MCQs) 1.1

Q.1 The occupation in which people work for others and get remunerated in return:
(a) Business (b) Profession
(c) Employment (d) None of these
Q.2 Read the following statements: Assertion (A) and Reason (R). Choose the correct alternative from those given below:
Assertion (A): Business is considered to be an economic Activity.
Reason (R): One of the main purposes of business is to earn income by way of profit.
(a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A).
(b) Both Assertion (A) and Reason (R) are true but Reason (R) is not the correct explanation of Assertion (A).
(c) Assertion (A) is true but Reason (R) is false.
(d) Assertion (A) is false but Reason (R) is true.
Q.3 Which of the following statements is false?
(a) If goods are produced not for the purpose of sale but for personal consumption, it cannot be called a business activity.
(b) One single transaction of sale or purchase does not constitute business.
(c) Businessmen make all possible efforts to maximise profits, by increasing the prices.
(d) There is always a possibility of losses being incurred, despite the best effort put in the business.
Q.4 Which of the following does not characterize the business activities?
(a) Provision of goods and services to the public. (b) No minimum qualification is necessary.
(c) Profits are uncertain and irregular; risk is present. (d) Transfer of interest is not possible.
Q.5 Which of the following is not a characteristic of profession?

(a) Rendering of personalised, expert services.
(b) Qualifications, expertise and training in a specific field as prescribed by the professional body is a must.
(c) No capital is required.
(d) Professional code of conduct is to be followed.
Q.6 Which of the following is not a characteristic of employment?
(a) Performing work as per service contract or rules of service.
(b) Fee is generally regular and certain; some risk.
(c) Qualification and training as prescribed by the employer.
(d) Transfer of interest is not possible.
Q.7 Which of the following is an economic activity?
(a) Store owner sympathies with a needy elderly person and gives medicines for his ailment.
(b) Football coach giving training in football to his daughter for a forthcoming match.
(c) Health worker treating her patient.
(d) Donation made by a business house towards a community kitchen run by an NGO for providing food, medicines to the
underprivileged people and migrant workers of society during Covid 19 pandemic.
Q.8 Match the columns and choose the correct alternative:
Column I Column II
A. An economic activity in which capital is not required. i. Business
B. An economic activity in which rendering of personalised expert service is required. ii. Employment
C. An economic activity, where the main objective is 'Earning Profit'. iii. Profession
(a) A - iii, B - ii, C - i (b) A - i, B - ii, C - iii
(c) A - ii, B - i, C - iii (d) A - ii, B - iii, C - i
Q.9 Due to which characteristic of business, there is always a possibility of losses being incurred, despite the best efforts put in the
business?
(a) Uncertainty of returns (b) Production or procurement of goods and services
(c) Economic activity (d) Profit earning
Q.10 Read the following statements carefully – Assertion (A) and Reason (R) and choose the correct alternative:
Assertion (A): Business is a major economic activity.
Reason (R): Business is concerned with the production and sale of goods and services required by people.
(b) Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).
(c) Assertion (A) is true, but Reason (R) is false.
(d) Assertion (A) is false, but Reason (R) is true.
Q.11 Read the following statements carefully and choose the correct alternative:
Statement I: Business starts with production and ends with consumption.
Statement II: ‘Business’ includes Industry, trade and commerce.
(a) Both the statements are true. (b) Both the statements are false.
(c) Statement I is true, Statement II is false. (d) Statement II is true, Statement I is false.
Statement I: Business refers to an occupation in which people regularly engage in activities related to purchase, production and/or
sale of goods and services with a view to earning profits.
Statement II: Economic activities are those by which we can earn our livelihood, whereas, non-economic activities are performed
out of love, sympathy, sentiment, patriotism, etc.
Statement I: Non-economic activities may be divided into three categories, namely business, profession and employment.
Statement II: Business is an economic activity involving the production and sale of goods and services undertaken with the motive
of earning a profit by satisfying human needs in society.
Assertion (A): Business is considered to be an economic activity
Reason (R): Business activity can be undertaken either on small and individual levels, e.g. (purchase and sale by a shopkeeper) or
on a large scale in a more formal and organised manner (purchase and sale by a cooperative society or company).
Statement I: Directly or indirectly, business involves a transfer or an exchange of goods and services for value.
Statement II: Cooking food and selling it to others in a restaurant is not a business.
Assertion (A): If a person sells his/her domestic television set at a profit, it will be considered a business activity.
Reason (R): Business involves dealings in goods or services on a regular basis.
(a) Both Assertion (A) and Reason (R) are true. (b) Both Assertion (A) and Reason (R) are false.
(c) Assertion (A) is true, but Reason (R) is false. (d) Assertion (A) is false, but Reason (R) is true.
Assertion (A): If a person sells radio sets regularly from his/her residence, it will be regarded as a business activity.
Reason (R): Business involves dealings in goods or services on a regular basis.
Statement I: Salary is reward for business.
Statement II: Chartered Accountancy is a Profession.
Q.19 Which of the following is an economic activity?
(a) A housewife cooking food for her family. (b) A person selling cold water on the pavement.
(c) A young boy driving his motorcycle in the city. (d) An old man offering prayers in a temple.
Q.20 The economic activity in which specialised knowledge is required is _________.
(a) Business (b) Employment
(c) Profession (d) Industry
Q.21 Capital is required in ________.
(a) Profession (b) Employment
(c) Business (d) Non-economic Activity
Q.22 Which is not an economic activity?
(a) Clerical work in a bank (b) Teaching in a Govt. school
(c) Cooking by a housewife (d) Car production
Q.23 Code of conduct exists in ________.
(c) Employment (d) All of these
Q.24 Which economic activity has zero risk?
(c) Employment (d) All of these
Q.25 Which of the following does not characterise business activity?
(a) Production of goods (b) Presence of risk and services
(c) Sale or exchange (d) Salary or wages
Competency Based Questions 1.1

Q.1 Ms. Meena is a lecturer in a college. She gets `72,000 p.m. as remuneration. Mr. Kunal is a farmer producing 20 quintals
of wheat for his own consumption and 2,000 quintals for sale. Ms. Kirti, a journalist in an agency, teaches slum children
after her office hours. She doesn’t charge anything from them. This gives her psychological and mental satisfaction.
Production of wheat by Mr. Kunal for his own consumption refers to which human activity? Explain. (3)
Q.2 All the four children of Mr. Madan Mohan Lal are doctors. Shyam is a skin specialist, Krishna is a heart specialist, Radhika is a
child specialist and Gauri is a physician. Dr. Shyam joined a multi-speciality private hospital. Dr. Krishna established his own
nursing home. Dr. Radhika works in a government hospital and also treats the poor people free of charge in a charitable dispensary.
Dr. Gauri opened a medical store wherein she sells genuine medicines, getting the minimum profit margin.
(a) State, giving reasons, whether they are engaged in economic or non-economic activities.
(b) Also explain in which form of the economic activities and non-economic activities they have been engaged. (4)
Q.3 Anshul is a farmer. His elder brother Ankur is an advocate while his sister Priyanka is a clerk in a government office. Name
the economic activities in which they are engaged and distinguish among them on the basis of: (i) Reward/Return (ii) Capital
investment (iii) Risk. (3)
Q.4 Answer the following: (6)
(a) Rajni, a house wife exchanges utensils for old clothes on a regular basis. Is it a business and why?
(b) ‘Only sale or exchange of goods/services for profit is business.’ Do you agree with the statement? Give reason in support of
your answer.
(c) Mr. Rajnesh sold his furniture & bike on OLX as he was moving base to London. Is this a business activity ? Which element
of business is being referred to here?
(a) A housewife sells old newspapers for `100. Is it a business activity? Why?
(b) If a person sells his/her domestic T.V. set at a profit, will it be considered as a business? Why?
(c) Ritika produces goods not for the purpose of sale but for personal consumption. Will it be a business activity? Why?
(d) Chhavi cooks food at home for her family but Shelly cooks food and sells it to others in a restaurant. Who is engaged in
business activity?
(e) A person repairs scooters by the roadside. How will you describe this activity?
(f ) Lalita , a housewife sells old newspaper of two months at ` 300, will you classify it as business activity? Why?
(a) Give an example of activity which is economic in one sense and non-economic in other sense.
(b) “Business activities are undertaken under conditions of uncertainty.” Which characteristic of business is highlighted in this
statement?
(c) “Business is undertaken with the object of earning money.” Which characteristic of business is highlighted in this statement?
(d) Nitin is a salesman who sells mobile phones on behalf of his employer. What will be his remuneration?
(e) Which economic activity requires minimum academic and other qualifications?
(f ) A hawker sells toys for children. How will you describe this activity?
(a) Name the type of economic activity wherein a doctor runs his clinic. (1)
(b) Name the economic activity which is conducted by a person having some special knowledge and skills which is used to serve
different sections of the society. (1)
(c) A lawyer is working in a knowledge process outsourcing (KPO) organization. What type of economic activity is he
performing? (1)
(d) Prakash, a farmer went to the market and exchanged his rice with pulses. Is it an economic activity ? (1)
(e) Rajana is managing her own bakery. What type of economic activity is she doing ? (1)
(f ) Babita is a qualified Chartered Accountant and is practicing independently. While her friend Chitra has done her B.Tech. from
IIT Kanpur and got a campus placement in an MNC. In what kind of business activities are Babita and Chitra engaged? (1)
Q.8 After completing their graduation, Salman and Ram decided to set up a flour mill to earn income. Their main job is to purchase
wheat from the market and have it ground into flour. Their flour is available in the packets of 5 kg, 10 kg and 20 kg. They sell these
under the brand name ‘Desh ka Atta’, and earn a reasonable profit of 10% on cost. They worked very hard to make their business
flourish on a regular basis, and hence in no time their brand became very popular in the market. The main reasons for the success
of their business are a superior quality and a low price. Their business was running very well. But one day, the flour mill caught fire,
and as a result they had to suffer a heavy loss. However, Salman and Ram did not lose heart, and worked even harder. Gradually,
their business was back to normal. Now, they are fully satisfied with their business. Quoting the lines from the above para, explain
any four characteristics of business. (6)
Q.9 Fill in the blanks with correct answers: (3)
(i) Taking photographs of mountains as a hobby is ________ activity.
(ii) ________ is the primary objective of business.
(iii) Profit is essential for covering ________ of the business. Every business must earn reasonable profit to ________.
Q.10 State, giving reasons, whether the following statements are true or false: (4)
(a) Teaching in a school is a non-economic activity.
(b) Business is an economic activity.
(c) Sale of one’s ancestral house will not fit into the description of a business.
(d) A business activity may be without a profit motive.
Q.11 Identify and explain the three major categories of economic activities. (3)
Economic Activities
(i) (ii) (iii)
Q.12 Explain the differences between the types of economic activities shown in the pictures (i),(ii) and (iii) given below. (6)
(i) (ii) (iii)
Subjective Questions 1.1

Q.1 Explain the meaning of business with special reference to economic and non-economic activities. (3)
Q.2 Discuss the characteristics of business. (6)
Q.3 Explain the concept of business, profession and employment. (3)
Q.4 Differentiate between business, profession and employment. (any four points) (6)
Q.5 Explain the following characteristics of business activities: (4)
(i) Sale or exchange of goods and services
(ii) Dealings in goods and services on a regular basis
Q.6 Explain the following characteristics of business activities: (4)
(i) Uncertainty of return
(ii) Element of risk
Q.7 State the different types of economic activities. (3)
Q.8 Compare Business, Profession and Employment on the basis of: (3)
(i) Mode of establishment
(ii) Reward or return
(ii) Transfer of interest
Q.9 Compare Business, Profession and Employment on the basis of: (4)
(i) Nature of work (ii) Qualification
(ii) Capital investment (iv) Risk
Q.10 Define business. Describe its important characteristics. (any five) (6)
Q.11 Compare business with profession and employment. (any six basis) (6)
Q.12 “Business is an institution organised and operated to provide goods and services under the incentive of a private gain.” Discuss. (3)
Q.13 Name and explain the two characteristics of business which involve possibility of loss. (3)
Objectives of Business — Economic and Social; Role of Profit in Business 1.2

An objective is the starting point of business. Every business is directed to the achievement of certain objectives.
Objectives are defined as ends which a business firm seeks to achieve by its operations, e.g., increasing sales by 10 per cent,
earning 20 per cent Return on Investment (RoI), etc. Objectives provide directions for all decisions and actions.
Objectives are needed in every area that influences the survival and prosperity of business. Since a business has to
balance a number of needs and goals, it requires multiple objectives. It cannot follow only one objective and expect to achieve
excellence.
• Objectives have to be specific in every area and sphere of business.
• Objectives also enable the business to analyse their own performance and take steps as necessary to improve their performance
in future.
Objectives of Business
Economic Objectives Social Objectives
1. Earning profits 1. Production and supply of

2. Market standing quality goods and services
3. Innovation 2. Avoidance of anti-social and
unfair trade practices
4. Optimum utilization of
3. Generation of employment
physical and financial
4. Welfare of employees
resources 5. Community service
5. Increasing productivity
Economic Objectives
Since business is an economic activity, its main objectives are economic objectives. The economic objectives of business are as follows:
1. Earning profits: Profitability refers to profit in relation to capital investment. One of the main economic objectives of
business is to earn profits on the capital employed. Every business must earn a reasonable profit which is so important for
its survival and growth.
2. Market standing: Market standing refers to the position of an enterprise in relation to its competitors. A business enterprise
must aim at standing on a stronger footing in terms of offering competitive products to its customers and serving them to
their satisfaction.
3. Innovation: Innovation is the introduction of new ideas or methods in the way something is done or made.
There are two kinds of innovations in every business:
• innovations in product or services; and
• innovations in various skills and activities needed to supply products and services.
No business enterprise can flourish in a competitive world without innovation. Therefore, innovation becomes an
important objective.
4. Optimum utilization of physical and financial resources: Every business requires physical resources, like plants, machines,
offices, etc., and financial resources, i.e., funds to be able to produce and supply goods and services to its customers.
The business enterprise must aim at acquiring these resources according to their requirements and use them efficiently.
5. Increasing productivity: Productivity is ascertained by comparing the value of output with the value of inputs. It is used as a
measure of efficiency.
In order to ensure continuous survival and progress, every enterprise must aim at greater productivity through the best use
of available resources.
Social Objectives
Social objectives of business are centred around the interests of society and based on the slogan of ‘social welfare’.
Social responsibility refers to the obligation of business firms to contribute resources for solving social problems and
work in a socially desirable manner.
Social objectives of business are as follows:

1. Production and supply of quality goods and services: Business should produce and supply products of proper quality
to satisfy customer expectations. Quality may mean durability as in the case of radio, TV, refrigerator, etc. or purity as in
the case of medicine, or safety as in the case of pressure cooker, electric appliances, etc. Modern consumers prefer to buy
quality products. He looks for an ISI mark on electrical goods, an FPO mark on food products, a Hallmark on jewellery,
AGMARK on agricultural products, etc.
2. Avoidance of anti-social and unfair trade practices: A businessman should avoid hoarding, black-marketing, over-
charging, misleading advertisements, etc. to mint money. Such unfair practices destroy the goodwill and image of the
business and are punishable also.
3. Generation of employment: Business should generate employment opportunities to the disadvantaged sections of the
society (e.g., differently abled people).
4. Welfare of employees: Business should provide good working conditions and pay satisfactory wages/salaries to its
employees.
5. Community service: Large business units should undertake community services like setting up charitable dispensaries,
schools, etc. For example, Steel Authority of India contributes regularly to agriculture, industry, education, healthcare,
dairy, poultry, fisheries and drinking water supply to the people living nearby to their steel plants.
Role of Profit in Business
The basic objective of every business is profit maximisation. Profit is the excess of revenue over cost.
Profit may be regarded as an essential objective of business because of the following reasons:
1. Source of income for business persons: Profit helps a business to continue to exist for a long period. In the absence of
profit, the establishment of a particular business loses its justification.
2. Source of finance for meeting expansion requirements of business: All business persons want their businesses to expand
and grow. For growth and expansion of business, additional capital is needed. Retained earnings is a very good source of
capital.
3. Indicator of the efficient working of business: Profit motivates the owners as well as the workers to do their best. As a
result of higher profits, employees get adequate compensation.
4. Covers costs and risks of the business: It is in the hope of earning sufficient profits that a businessman invests money in
business and undertakes risks.
5. Builds the reputation of a business enterprise: For gaining prestige in the society, every business has to satisfy all
the parties concerned. It has to supply good quality products/services at a reasonable price to customers, pay adequate
remuneration to employees, pay sufficient dividend to the shareholders etc. All this is possible only if the business is
earning sufficient profits.
Earning profit cannot be the only objective of business

It is generally believed that business activity is carried out only for profit. Business persons themselves
proclaim that their primary objective is produce or distribute goods or services for profit. Every business is
said to be an attempt on the part of business people to get more than what has been spent or invested,
Interesting or in other words, to earn profit which is the excess of revenue over cost. However, it is being increasingly
Fact realised nowadays that business enterprises are part of the society and need to fulfil several objectives,
including social responsibility, to survive and prosper in the long run. Profit is found to be a leading
objective but not the only one.
Too much emphasis on profit to the exclusion of other objectives can be dangerous for good business.
Obsessed with profit, business managers may neglect all other responsibilities towards customers,
employees, investors and society at large. They may even be inclined to exploit various sections of society
to earn immediate profit. This may result in the non-cooperation or even opposition from the affected
people against the malpractices of business enterprises. The enterprises might lose business and may be
unable to earn profit. This is essential for its own survival and prosperity.

Q.1 “Profit may be regarded as an essential objective of business.” Which of the following does not explain the given statement?
(a) It is a source of income for business persons.
(b) It can be a source of finance for meeting expansion requirements of business.
(c) It builds the reputation of a business enterprise.
(d) It helps in fulfilling the social responsibility.
Column I Column II
(A) An economic activity, in which salary is a reward. (i) Profit
(B) Position of an enterprise in relation to its competitor. (ii) Innovation
(C) The excess of revenue over cost. (iii) Marketing Standing
(D) Introduction of new idea or method in a way something done or made. (iv) Employment
(a) (A) - (iii), (B) - (i), (C) - (ii), (D) - (iv) (b) (A) - (iv), (B) - (iii), (C) - (i), (D) - (ii)
(c) (A) - (iv), (B) - (iii), (C) - (ii), (D) - (i) (d) (A) - (iii), (B) - (iv), (C) - (ii), (D) - (i)
Statement I: Workers’ performance and attitude determine their contribution towards productivity and profitability of any
enterprise.
Statement II: Productivity is used for measuring efficiency.
Q.4 Which is not the objective of business?
(a) Making profit (b) Creation of customers
(c) Investment (d) Innovation

Q.1 Shreya and Vrinda joined together and established a partnership firm dealing in electronic goods. Each one of them looks after
one particular department. They had made it certain that every Saturday they would hold a meeting and share the information
on the activities of their respective departments. In one of their meetings, they discuss some key areas on which they should focus
their attention. Shreya says, “we should focus on increasing the number of products and profits.” On the other hand, Vrinda says,
“we should keep clear of the anti-social activities like adulteration, hoarding and profiteering, and contribute to the benefits of the
society like opening charitable dispensary, educational institution, etc.
What are the objectives of business Shreya and Vrinda focusing on? Explain. (6)
Q.2 Manjeet Pvt. Ltd. is a reputed company manufac-turing computers. The company is earning a considerable profit. Both the
proprietors and the employees are putting in their best effort to make good quality products available to the customers at a low
price, paying its shareholders a good amount of dividends and the employees a reasonable remuneration. This contributes to the
successful operations of the business. With increased profits over time, the company’s foundation becomes strong, and it earns a
good reputation in the society. It utilises its profits to finance its growth and expansion requirements.
Explain the role of profit in business of Manjeet Pvt. Ltd. by quoting the lines from the above para. (6)
Q.3 Mr. X and Y are having a discussion. Mr. X says that business is based on a selfish desire to gain higher and higher profits while Mr.
Y thinks that profit is essential for a business. Can you support Mr. Y’s case by giving strong points in his favour? (3)
Q.4 A factory emits a lot of smoke and pollutants while manufacturing Sugar. It is overlooking the impact of its activities on the
environment and is engaged in profit maximization.
(i) Which objectives is not being fulfilled by the manufacturers? State any three such objectives.
(ii) Which type of industry will you classify sugar manufacturing? (4)
Q.5 A company has decided to donate 1% of its sales to an NGO, serving mentally disabled people. This initiative by the company was
highly appreciated by the public and their sales increased by 10%
Identify the objectives depicted in the given example.State any three such objectives. (4)

Q.1 “Every business makes an attempt to reap more than what has been invested.” Which objective of business is stated in above
Statement? State any three reasons which highlight the importance of this object of business. (4)
Q.2 ABC Ltd. is planting a tree by the roadside. Which objectives is it trying to achieve? Explain any two such objectives. (3)
Q.3 Explain the economic and social objectives of business. (6)
Q.4 Examine the role of profit in business. (4)
Q.5 Explain any four objectives of business. (6)
Q.6 Explain any three social objectives of business. (3)
Q.7 Explain any four economic objectives of business. (4)
Q.8 “Although earning profit cannot be the only objective of business, its importance cannot be ignored.” Defend or refute the given
statement. (4)
Q.9 “Too much emphasis on profit to the exclusion of other objectives can be dangerous for good business.” Comment. (4)
Q.10 Profit maximization cannot be the sole objective of a business. Comment. (6)
Q.11 “Business is essentially a social institution and not merely a profit making activity.” Explain. (6)
Business Risk — Concept, Nature and Causes 1.3

Concept of Business Risk
Meaning
The term ‘business risk’ refers to the possibility of inadequate profits or even losses due to uncertainties or unexpected events.
• Demand for a particular product may decline due to change in tastes and preferences of consumers or due
to increased competition from other producers. Lower demand results in low sales and profits.
• The shortage of raw materials in the market may shoot up its price. The firm using these raw materials
will have to pay more for buying them. As a result, cost of production may increase which, in turn, may
reduce profits.
Types of Business Risks

Business enterprises constantly face two types of risk : speculative risks and pure risks.
SPECULATIVE RISKS PURE RISKS

1 2
Speculative risks involve both Pure risks involve only the
the possibility of gain, as well possibility of loss or no loss.
as, the possibility of loss. Their occurrence may
Favourable market result in a loss, whereas,
conditions are likely to result non-occurrence may
in gains, whereas, explain an absence of a
unfavourable ones may loss, instead of a gain.
result in losses. TYPES OF The chance of fire, theft
Speculative risks arise due
to changes in market BUSINESS RISKS or strike are examples of
pure risks.
conditions, including
fluctuations in demand and
supply, changes in prices or
changes in fashion and
tastes of customers.
Nature of Business Risks

Nature of business risks can be understood in terms of their peculiar characteristics:
1. Risk is an essential part of every business. Every business has some risk. No business can avoid risk, although the amount
of risk may vary from business to business. Risk can be minimised, but cannot be eliminated.
2. Business risks arise due to uncertainties. Uncertainty refers to the lack of knowledge about what is going to happen
in future. Natural calamities, change in demands and prices, changes in government policies and prices, improvement in
technology, etc., are some of the examples of uncertainty which create risks for business because the outcomes of these
future events are not known.
3. Degree of risk depends mainly upon the nature and size of business. Nature of business (i.e., type of goods and services
produced and sold) and size of business (i.e., volume of production and sale) are the main factors which determine the
amount of risk in a business.
For example, a business dealing in fashionable items has a high degree of risk. Similarly, a large-scale business generally has
a higher risk than what a small scale has.
4. Profit is the reward for risk taking. ‘No risk, no gain’ is an age-old principle which applies to all types of business. The
greater the risk involved in a business, the higher is the chance of profit. An entrepreneur undertakes risks under the
expectation of higher profit. Profit is, thus, the reward for risk taking.
Causes of Business Risks

Business risks arise due to a variety of causes, which are classified as follows:
1. Natural causes: Human beings have little control over natural calamities, like flood, earthquake, lightning, heavy rains,
famine, etc.
2. Human causes: Human causes include such unexpected events, like dishonesty, carelessness or negligence of employees,
stoppage of work due to power failure, strikes, riots, management inefficiency, etc.
3. Economic causes: These include uncertainties relating to a demand for goods, competition, price, collection of dues from
customers, change of technology or method of production, etc.
Must know!
Financial problems, like rise in interest rate for borrowing, levy of higher taxes, etc., also come under these type of causes as they
result in higher unexpected cost of operation or business.
4. Other causes: These are unforeseen events, like political disturbances, mechanical failures, such as the bursting of boiler,
fluctuations in exchange rates, etc., which lead to the possibility of business risks.

Q.1 Which of the following does not highlight the nature of business risks?
(a) Business risks arise due to uncertainties.
(b) Profit is the reward for risk taking.
(c) Risk is an essential part of every business.
(d) Degree of risk depends mainly upon demand and supply of product.
Column I (Causes of Business Risks) Column II (Examples)
A. Natural causes i. Rise in interest rate for borrowing, levy of higher taxes, etc.
B. Human causes ii. Dishonesty, carelessness or negligence of employees, stoppage of work due
to power failure, strikes, riots, management inefficiency, etc.
C. Economic causes iii. Flood, earthquake, lightning, heavy rains, famine, etc.
D. Other causes iv. Political disturbances, mechanical failures, such as the bursting of boiler,
fluctuations in exchange rates, etc.
(a) A - iii, B - ii, C - i, D - iv (d) A - ii, B - iii, C - i, D - iv
(c) A - iii, B - i, C - ii, D - iv (d) A - iv, B - ii, C - i, D - iii
Column I – Business Risks Column II – Causes
A. Losses due to flood, earthquake, lightning, heavy rains, famine, etc. i. Economic causes
B. Dishonesty, carelessness or negligence of employees, stoppage of work due to power ii. Natural causes
failure, strikes, riots, management inefficiency, etc.
C. Uncertainties relating to demand for goods, competition, price, collection of dues iii. Human causes
from customers, change of technology or method of production, etc.
(a) A - ii, B - iii, C - i (b) A - i, B - ii, C - iii
(c) A - ii, B - i, C - iii (d) A - iii, B - i, C - ii
Statement I: Pure risks involve both the possibility of gain, as well as, the possibility of loss.
Statement II: Speculative risks involve only the possibility of loss or no loss.
Assertion (A): The chance of fire, theft or strike are examples of pure risks.
Reason (R): Their occurrence may result in a loss, whereas, non-occurrence may explain an absence of a loss, instead of a gain.
Assertion (A): The shortage of raw materials in the market may shoot up its price.
Reason (R): The firm using these raw materials will have to pay more for buying them. As a result, cost of production may increase.
Statement I: Lower demand results in low sales and profits.
Statement II: The shortage of raw materials in the market may shoot up its price.
Statement I: No business can avoid risk, although the amount of risk may vary from business to business.
Statement II: The greater the risk involved in a business, the higher is the chance of profit.
Statement I: Risk can be minimized but cannot be eliminated.
Statement II: The greater the risk involved in a business, the higher is the choice of profit.
Q.10 Risk is the result of _____________.
(a) Uncertainty (b) Certainty
(c) Business activities (d) None of these

Q.1 Vrinda Ltd. is facing a decline in demand for its products due to change in tastes and preferences of consumers as well as increased
competition from other producers. Lower demand results in low sales and profits. Moreover, the shortage of raw materials in the
market shoots up their price. So the company has to pay more for buying them. As a result, cost of production increases which, in
turn, reduces profits of the company.
(a) State the concept highlighted above. (1)
(b) Explain three main causes of the concept identified. (3)
Q.2 Business enterprises constantly face two types of risks. Some business risks arise due to changes in market conditions, including
fluctuations in demand and supply, changes in prices or changes in fashion and tastes of customers. Favourable market conditions
are likely to result in gains, whereas, unfavourable ones may result in losses. The chance of fire, theft or strike are examples of other
type of business risks. Their occurrence may result in a loss, whereas, non-occurrence may explain an absence of a loss, instead of a
gain.
(a) Identify and explain, by quoting lines from the above paragraph, the two types of business risks. (2)
(b) Explain, with examples, the two main factors which determine the amount of risk in a business. (2)
(c) Explain the age-old principle ‘No risk, no gain’. (1)
(d) “Business risk can be eliminated by risk identification, risk assessment, consultations and risk management and insurance
policy.” Do you agree with the statement? Give reason in support of your answer. (1)
Q.3 Mr. Ramesh is running a Grocery store in Karol Bagh, New Delhi. Due to the entry of many big retail. stores in the area, he fears
that it will affect the Sales and revenue of his business. He lacks the knowledge to ascertain the real effect of entry of big retail
stores. But he knows that “No risk No Gain”. So he decided to invest more money to upgrade his small store so as to compete with
large stores. He thus tried to minimise the risk.
Identify any three points of nature of business risk depicted the above paragraph. (3)
Q.4 Different situations in different businesses are being elaborated below:
• Raghunath Gorkha had a matchstick factory in Nepal which got destroyed by the recent earthquake.
• Mr. Arya a senior manager in a telecom company shared confidential information about the company with a competitor
which led to huge losses for the company.
• Vodafone Co. was charged with an evasion of tax and asked to pay a fine in crores which would lead to heavy losses for the
company.
• Typewriters becoming redundant because of laptops.
(a) Which characteristic of business is being referred to in all the above cases ?
(b) How can you classify the different cases based on this characteristic ? (4)
(a) Risks arise in business due to uncertain future.
(b) Profit is the reward for bearing risks.
(c) Risk is an essential element of every business activity.

Q.1 Explain the concept and nature of risk as a special characteristic of business. (6)
Q.2 Examine the causes of business risks. (4)
Q.3 Explain the concept of business risk and its causes. (6)
Q.4 Distinguish between Speculative risks and Pure risks. (3)
Q.5 Explain the following: (3)
(i) Business risks arise due to uncertainties
(ii) Degree of risk depends mainly upon the nature and size of business.
Q.6 What is business risk? What is its nature? Explain. (6)
Q.7 “No business is risk free.” In the light of this statement, explain the concept of business risk and its any three causes. (4)
Classification of Business Activities — Industry and Commerce 1.4

Various business activities may be classified into two broad categories — industry and commerce.
 Industry is concerned with the production or processing of goods and materials.
 Commerce includes all those activities, which are necessary for facilitating the exchange of goods and services. On the basis
of these two categories, we may classify business firms into industrial and commercial enterprises.
Industry
Industry refers to economic activities, which are connected with conversion of resources into useful goods. Generally, the
term 'industry' is used for activities in which mechanical appliances and technical skills are involved. These include activities
relating to producing or processing of goods, as well as, breeding and raising of animals.
The term 'industry' is also used to mean groups of firms producing similar or related goods. For example, cotton textile industry
refers to all manufacturing units producing textile goods from cotton. Similarly, electronic industry would include all firms
producing electronic goods, and so on.
Further, certain services, like banking and insurance, are also referred to as industry, say banking industry, insurance industry, etc.
Industries may be divided into three broad categories namely primary, secondary and tertiary.
1. Primary industries
These include all those activities which are concerned with the extraction and production of natural resources and reproduction
and development of living organisms, plants, etc.
Primary industries are divided as follows:
(i) Extractive industries: These industries extract or draw products from natural sources. Extractive industries supply some
basic raw materials that are mostly products of geographical or natural environment. Products of these industries are
usually transformed into many other useful goods by manufacturing industries. Important extractive industries include
farming, mining, lumbering, hunting and fishing operations.
(ii) Genetic industries: These industries are engaged in breeding plants and animals for their use in further reproduction.
Seeds and nursery companies are typical examples of genetic industries. In additional, activities of cattle breeding farms,
poultry farms, and fish hatchery come under genetic industries.
2. Secondary industries
These are concerned with using materials, which have already been extracted at the primary state. These industries process
such materials to produce goods for final consumption or for further processing by other industrial units. For example, mining
of iron ore is a primary industry, but manufacturing of steel by way of further processing of raw irons is a secondary industry.
Secondary industries may be further divided as follows:
(i) Manufacturing industries: These industries are engaged in producing goods through processing of raw materials and,
thus, creating form utilities. They bring out diverse finished products, that we consume, or use through the conversion
of raw materials or partly finished materials in their manufacturing operations. Manufacturing industries may be further
divided into four categories on the basis of method of operation for production.
• Analytical industry which analyses and separates different elements from the same materials, as in the case of oil refinery.
• Synthetical industry which combines various ingredients into a new product, as in the case of cement.
• Processing industry which involves successive stages for manfucturing finished products, as in the case of sugar and paper.
• Assembling industry which assembles different component parts to make a new product, as in the case of television,
car, computer, etc.
(ii) Construction industries: These industries are involved in the construction of buildings, dams, bridges, roads as well as
tunnels and canals. Engineering and architectural skills are an important part in construction industries.
3. Tertiary industries
These are concerned with providing support services to primary and secondary industries as well as activities relating to trade.
These industries provide service facilities. As business activities, these may be considered part of commerce because as auxiliaries
to trade these activities assist trade.
Tertiary industries include transport, banking, insurance, warehousing, communication, packaging and advertising.
Commerce
Commerce includes all those activities, which are necessary for facilitating the exchange of goods and services.
Top Tip
Commerce includes two types of activities, viz., (i) trade and (ii) auxiliaries to trade.
• Buying and selling of goods is termed as trade.
• But there are a lot of activities that are required to facilitate the purchase and sale of goods. These are called auxiliaries to
trade (or services) and include transport, banking, insurance, communication, advertisement, packaging and warehousing.
All activities involving the removal of hindrances in the process of exchange are included in commerce.
Commerce provides the necessary link between producers and consumers. It embraces all those activities, which
are necessary for maintaining a free flow of goods and services. Thus, all activities involving the removal of
hindrances in the process of exchange are included in commerce.
The hindrances may be in respect of persons, place, time, risk, finance, etc.
• The hindrance of persons is removed by trade, thereby, making goods available to consumers from the
possession or ownership producers.
• Transport removes the hindrances of place by moving goods from the place of production to the markets for sale.
• Storage and warehousing activities remove the hindrance of time by facilitating holding of stocks of goods to
be sold as and when required.
• Goods held in stock, as well as, goods in course of transport are subject to a risk of loss or damage due to theft,
fire, accidents, etc. Protection against these risks is provided by insurance of goods.
• Capital required to undertake the above activities is provided by banking and financing institutions.
• Advertising makes it possible for producers and traders to inform consumers about the goods and services
available in the market.
Hence, commerce is said to consist of activities of removing the hindrances of persons, place, time, risk, finance and
information in the process of exchange of goods and services.
Trade
Trade refers to sale, transfer or exchange of goods.
Trade is an essential part of commerce. It helps in making the goods produced available to the consumers or users. These days
goods are produced on a large scale and it is difficult for producers themselves to reach out to individual buyers for selling their
products. Businessmen are engaged in trading activities to make the goods available to consumers in different markets. In the
absence of trade, it would not be possible to undertake production activities on a large scale.
Trade may be classified into two broad categories – internal and external.
1. Internal trade: Internal, domestic or home trade is concerned with the buying and selling of goods and services within
the geographical boundaries of a country. This may further be divided into wholesale and retail trade.
(i) Wholesale trade: It refers to buying and selling of goods and services in large quantities for the purpose of resale
or intermediate use. Traders dealing in wholesale trade are called wholesalers.
(ii) Retail trade: When goods are purchased and sold in comparatively smaller quantities, for final consumption it is
referred to as retail trade.
2. External trade: External or foreign trade consists of the exchange of goods and services between persons or organisations
operating in two or more countries.
(i) Import trade: If goods are purchased from another country, it is called import trade.
(ii) Export trade: If goods are sold to other countries, it is known as export trade.
(iii) Entrepot trade: When goods are imported for export to other countries, it is known as entrepot trade.
Auxiliaries to Trade
Activities which are meant for assisting trade are known as auxiliaries to trade.
These activities are generally referred to as services because these are in the nature of facilitating the activities relating to industry
and trade. Transport, banking, insurance, warehousing, and advertising are regarded as auxiliaries to trade, i.e., activities playing
a supportive role. In fact, these activities support not only trade, but also industry and, hence, the entire business activity.
Auxiliaries are an integral part of commerce in particular and business activity in general. These activities help in removing
various hindrances which arise in connection with the production and distribution of goods.
• Transport facilitates movement of goods from one place to another.
• Banking provides financial assistance to the manufacturer and trader.
• Insurance covers various kinds of business risks.
• Warehousing creates time utility by way of storage facilities.
• Advertising provides information to the consumers.
In other words, these activities facilitate movement, storage, financing, risk coverage and sales promotion of goods.
Auxiliaries to trade are briefly discussed below:
1. Transport and Communication: Production of goods generally takes place in particular locations. For instance, tea is
mainly produced in Assam; cotton in Gujarat and Maharashtra; jute in West Bengal and Odisha; sugar in U.P., Bihar and
Maharashtra and so on. But these goods are required for consumption in different parts of the country. The obstacle of
place is removed by transport through road, rail or coastal shipping. Transport facilitates movement of raw material, to the
place of production and the finished products from factories to the place of consumption.
Along with transport facility, there is also a need for communication facilities so that producers, traders and consumers may
exchange information with one another. Thus, postal services and telephone facilities may also be regarded as auxiliaries to
business activities.
2. Banking and Finance: Business activities cannot be undertaken unless funds are available for acquiring assets, purchasing
raw materials and meeting other expenses. Necessary funds can be obtained by businessmen from a bank. Thus, banking
helps business activities to overcome the problem of finance.
• Commercial banks, generally lend money by providing overdraft and cash credit facilities, loans and advances.
• Banks also undertake collection of cheques, remittance of funds to different places, and discounting of bills on behalf
of traders.
• In foreign trade, commercial banks help exporters in collecting money from importers.
• Commercial banks also help promoters of companies to raise capital from the public.
3. Insurance: Business involves various types of risks. Factory building, machinery, furniture, etc., must be protected against
fire, theft and other risks. Material and goods in stock or in transit are subject to the risk of loss or damage. Employees are
also required to be protected against the risks of accident and occupational hazards. Insurance provides protection in all
such cases. On payment of a nominal premium, the amount of loss or damage and compensation for injury, if any, can be
recovered from the insurance company.
4. Warehousing: Usually, goods are not sold or consumed immediately after production. They are held in stock to made
available as and when required. Special arrangement must be made for the storage of goods to prevent loss or damage.
Warehousing helps business firms to overcome the problem of storage and facilitates the availability of goods when needed.
Prices are, thereby, maintained at a reasonable level through continuous supply of goods.
5. Advertising and Public Relations (PR): There is an old saying “Advertising is what you pay for and PR is what you pray
for”. Both advertisement and PR activities are the tools to commerce, which influence and promote your product, services
or an idea to the potential customers and motivate your target customers to recognise your accomplishments. The popular
PR tool is the use of press release in print and social media platforms.
Advertising and public relation activities are one of the most important methods of promoting the sale of products and
services in a market place. It is practically impossible for producers and traders to contact each and every customer. Thus,
for promoting sales, information is made available through advertisements and publicity tools about their features, price,
etc., to the potential customers. Also, there is a need to persuade potential customer’s and buyers about the utility features,
quality, price, competitive information about the goods and services, etc. The publicity of such attributes of products and
services are done using various techniques of maintaining public relation tools.
Advertising and Public Relations activities help in providing information about available goods and services and inducing
customers to buy particular items. Advertisements are always a paid activity where business occupies space in print or
non-print media to promote its product or a service. PR activities, on the other hand, are normally unpaid where business
enters into a strategic communication to build a mutually beneficial relationship.

Q.1 Which auxiliary to trade helps in maintaining prices at reasonable level through continuous supply of goods?
(a) Transportation (b) Banking
(c) Warehousing (d) Advertising
Q.2 With the help of government subsidy, Gaurav is running a poultry farm successfully. Identify the name of Industry in which Gaurav
is engaged.
(a) Genetic Industry (b) Manufacturing Industry
(c) Extractive Industry (d) Tertiary Industry
Q.3 This Auxiliary to trade helps promoters of companies to raise capital from public. Identify the Auxiliary to trade:
(a) Insurance (b) Banking
(c) Communication (d) Advertising
Q.4 Match the following Business Activities with their type of Industry and choose the correct option:
S. No. Business Activities S. No. Type of Industry
A. Cement manufacturing 1. Analytical industry
B. Car manufacturing 2. Synthetical industry
C. Oil refinery 3. Processing industry
D. Paper manufacturing 4. Assembling Industry
(a) A-2, B-4, C-1, D-3 (b) A-1, B-2, C-3, D-4
(c) A-3, B-4, C-2, D-1 (d) A-2, B-1, C-4, D-3
Column I Column II
A. Analytical industry i. Combines various ingredients into a new product.
B. Synthetical industry ii. Involves successive stages for manufacturing finished products.
C. Processing industry iii. Assembles different component parts to make a new product
D. Assembling industry iv. Analyses and separates different elements from the same materials.
(a) A - iv, B - i, C - ii, D - iii (b) A - iii, B - i, C - ii, D - iv
(c) A - i, B - ii, C - iii, D - iv (d) A - iv, B - ii, C - i, D - iii
Column I Column II
A. Transport i. Removes the hindrance of time.
B. Warehousing ii. Removes the hindrance of risks.
C. Insurance iii. Removes the hindrance of place.
D. Banking iv. Removes the hindrance of finance.
(a) A - ii, B - i, C - iii, D - iv (b) A - iii, B - i, C - ii, D - iv

(c) A - iii, B - ii, C - i, D - iv (d) A - iii, B - i, C - iv, D - ii
Q.7 Identify the type of Industry shown in the picture given below and select the correct alternative:
Textile Industry
(a) Analytical industry (b) Synthetical industry
(c) Processing industry (d) Assembling industry
Q.8 ________ is said to consist of activities of removing the hindrances of persons, place, time, risk, finance and information in the
process of exchange of goods and services.
(a) Commerce (b) Business
(c) Trade (d) Industry
Q.9 Activities which are meant for assisting trade are known as ________ .
(a) Commerce (b) Business
(c) Auxiliaries to trade (d) Industry
Q.10 Commerce is a combination of:
(a) Industry and Trade (b) Trade and Business
(c) Trade and Auxiliaries to trade (d) Production and Consumption
Q.11 ______ refers to purchase of goods from one country for the purpose of selling them to another country.
(a) Import Trade (b) Entrepot trade
(c) Wholesale trade (d) Export trade
Q.12 Which of the following hindrances of trade is overcome by banks?
(a) Hindrance of place (b) Hindrance of time
(c) Hindrance of finance (d) Hindrance of information
Q.13 Which of the following combinations is correct for internal trade?
(a) Import and Export (b) Wholesale trade and Entrepot trade
(c) Retail trade and Import trade (d) Wholesale trade and Retail trade
Column I Column II
(A) Analytical industry (i) Cement manufacturing
(B) Syntheticay industry (ii) Manufacturing of televisions
(C) Processing industry (iii) Oil refinery
(D) Assembling industry (iv) Production of sugar
(a) (A) - (i), (B) - (iii), (C)-(iv), (D)-(ii) (b) (A) - (iii), (B) - (iv), (C)-(i), (D)-(ii)
(c) (A) - (iii), (B) - (i), (C)-(iv), (D)-(ii) (d) (A) - (iv), (B) - (i), (C)-(iii), (D)-(ii)
Column I Column II
(A) Analytical industry (i) Construction of dams
(B) Synthetical industry (ii) Car manufacturing
(C) Construction industry (iii) Cement manufacturing
(D) Assembling industry (iv) Oil refinery
(a) (A) - (iii), (B) - (iv), (C)-(i), (D)-(ii) (b) (A) - (iv), (B) - (iii), (C)-(ii), (D)-(i)
(c) (A) - (i), (B) - (iii), (C)-(iv), (D)-(ii) (d) (A) - (iv), (B) - (iii), (C)-(i), (D)-(ii)
Column I Column II
(A) Wholesale trade (i) Selling goods to other countries.
(B) Retail trade (ii) Buying and selling of goods and services in large quantities for the purpose of
resale or intermediate use.
(C) Entrepot trade (iii) Purchase and sale of goods in comparatively small quantities, for final
consumption.
(D) Export trade (iv) Import of goods for export to other countries.
(a) (A) - (iii), (B) - (ii), (C)-(iv), (D)-(i) (b) (A) - (ii), (B) - (iii), (C)-(iv), (D)-(i)
(c) (A) - (ii), (B) - (iii), (C)-(i), (D)-(iv) (d) (A) - (iii), (B) - (ii), (C)-(i), (D)-(iv)
Column I Column II
(A) Facilitates movement of goods from one place to another. (i) Banking
(B) Provides financial assistance to the manufacturer and trader. (ii) Insurance
(C) Covers various kinds of business risks. (iii) Transport
(D) Creates time utility by way of storage facilities. (iv) Advertising
(E) Provides information to the consumers. (v) Warehousing
(a) (A) - (i), (B) - (iii), (C) - (ii), (D) - (v), (E) - (iv) (b) (A) - (iii), (B) - (i), (C) - (v), (D) - (ii), (E) - (iv)
(c) (A) - (iii), (B) - (ii), (C) - (i), (D) - (iv), (E) - (v) (d) (A) - (iii), (B) - (i), (C) - (ii), (D) - (v), (E) - (iv)
Statement I: Industry is concerned with the production or processing of goods and materials.
Statement II: Commerce includes all those activities, which are necessary for facilitating the exchange of goods and services.
Statement I: Certain services, like banking and insurance, are also referred to as industry.
Statement II: Activities of cattle breeding farms, poultry farms, and fish hatchery come under genetic industries.
Statement I: Manufacturing of steel by way of further processing of raw iron is a tertiary industry.
Statement II: Seeds and nursery companies are typical examples of genetic industries.
Assertion (A): Transport, banking, insurance, warehousing, communication, packaging and advertising may be considered part of
commerce.
Reason (R): As auxiliaries to trade, these activities assist trade.
Statement I: The hindrance of persons is removed by trade, thereby, making goods available to consumers from the possession or
ownership producers.
Statement II: Commerce refers to sale, transfer or exchange of goods either physical or virtual.
Statement I: Postal services and telephone facilities may also be regarded as auxiliaries to business activities.
Statement II: In foreign trade, commercial banks help exporters in collecting money from importers.
Assertion (A): Auxiliaries to trade are generally referred to as ‘Services’.
Reason (R): These are in the nature of facilitating the activities relating to industry and trade.
Assertion (A): Transport, banking, insurance, warehousing, and advertising are regarded as auxiliaries to trade.
Reason (R): These activities support not only trade, but also industry and, hence, the entire business activity.
Assertion (A): Commerce embraces all those activities, which are necessary for maintaining a free flow of goods and services.
Reason (R): Commerce provides the necessary link between producers and consumers.
Assertion (A): Auxiliaries are an integral part of commerce in particular and business activity in general.
Reason (R): These activities help in removing various hindrances which arise in connection with the production and distribution of
goods.
Assertion (A): Commerce includes both, buying and selling of goods, i.e., trade, as well as, auxiliaries to trade, such as transport,
banking, etc.
Reason (R): All activities involving the removal of hindrances to the process of exchange are included in commerce.
Statement I: The popular advertising tool is the use of press release in print and social media platforms.
Statement II: Advertising and Public Relations activities help in providing information about available goods and services and
inducing customers to buy particular items.
Statement I: Advertisements are always a paid activity where business occupies space in print or non-print media to promote its
product or a service.
Statement II: PR activities are normally unpaid where business enters into a strategic communication to build a mutually beneficial
relationship.
Statement I: Advertising and public relation activities are one of the most important methods of promoting the sale of products
and services in a market place.
Statement II: For promoting sales, information is made available through advertisements and publicity tools about their features,
price, etc., to the potential customers.
Statement I: Industries may be divided into broad categories, namely analytical synthetical industry and processing industry.
Statement II: Manufacturing industries may be further divided into primary, secondary and tertiary industries.
Statement I: Secondary industries process such material to produce goods for final consumption by other industrial units
Statement II: Transportation helps in removing the hindrance of funds.
Statement I: Trade is buying and selling of goods and services.
Statement II: Commerce provides the necessary links among producers, consumers and middlemen.
Statement I: The type of manufacturing industry which analyses and separates different elements from the same materials is
Analytical Industry
Statement II: Auxiliaries to trade are helpful with the removal of hindrance to the process of exchange.
Statement I: The auxiliary to trade which provides vital information about goods and services to customers is called advertising.
Statement II: Pure risk involves only the possibility of loss or no loss.
Q.37 Choose the correct alternative: (1)
Column I Column II
(i) The service which helps in removing hindrance of knowledge. (A) Advertising
(ii) The service which helps in removing hindrance of place. (B) Transport
(iii) The service which helps in removing hindrance of time. (C) Insurance
(iv) The service which helps in removing hindrance of risk. (D) Warehousing
(a) (i)-A, (ii)-B, (iii)-D, (iv)-C (b) (i)-C, (ii)-B, (iii)-D, (iv)-A
(c) (i)-A, (ii)-D, (iii)-B, (iv)-C (d) (i)-C, (ii)-D, (iii)-B, (iv)-A
Q.38 Identify the type of manufacturing industry in which sugar and paper are produced. (1)
(a) Analytical Industry (b) Processing Industry
(c) Assembling Industry (d) Synthetical Industry
Q.39 Which is a service industry?
(a) Sugar (b) Cement
(c) Poultry farm (d) Banking
Q.40 Which of the following is not included in ‘Auxiliary to Trade’?
(a) Animal Husbandry (b) Insurance
(c) Transport (d) Warehousing
Q.41 Which of the following is Extractive Industry?

(a) Building construction (b) Plantation
(c) Mining (d) Textile
Q.42 Which of the broad categories of industries covers oil refinery and sugar mills?
(a) Primary (b) Secondary
(c) Tertiary (d) None of them
Q.43 Which of the following cannot be classified as an auxiliary to trade?
(a) Mining (b) Insurance
(c) Warehousing (d) Transport
Q.44 The industries which provide support services to other industries are known as
(a) Primary industries (b) Secondary industries
(c) Commercial industries (d) Tertiary industries
Q.45 ‘Fishing’ is what type of Industry?
(a) Primary industry (b) Secondary industry
(c) Commercial industry (d) Tertiary industry
Q.46 Which hindrance of trade is removed by the activity shown in image given below:
(a) Hindrance of Information (b) Hindrance of Place

(c) Hindrance of Finance (d) Hindrance of Risk
Q.47 Which hindrance of trade is removed by the activity shown in image given below?
(a) Hindrance of Persons (b) Hindrance of Place

(c) Hindrance of Time (d) Hindrance of Risk

Q.1 Farhan, a young man, wants to provide employment to the local people of his village. He decided to do the wholesale business of
mobile phones made by the latest technique. But so many questions began to crop up in his mind: how will the goods be brought
from distant places, how will the finance be arranged, and how will the information on his modern business be conveyed to the
people? He consulted a business expert, Mr. Balram who gave him information on the auxiliaries to trade, which could solve his
problem. Farhan understood what the expert told him. He employed 50 workers and started his business.
(a) Which economic activity is Farhan going to do?
(b) On which part of business was the information given to Farhan by the business expert?
(c) If we add the answer of (a) to the answer of (b) which part of business shall we have?
(d) Explain the auxiliaries to trade which may solve the problem of Farhan, as suggested by the business (6)
Q.2 Dr. Rajiv Mishra is working against the post of a senior doctor in a government hospital. He does not discriminate between the rich
and poor while treating his patients medically. When he returns home from the hospital, he attends to the poor patients at home free
of charge between 6 pm and 8 pm. Besides, he gives them the information about the employment opportunities. He advises many
young people to go into the fields of advertising and transportation. They went into these fields and remarkably succeeded there.
(i) What type of activities does Dr. Rajiv Mishra perform in the hospital and at home?
(ii) Explain the auxiliaries to trade mentioned in the above para. (4)
Q.3 Define ‘Auxiliaries to Trade’. Identify and explain the auxiliaries to trade required in the following cases: (6)
(i) Production of goods generally takes place in particular locations. For instance, tea is mainly produced in Assam; cotton in
Gujarat and Maharashtra; jute in West Bengal and Odisha; sugar in U.P., Bihar and Maharashtra and so on. But these goods
are required for consumption in different parts of the country.
(ii) Business activities cannot be undertaken unless funds are available for acquiring assets, purchasing raw materials and meeting
other expenses.
(iii) Business involves various types of risks. Factory building, machinery, furniture, etc., must be protected against fire, theft and
other risks. Material and goods in transit are subject to the risk of loss or damage. Employees are also required to be protected
against the risks of accident and occupational hazards.
(iv) Usually, goods are not sold or consumed immediately after production. They are held in stock to make them available as and
when required. Special arrangement must be made to prevent loss or damage.
(v) It is practically impossible for producers and traders to contact each and every customer. Thus, for promoting sales, information
in made available about their features, price, etc., to the potential customers. Also, there is a need to persuade potential
customers and buyers about the utility features, quality, price, competitive information about the goods and services, etc.
Q.4 Shree Radhey Industries Pvt. Ltd. is a large company which produces agricultural products like sugarcane, cotton, etc. Instead of
selling these agricultural products in the market, the company uses these as raw materials to produce sugar and cloth in its own
established sugar mill and cloth mill at some rural area where there was a high unemployment. In this way, the company provided
employment to about 200 local people.
To which type and sub-type of industries are related the different products described in the above para? Explain. (4)
Q.5 Rising Heights Ltd. wants to expand and grow. For this it needs funds to acquire land, building, machinery etc. Also since these
assets cost a lot they want the risk associated with them to be reduced. Identify the hindrances and explain how they can be
removed. (4)
Q.6 Ramesh sells winter wear in the month of December, January and February but he is not able to sell his complete stock.
(i) Identify the hindrance.
(ii) How can Ramesh resolve this hindrance?
(iii) Will this hindrance always occur? Why? (4)
Q.7 It is one of the activities means for assisting trade and help in the promotion of the product by providing information to the
consumers. Business does not exist in isolation , it has to communicate with others and the activity helps in making consumers
aware and informed about the product of the company and inducing them to buy particular items.
(i) Which activity is discussed in the above para ?
(ii) What are those activities called which are meant for assisting trade ?
(iii) Name and explain the categories into which communication services can be classified. (4)
Q.8 In business activities, there are some activities that are involved in the removal of hindrances in process of exchange i.e. from the
producer to the consumer. (4)
(a) Identify them.
(b) Also classify the activities which help in removing the following hindrances.
(i) Hindrance of place (ii) Hindrance of risk (iii) Hindrance of time (iv) Hindrance of finance (v) Hindrance of information
Q.9 Tea is mainly produced in Assam, while cotton in Gujrat & Maharastra but they are required for consumption in different parts of
the country. How can this hindrance of place be removed ? Under what business activity will it be categorized? Explain. (3)
(a) Name the business activity which is concerned with conversion of resources into useful products.
(b) Name the category of industry which involves breeding or reproduction of plants and animals.
(c) Name the manufacturing industry in which TV sets or computers are produced.
(d) Name the auxiliary to trade which removes the hindrance of time.
(e) Name the auxiliary to trade which removes the hindrance of exchange.
(f ) Name the commercial activity that removes the hindrance of knowledge.
(a) Why do we insure goods?
(b) Name the type of manufacturing industry in which one material is separated into several useful products.
(c) Name the type of manufacturing industry wherein two or more ingredients are combined into one product.
(d) Name the type of manufacturing industry wherein a finished product is produced through successive stages.
(e) Is furniture making a manufacturing industry? Why?
(f ) Why is mining called a primary industry?
(a) Why is construction industry called a secondary industry?
(b) Why is insurance known as a tertiary industry?
(c) Is dairying a genetic or an extractive industry? Why?
(d) Why is the insurance known as a tertiary industry?
Q.13 Fill in the Blanks with correct answers: (6)
(i) _________ industries provide support services to primary and secondary industries.
(ii) _________ facilitate buying and selling of goods and services.
(iii) Manufacturing industries are known as secondary industries because _________.
(iv) Banking is called a tertiary industry because _________.
(v) _________ is concerned with holding goods in stock for sale in future.
(vi) _________ involves movement of goods from one place to another.
(a) Industry and commerce are interchangeable terms.
(b) Trade between two countries is known as internal trade.
(c) Conversion of cotton into cloth is an example of genetic industry.

Q.1 “The term ‘industry’ is used to mean groups of firms producing similar or related goods. Further, in common parlance, certain
services are also referred to as industry.” Support the given statement by giving examples. (3)
Q.2 Trade and Auxiliaries to Trade are an integral part of commerce in particular and business activity in general. Justify the statement
by giving valid reasons. (4)
Q.3 Identify and explain which Auxiliaries to trade help in removing the following hindrances and how? (4)
(a) Hindrance of Place (b) Hindrance of Risk (c) Hindrance of time (d) Hindrance of Finance
Q.4 Explain the broad categories of business activities – industry and commerce. (4)
Q.5 Describe the various types of industries. (6)
Q.6 Discuss the meaning of commerce, trade and auxiliaries to trade. (3)
Q.7 Discuss the meaning of different types of trade and auxiliaries to trade. (6)
Q.8 Examine the role of commerce – trade and auxiliaries to trade. (6)
Q.9 What are the various types of industries? (6)
Q.10 Explain any two business activities which are auxiliaries to trade. (4)
Q.11 Define auxiliaries to trade. Explain any five activities which are auxiliaries to trade. (6)
Q.12 Explain “Advertising and Public Relations” as important Auxiliaries to Trade. (3)
Q.13 Explain with examples the two types of primary industries. (3)
Q.14 “Manufacturing industries may be further divided into four categories on the basis of method of operation for production.” Explain
any three such industries. (3)
Q.15 How would you classify business activities? State briefly. (6)
Q.16 Explain any four business activities which are auxiliaries to trade. (6)
Q.17 Define Industry. Explain various types of industries giving examples. (6)
Q.18 Describe the activities relating to commerce. (6)

Q.19 Explain with examples, different kinds of secondary industries. (4)
Q.20 “All activities involving the removal of hindrances to the process of exchange are included in commerce.” Explain the statement. (4)
Q.21 “Auxiliaries are an integral part of commerce in particular and business activity in general.” Do you agree with given statement?
Give reasons in support of your answer. (4)
Q.22 Commerce is considered as the backbone of industry and other business activities. Discuss the various functions performed by
commerce. (6)
Q.23 Commerce is the sum total of activities that remove hindrances to the free flow of goods from producers to consumers. Explain.(6)
History of Trade and Commerce in India 1.5

The economic and commercial evolution of any land depends upon its physical environment. This stands true for the Indian
subcontinent as a whole which has Himalayas in the North bordered by water in the South.
A network of roads merging into the Silk Route helped in establishing commercial and political contacts with adjoining foreign
kingdoms and empires in Asia, in particular, and the world, in general.
The maritime routes linked the east and the west by sea and were used for the trade of spices and known as ‘spice route’. Due
to the flow of wealth through these routes, the chief kingdoms, important trade centres and the industrial belt flourished,
which in turn further facilitated the progress of domestic and international trade in ancient India.
Trade and commerce have played a vital role in making India evolve as a major actor in the economic world in ancient times.
Archaeological evidences have shown that trade and commerce was the mainstay of the economy of ancient India carried out by
water and land. Commercial cities like Harappa and Mohenjodaro were founded in the third millennium B.C. The civilisation
had established commercial connections with Mesopotamia and traded in gold, silver, copper, coloured gemstones, beads,
pearls, sea shells, terracotta pots, etc. The period was marked by substantial commercial activities and urban development.
Political economy and military security during ancient times united most of the Indian subcontinent and trade regulations
were carefully planned. There were diverse types of coins and weighing practices which used to vary from place to place with
the help of money changers and by resorting to certain commonly accepted weights and measures.
Indigenous Banking System

As economic life progressed, metals began to supplement other commodities as money because of its durability and divisibility.
As money served as a medium of exchange, the introduction of metallic money and its use accelerated economic activities.
Documents such as Hundi and Chitti were in use for carrying out transactions in which money passed from hand to hand.
Hundi as an instrument of exchange, which was prominent in the subcontinent, involved a contract which — (i) warrant the
payment of money, the promise or order which is unconditional
(ii) capable of change through a transfer by a valid negotiation.
Hundi as practised by Indian Merchant Communities
Name of Hundi Broader Classification Functions of Hundi
Dhani-jog Darshani Payable to any person—no liability over who received payment.
Sah-jog Darshani Payable to a specific person, someone ‘respectable’. Liability over who received
payment.
Firman-jog Darshani Hundi made payable to order.
Dekhan-har Darshani Payable to the presenter or bearer.
Dhani-jog Muddati Payable to any person—no liability over who received payment, but payment over
a fixed term.
Firman-jog Muddati Hundi made payable to order following a fixed term.
Jokhmi Muddati Drawn against dispatched goods. If goods lost in transit, the drawer or holder
bears the costs, and the drawee carries no liability.
Indigenous banking system played a prominent role in lending money and financing domestic and foreign trade with currency and
letter of credit. With the development of banking, people began to deposit precious metals with lending individuals functioning
as bankers or Seths, and money became an instrument for supplying the manufacturers with a means of producing more goods.
Agriculture and the domestication of animals were important components of the economic life of ancient people. Due to
the favourable climatic conditions they were able to raise two or sometimes three crops in a year. In addition to this, by
resorting to weaving cotton, dyeing fabrics, making clay pots, utensils, and handicrafts, sculpting, cottage industries, masonry,
manufacturing, transports (i.e., carts, boats and ships), etc., they were able to generate surpluses and savings for further investment.
Workshops (Karkhana) were prominent where skilled artisans worked and converted raw materials into finished goods which
were high in demand. Family-based apprenticeship system was in practice and duly followed in acquiring trade-specific skills.
The artisans, craftsmen and skilled labourers of different kinds learnt and developed skills and knowledge, which were passed
on from one generation to another.
Rise of Intermediaries
Intermediaries played a prominent role in the promotion of trade. They comprised commission agents, brokers and distributors
both for wholesale and retail goods.
They provided considerable financial security to the manufacturers by assuming responsibility for the risks involved, especially
in foreign trade. An expanding trade brought in huge amounts of silver bullion into Asia and a large share of that bullion
gravitated towards India.
The institution of Jagat Seths also developed and exercised great influence during the Mughal period and the days of the East
India Company.
Bankers began to act as trustees and executors of endowments.
Foreign trade was financed by loans. However, the rate of interest for longer voyages was kept high in view of the huge risk
involved.
The emergence of credit transactions and availability of loans and advances enhanced commercial operations.
The Indian subcontinent enjoyed the fruits of favourable balance of trade, where exports exceeded imports with large margins
and the indigenous banking system benefitted the manufacturers, traders and merchants with additional capital funds for
expansion and development.
Commercial and Industrial banks later evolved to finance trade and commerce and agricultural banks to provide both short-
and long-term loans to finance agriculturists.
Transport
Transport by land and water was popular in the ancient times. Trade was maintained by both land and sea. Roads as a means
of communication had assumed key importance in the entire process of growth, particularly of the inland trade and for trade
overseas. The northern roadway route is believed to have stretched originally from Bengal to Taxila. There were also trade
routes in the south spreading east and west. Trade routes were structurally wide and suitable for speed and safety.
Maritime trade was another important branch of global trade network. Malabar Coast, on which Muziris is situated, has a
long history of international maritime trade going back to the era of the Roman Empire. Pepper was particularly valued in the
Roman Empire and was known as ‘Black Gold’. For centuries, it remained the reason for rivalry and conflict between various
empires and trade powers to dominate the route for this trade. It was in the search for an alternate route to India for spices
that led to the discovery of America by Columbus in the closing years of 15th century and also brought Vasco da Gama to the
shores of Malabar in 1498.
Calicut was such a bustling emporium that it was even visited by Chinese ships to acquire items, like frankincense (essential
oil) and myrrh (fragrant resin used in perfumes, medicines) from the Middle East, as well as, pepper, diamonds, pearls and
cotton from India. On the Coromandel Coast, Pulicat was a major port in the 17th century. Textiles were the principal export
from Pulicat to Southeast Asia.
Trading Communities
In different parts of the country, different communities dominated trade.
• Punjabi and Multani merchants handled business in the northern region, while the Bhats managed the trade in the states
of Gujarat and Rajasthan.
• In western India, these groups were called Mahajan, Chatts were important traders from the South.
• In urban centres, such as Ahmedabad the Mahajan community was collectively represented by their chief called nagarseth.
• Other urban groups included professional classes, such as hakim and vaid (physician), wakil (Lawyer), pundit or mulla
(teachers), painters, musicians, calligraphers, etc.
Merchant Corporations
The merchant community also derived power and prestige from guilds, which were autonomous corporations formed to
protect the interests of the traders. These corporations, organised on formal basis, framed their own rules of membership and
professional code of conduct, which even kings were supposed to accept and respect.
• Trade and industry taxes were also a major source of revenue. Traders had to pay octroi duties that were levied on most of
the imported articles at varying rates. They were paid either in cash or in kind.
• Customs duties varied according to the commodities. Tariffs varied from province to province.
• The ferry tax was another source of income generation. It had to be paid for passengers, goods, cattle and carts. The right
to receive the labour tax was usually transferred to the local bodies.
• The guild chief dealt directly with the king or tax collectors and settled the market toll on behalf of its fellow merchants
at a fixed sum of money. The guild merchants also acted as custodians of religious interests. They undertook the task of
building temples and made donations by levying a corporate tax on their members. The commercial activity, thus, enabled
big merchants to gain power in society.
Major Trade Centres

There were all kinds of towns—port towns, manufacturing towns, mercantile towns, the sacred centres, and pilgrimage towns.
Their existence is an index of prosperity of merchant communities and professional classes. The following were the leading
trade centres in ancient India:
1. Pataliputra (known as 'Patna' today): It was not only a commercial town, but also a major centre for export of stones.
2. Peshawar: It was an important exporting centre for wool and for the import of horses. It had a huge share in commercial
transactions between India, China and Rome in the first century A.D.
3. Taxila: It served as a major centre on the important land route between India and Central Asia. It was also a city of
financial and commercial banks. The city occupied an important place as a Buddhist centre of learning. The famous Taxila
University flourished here.
4. Indraprastha: It was the commercial junction on the royal road where most routes leading to the east, west, south and
north converged.
5. Mathura: It was an emporium of trade and people here subsisted on commerce. Many routes from South India touched
Mathura and Broach.
6. Varanasi: It was well placed as it lay both on the Gangetic route and on the highway that linked North with the East. It
grew as a major centre of textile industry and became famous for beautiful gold silk cloth and sandalwood workmanship. It
had links with Taxila and Bharuch.
7. Mithila: The traders of Mithila crossed the seas by boats, through the Bay of Bengal to the South China Sea, and traded at
ports on the islands of Java, Sumatra and Borneo. Mithila established trading colonies in South China, especially in Yunnan.
8. Ujjain: Agate, carnelian, muslin and mallow cloth were exported from Ujjain to different centres. It also had trade relations
through the land route with Taxila and Peshawar.
9. Surat: It was the emporium of western trade during the Mughal period. Textiles of Surat were famous for their gold borders
(zari). It is noteworthy that Surat hundi was honoured in far off markets of Egypt and Iran.
10. Kanchi (today known as Kanchipuram): It was here that the Chinese used to come in foreign ships to purchase pearls,
glass and rare stones and in return they sold gold and silk.
11. Madura: It was the capital of the Pandayas who controlled the pearl fisheries of the Gulf of Mannar. It attracted foreign
merchants, particularly Romans, for carrying out overseas trade.
12. Broach: It was the greatest seat of commerce in Western India. It was situated on the banks of river Narmada and was
linked with all important marts by roadways.
13. Kaveripatta (also known as Kaveripatnam): It was scientific in its construction as a city and provided loading, unloading
and strong facilities of merchandise. Foreign traders had their headquarters in this city. It was a convenient place for trade
with Malaysia, Indonesia, China and the Far East. It was the centre of trade for perfumes, cosmetics, scents, silk, wool,
cotton, corals, pearls, gold and precious stones; and also for ship building.
14. Tamralipti: It was one of the greatest ports connected both by sea and land with the West and the Far East. It was linked
by road to Banaras and Taxila.
Major Exports and Imports

Exports consisted of spices, wheat, sugar, indigo, opium, sesame oil, cotton, parrot, live animals and animal products—hides,
skin, furs, horns, tortoise shells, pearls, sapphires, quartz, crystal, lapis, lazuli, granites, turquoise and copper etc.
Imports included horses, animal products, Chinese silk, flax and linen, wine, gold, silver, tin, copper, lead, rubies, coral, glass,
amber, etc.
Position of Indian Subcontinent in World Economy (1 AD up to 1991)

Between the 1st and the 7th centuries CE, India is estimated to have the largest economy of the ancient and medieval world,
controlling about one-third and one-fourth of the world’s wealth (timeline). The country was often referred to as ‘Swaranbhumi’
and ‘Swarndweep’ in the writings of many travellers, such as Megasthenes, Faxian (Fa Hien), Xuanzang (Huen Tsang), Al
Beruni (11th century), Ibn Batuta (11th century), Frenchman Francois (17th century) and others. They repeatedly refer to the
prosperity of the country.
The pre-colonial period in Indian history was an age of prosperity for Indian economy and made the Europeans embark great
voyage of discovery. Initially, they came to plunder but soon realised the rewards of trade in exchange for gold and silver.
Despite the growing commercial sector, it is evident that the 18th century India was far behind Western Europe in technology,
innovation and ideas. With the increasing control of the East India Company causing lack of freedom and no occurrence of
agricultural and scientific revolution, limited reach of education to the masses, population growth and preference to machines
over manual skills made India a country which was prosperous but with people who were poor.
The British empire began to take root in India in the mid– 18th century. The East India Company used revenues generated
by the provinces under its rule for purchasing Indian raw materials, spices and goods. Hence, the continuous inflow of bullion
that used to come on account of foreign trade stopped. This changed the condition of the Indian economy from being an
exporter of processed goods to the exporter of raw materials and buyer of manufactured goods.
India begins to Reindustrialise

After Independence, the process of rebuilding the economy started and India went in for centralised planning. The First
Five Year Plan was implemented in 1952. Due importance was given to the establishment of modern industries, modern
technological and scientific institutes, space and nuclear programmes.
Despite these efforts, the Indian economy could not develop at a rapid pace. Lack of capital formation, rise in population, huge
expenditure on defence and inadequate infrastructure were the major reasons. As a result, India relied heavily on borrowings
from foreign sources and finally, agreed to economic liberalisation in 1991.
The Indian economy is the fastest growing economy in the world today and a preferred FDI destination.
Rising incomes, savings, investment opportunities, increased domestic consumption and younger population ensure growth for
decades to come.
The high growth sectors have been identified, which are likely to grow at a rapid pace world over and the recent initiatives of the
Government of India such as ‘Make in India’, Skill India’, ‘Digital India’ and roll out of the Foreign Trade Policy (FTP 2015-20)
is expected to help the economy in terms of exports and imports and trade balance.

Q.1 Indian Subcontinent was referred to as “Swarnbhumi” and “Swarndeep” in the ancient times because
(a) Indian subcontinent had vast gold reserves.
(b) Foreign invaders brought gold reserves.
(c) From 1 A.D. till 1000 A.D. the subcontinent contributed all the world’s Income.
(d) Indian traders contributed a lot to economy of the subcontinent.
Q.2 Which Indian spice was known as “Black Gold” in the era of Roman Empire?
(a) Clove (b) Pepper
(c) Asafoetida (d) Cinnamon
Q.3 Match the columns and select the correct alternative:
Ancient instrument of exchange Similar to modern day instrument
(i) Jokhmi A. Currency notes
(ii) Dhani-jog B. Cheque to payee
(iii) Dekhan-har C. Insurance policy
(iv) Sah-jog D. Not similar to any modern day instrument
(a) (i)-D, (ii)-A, (iii)-B, (iv)-C (b) (i)-C, (ii)-A, (iii)-B, (iv)-D
(c) (i)-A, (ii)-C, (iii)-B, (iv)-D (d) (i)-C, (ii)-A, (iii)-D, (iv)-B
Q.4 The Mahajan Community in the urban Ahmedabad was collectively called
(a) Bhats (b) Nagar Seth
(c) Jagat Seth (d) Gram Seth
Q.5 Identify the document used for carrying out transactions in which money passed from hand to hand in ancient times.
(a) Cheques (b) Bills of Exchange
(c) Hundi (d) Demand Draft
Q.6 Patliputra was popularly known as a commercial centre for ________.
(a) Export of stones (b) Import of horses
(c) Centre of learning (d) Centre of textiles
Statement I: In ancient times, silk route and maritime trade were quite prominent in transporting goods and commodities for
trading purposes.
Statement II: In ancient times, the goods were traded both internally and to the foreign lands, which generated surplus income.
Assertion (A): Hundi and Chitties were used as documents to facilitate transfer of money from one hand to another for trading
activities.
Reason (R): As an instrument of exchange it involved a contract which warrant the payment of money, the promise or order which
is unconditional, capable of change through transfer by a valid negotiation.
Assertion (A): There was a need to create an intangible form of exchange of money.
Reason (R): It was so because travelling long distances either by land or sea involved risk of theft and robbery.
Statement I: Hundi which literally means ‘to collect’ was written in vernacular language and facilitated the safe transfer of money
between parties and helped with promotion of trading activities.
Statement II: The emergence of cash transactions enhanced commercial operations.
Statement I: Indian subcontinent enjoyed the fruits of favourable balance of trade, where exports exceeded imports with large
margins and the indigenous banking system benefited the manufacturers, traders and merchants with additional capital funds for
expansion and development.
Statement II: Commercial and Industrial banks later evolved to finance trade and commerce and agricultural banks to provide both
short and long-term loans to finance agriculturists.
Statement I: Guild Merchants undertook the task of building temples and made donations by levying a Corporate tax on their
members.
Statement II: The type of manufacturing industry which involves successive stages for manufacturing finished product is ‘Processing
Industry’.
Statement I: Documents such as Hundi and Chitti were used for carrying out transactions under barter system.
Statement II: Indraprastha was the social junction on the royal road, where most routes leading to the east, west, south and north
converged.
Statement I: Documents such as Hundi and Chitti were in use for carrying out the transactions in ancient times.
Statement II: The term used for activities in which mechanical appliances and technical skills are involved is ‘Industry’.
Statement I: Pepper was particularly valued in the Roman Empire and was known as Black Gold.
Statement II: The type of industry which is engaged in breeding plants and animals for their use in further reproduction is called.
Genetic Industry
Statement I: The maritime routes linked the east and the west by Sea and were used for the trade of spices is known as Spice Route.
Statement II: It is generally believed that business activity is carried out for profit earning only.
Statement I: Commercial Cities like Harappa and Mohenjodaro were founded in the year Third Millennium B.C.
Statement II: Obligation of business firms to contribute resources for solving social problems and work in a socially desirable
manner is called social responsibility.
Q.18 India has had a rich and sophisticated history of trade and commerce. Which of the following ancient instrument of exchange can
be considered as the modern-day insurance policy?
(a) Jokhmi (b) Dhani-jog
(c) Dekhan-har (d) Sah-jog

(a) The maritime routes linked the east and the west by sea and were used for the trade of spices and known as _________.
(b) Commercial cities like Harappa and Mohenjodaro were founded in the third millennium B.C. The civilisation had established
commercial connections with Mesopotamia and traded in _________, coloured gemstones, beads, pearls, sea shells, terracotta
pots, etc.
(c) As economic life progressed, metals began to supplement other commodities as money because of its _________ and
_________.
(d) In ancient India, documents such as _________ and _________ were in use for carrying out transactions in which money
passed from hand to hand.
(e) The Indian subcontinent enjoyed the fruits of favourable balance of trade, where _________ exceeded _________ with large
margins.
(f ) _________ and _________ banks later evolved to finance trade and commerce and agricultural banks to provide both short-
and long-term loans to finance agriculturists.
(a) _________ was another important branch of global trade network. Malabar Coast, on which Muziris is situated, has a long
history of international maritime trade going back to the era of the Roman Empire.
(b) Pepper was particularly valued in the Roman Empire and was known as _________ .
(c) Calicut was such a bustling emporium that it was even visited by Chinese ships to acquire items, like frankincense (essential oil)
and myrrh (fragrant resin used in perfumes, medicines) from the Middle East, as well as, _________ from India.
(d) On the Coromandel Coast, Pulicat was a major port in the 17th century. _________ were the principal export from Pulicat to
Southeast Asia.
(e) Punjabi and Multani merchants handled business in the northern region, while the _________ managed the trade in the states
of Gujarat and Rajasthan.
(f ) _________ was another source of income generation. It had to be paid for passengers, goods, cattle and carts.

Q.1 Discuss the development of indigenous banking system in Indian subcontinent. (4)
Q.2 In the first five year plan, due importance was given to the establishment of modern industries, modern technological and scientific
institutes, space and nuclear programmes. Despite these efforts, the Indian economy could not develop at a rapid pace. Why? (1)
Q.3 What is Hundi? (1)
Q.4 Discuss the history of Trade and Commerce in India. (6)
Q.5 Write short notes on: (6)
(a) Rise of Intermediaries, Transport, Trading Communities
(b) Major Trade Centres
(c) Major Imports and Exports
Q.6 Explain the position of Indian Sub-Continent in the World Economy. (4)
CASE STUDY Based Multiple Choice Questions (MCQs)

CASE STUDY 1: Read the following carefully and answer question no. 1-4 on the basis of the same:
Shreya and Vrinda joined together and established a partnership firm dealing in electronic goods. Each one of them looks after one
particular department. They had made it certain that every Saturday they would hold a meeting and share the information on the
activities of their respective departments. In one of their meetings, they discuss some key areas on which they should focus their attention.
Shreya says, “we should focus on increasing productivity and profits through the best use of available resources.”
On the other hand, Vrinda says, “we should keep clear of the anti-social activities like adulteration, hoarding and profiteering, and contribute
to the benefits of the society like opening charitable dispensary, educational institution, etc.
Q.1 Shreya is focusing on _________ objectives of business.

(a) Economic (b) Social
(c) Both (a) and (b) (d) Multiple
Q.2 Vrinda is trying to fulfil the _________ objectives of business.
(a) Economic (b) Social
(c) Both (a) and (b) (d) Multiple
Q.3 Which among the following is not a characteristic of a business activity?
(a) Production or procurement of goods and services (b) Sale or exchange of goods and services
(c) Donation of a percentage of profit for charity (d) Uncertainty of returns
Q.4 Changes in market conditions, changes in price or changes in fashion and tastes of customers refers to which type of risk?
(a) Pure risk (b) High Risk
(c) Low Risk (d) Speculative Risk
CASE STUDY 2: Read the following carefully and answer question no. 5-8 on the basis of the same:
Raveena knows that without the service sector, the industry and trade sector could not operate smoothly as service sector helps to produce
goods in time as well as helps the goods reach consumers in time. Thus, service sector is said to be the backbone of every business and
industry. So, she has decided to work with an insurance company as a development manager. Suraksha Insurance Company has appointed
her and she has successfully completed her training for her job requirement. Suraksha insurance company is providing financial security
to businesses and help them to grow and expand.
Q.5 Name the hindrance of trade removed by the insurance.

(a) Person (b) Place
(c) Risk (d) Loss
Q.6 Identify the function of insurance related to the payment of claim for the risk of loss:
(a) Protection (b) Risk-sharing
(c) Capital formation (d) Providing certainty
Q.7 The consideration charged by the insurance company for providing the certainty is called__________.
(a) Premium (b) Rent
(c) Fees (d) Interest
Q.8 _________ is the person or property subject to risk.
(a) Insurer (b) Insured
(c) Drawer (d) Owner
DEFINITION OF
KEY TERMS
Industry Industry is concerned with the production or processing of goods and materials.
Primary industries These include all those activities which are concerned with the extraction and production of natural
resources and reproduction and development of living organisms, plants, etc.
Extractive industries These industries extract or draw products from natural sources, e.g. farming, mining, lumbering,
hunting and fishing operations.
Genetic industries These industries are engaged in breeding plants and animals for their use in further reproduction,
e.g. Seeds and nursery companies, activities of cattle breeding farms, poultry farms, fish
hatchery, etc.
Secondary industries These are concerned with using materials, which have already been extracted at the primary state,
e.g. manufacturing of steel.
Manufacturing industries These industries are engaged in producing goods through processing of raw materials and, thus,
creating form utilities.
Analytical industry Analytical industry which analyses and separates different elements from the same materials, as in
the case of oil refinery.
Synthetical industry Synthetical industry which combines various ingredients into a new product, as in the case of
cement.
Processing industry Processing industry which involves successive stages for manfucturing finished products, as in the
case of sugar and paper.
Assembling industry Assembling industry which assembles different component parts to make a new product, as in the
case of television, car, computer, etc.
Construction industries These industries are involved in the construction of buildings, dams, bridges, roads as well as
tunnels and canals. Engineering and architectural skills are an important part in construction
industries.
Tertiary industries These are concerned with providing support services to primary and secondary industries as well
as activities relating to trade. These industries provide service facilities. Tertiary industries include
transport, banking, insurance, warehousing, communication, packaging and advertising.
Commerce includes Commerce includes all those activities, which are necessary for facilitating the exchange of goods
and services. Commerce includes two types of activities, viz., (i) trade and (ii) auxiliaries to trade.
Trade refers to sale, transfer or exchange of goods.
Auxiliaries to trade (or There are a lot of activities that are required to facilitate the purchase and sale of goods. These are
services) called auxiliaries to trade (or services) and include transport, banking, insurance, communication,
advertisement, packaging and warehousing.
Internal trade Internal, domestic or home trade is concerned with the buying and selling of goods and services
within the geographical boundaries of a country.
Wholesale trade Wholesale trade refers to buying and selling of goods and services in large quantities for the
purpose of resale or intermediate use. Traders dealing in wholesale trade are called wholesalers.
Retail trade When goods are purchased and sold in comparatively smaller quantities, for final consumption it is
referred to as a retail trade.
External trade External or foreign trade consists of the exchange of goods and services between persons or
organisations operating in two or more countries.
Import trade If goods are purchased from another country, it is called an import trade.
Export trade If goods are sold to other countries, it is known as an export trade.
Entrepot trade When goods are imported for export to other countries, it is known as an entrepot trade.
Chapter 1
EVOLUTION AND
FUNDAMENTALS OF
BUSINESS
1.1 Concept and Characteristics of Business

Meaning of Business
• Business refers to an occupation in which people regularly engage in activities related to purchase, production and/or sale of
goods and services with a view to earning profits.
• Business may be defined as an economic activity involving the production and sale of goods and services undertaken with a
motive of earning profit by satisfying human needs in society.
Economic and non-economic activities

Economic Activities Non-Economic Activities
Economic activities are those by which we can earn our livelihood. Non-economic activities are those performed out of love,
Examples: • A worker working in a factory • A manager working in an office sympathy, sentiments, patriotism, etc.
• A doctor operating in his clinic • A teacher teaching in a school Examples: • A housewife cooking food for her family
• A boy helping an old man cross the road
Characteristics of Business DPS PURE
1. An Economic activity: Business is considered to be an economic activity because it is undertaken with the objective of earning
money or livelihood and not out of love, affection, sympathy or any other emotion.
2. Production or procurement of goods and services: Every business enterprise either manufactures the goods it deals in or
acquires them from producers, to be further sold to consumers or users.
3. Sale or exchange of goods and services: One essential characteristic of business is that there should be sale or exchange of
goods or services between the seller and the buyer. If goods are produced not for the purpose of sale but for personal consumption,
it cannot be called a business activity.
For example, cooking food at home for the family is not business, but cooking food and selling it to others in a restaurant is business.
4. Dealings in goods and services on a regular basis: One single transaction of sale or purchase, therefore, does not constitute business.
For example, if a person sells his/ her domestic radio set even at a profit, it will not be considered a business activity. But if he/she
sells radio sets regularly either through a shop or from his/her residence, it will be regarded as a business activity.
5. Profit earning: One of the main purpose of business is to earn income by way of profit. No business can survive for long without
profit. That is why, businessmen make all possible efforts to maximise profits, by increasing the volume of sales or reducing costs.
6. Uncertainty of return: Every business invests money (capital) to run its activities with the objective of earning profit. But it is not
certain as to what amount of profit will be earned. Also, there is always a possibility of losses being incurred, despite the best efforts
put into the business.
7. Element of Risk: Risk is the uncertainty associated with an exposure to loss. Risks are related with factors, like changes in consumer
taste and fashion, changes in method of production, strike or lockout at workplace, increased competition in market, fire, theft,
accidents, natural calamities, etc.
1.2 Comparison of Business, Profession and Employment
BASIS BUSINESS PROFESSION EMPLOYMENT
1. Mode of Entrepreneur’s decision and other legal Membership of a professional body Appointment letter and service
establishment formalities, if necessary and certificate of practice agreement
2. Nature of work Provision of goods and services to the Rendering of personalised, expert Performing work as per service
public services contract or rules of service
3. Qualification No minimum qualification is necessary Qualifications, expertise and training Qualification and training as prescribed
in specific field as prescribed by the by the employer
professional body is a must
4. Reward or return Profit earned Professional fee Salary or wages
5. Capital investment Capital investment required as per size Limited capital needed for No capital required
and nature of business establishment
6. Risk Profits are uncertain and irregular; risk Fee is generally regular and certain; Fixed and regular pay; no or little risk
is present some risk
7. Transfer of interest Transfer possible with some formalities Not possible Not possible
8. Code of conduct No code of conduct is prescribed Professional code of conduct is to be Norms of behaviour laid down by the
followed employer are to be followed
9. Example Shop, factory Legal, medical profession, chartered Jobs in banks, insurance companies,
accountancy government departments
1.3 Objectives of Business and Role of Profit in Business

Economic Objectives P2RIM
1. Earning Profits: Profit is the excess of revenue over cost. One of the objectives of business is to earn profits on the capital employed.
Profitability refers to profit in relation to capital investment. Every business must earn a reasonable profit which is so important for its
survival and growth.
Role of profit in business: Although earning profit cannot be the only objective of business, its importance cannot be ignored.
Every business is an attempt to reap more than what has been invested. Profit may be regarded as an essential objective of business
for various reasons: (i) It is a source of income for business persons. (ii) It can be a source of finance for meeting expansion
requirements of business. (iii) It indicates the efficient working of business. (iv) It can be taken as the society’s approval of the utility
of business. (v) It builds the reputation of a business enterprise.
2. Innovation: Innovation is central to the growth of any business enterprise. It helps business to scale up and give competitive edge
to the enterprise in the market. There are two kinds of innovation in every business, i.e., (i) innovation in product or services; and
(ii) innovation in various skills and activities needed to supply products and services. No business enterprise can flourish in a competitive
world without innovation. Therefore, innovation becomes an important objective.
3. Market standing: Marinating goodwill and reputation of ones’ business is paramount to succeed and prosper. It helps in forming a distinct
identity in the market and is referred to as market standing in relation to its competitors. A business enterprise must aim at standing on
stronger footing in terms of offering competitive products at reasonable prices to its customers and serving them to their satisfaction.
4. Increasing Productivity: Productivity is ascertained by comparing the value of output with the value of inputs. It is used as a measure
of efficiency. In order to ensure continuous survival and progress, every enterprise must aim at greater productivity through the best use
of available resources.
5. Optimum utilisation of physical and financial Resources: Any business requires physical resources, like plants, machines,
offices, etc., and financial resources, i.e., funds to be able to produce and supply goods and services to its customers. The business
enterprise must aim at acquiring these resources according to their requirements and use them efficiently.
Social Objectives
It is being increasingly realised nowadays that business enterprises are part of the society and need to fulfil several objectives, including
social responsibility, to survive and prosper in the long run. Profit is found to be a leading objective but not the only one.
Social responsibility refers to the obligation of business firms to contribute resources for solving social problems and
work in a socially desirable manner.
Social objectives of business include: • Production and supply of quality goods and services • Avoidance of anti-social and unfair
trade practices • Generation of employment opportunities to the disadvantaged sections of the society • Welfare of employees by
providing good working conditions and pay satisfactory wages/salaries to its employees. • Community services like setting up charitable
dispensaries, schools, etc.
1.4 Business Risk — Concept, Nature and Causes
Concept of Business Risk
The term ‘business risk’ refers to the possibility of inadequate profits or even losses due to uncertainties or unexpected
events. For example, demand for a particular product may decline due to change in tastes and preferences of consumers or due to
increased competition from other producers. Lower demand results in low sales and profits.
Business enterprises constantly face two types of risks:
• Speculative risks involve both the possibility of gain, as well as, the possibility of loss. Speculative risks arise due to changes in
market conditions, including fluctuations in demand and supply, changes in prices or changes in fashion and tastes of customers.
Favourable market conditions are likely to result in gains, whereas, unfavourable ones may result in losses.
• Pure risks involve only the possibility of loss or no loss. The chance of fire, theft or strike are examples of pure risks. Their occurrence
may result in loss, whereas, non-occurrence may explain absence of loss, instead of gain.
Nature of Business Risks
1. Risk is an essential part of every business: Business risk can be minimised, but cannot be eliminated. No business can avoid
risk, although the amount of risk may vary from business to business.
2. Business risks arise due to uncertainties: Natural calamities, change in demand and prices, changes in government policies
and prices, improvement in technology, etc., are some of the examples of uncertainties which create risks for business because the
outcomes of these future events are not known.
3. Degree of risk depends mainly upon the nature and size of business: Two main factors which determine the amount of risk
in a business are: • Nature of business (i.e., type of goods and services produced and sold), e.g. a business dealing in fashionable
items has a high degree of risk. • Size of business (i.e., volume of production and sale), e.g. a large-scale business generally has a
higher risk than what a small scale has.
4. Profit is the reward for risk taking: An entrepreneur undertakes risks under the expectation of higher profit. ‘No risk, no gain’.
Greater the risk involved in a business, higher is the chance of profit.
Causes of Business Risks

1. Natural causes: Human beings have little control over natural calamities, like flood, earthquake, lightning, heavy rains, famine, etc.
2. Human causes: Human causes include such unexpected events, like dishonesty, carelessness or negligence of employees, stoppage
of work due to power failure, strikes, riots, management inefficiency, etc.
3. Economic causes: These include uncertainties relating to demand for goods, competition, price, collection of dues from customers,
change of technology or method of production, etc.
Top Tip
Financial problems, like rise in interest rate for borrowing, levy of higher taxes, etc., also come under these type of causes as they
result in higher unexpected cost of operation or business.
4. Other causes: These are unforeseen events, like political disturbances, mechanical failures, such as the bursting of boiler, fluctuations
in exchange rates, etc., which lead to the possibility of business risks.
1.5 Broad Categories of Business Activities — Industry and Commerce: Their Classification
• Industry is concerned with the production or processing of goods and materials. Industry refers to economic activities, which are
connected with conversion of resources into useful goods.
• Commerce includes all those activities, which are necessary for facilitating the exchange of goods and services. All activities involving
the removal of hindrances in the process of exchange are included in commerce.
Commerce includes two types of activities, viz., (i) trade and (ii) auxiliaries to trade. Trade refers to sale, transfer or exchange of
goods either physical or virtual. Activities which are meant for assisting trade are known as auxiliaries to trade. Transport, banking,
insurance, warehousing, and advertising are regarded as auxiliaries to trade, i.e., activities playing a supportive role.
Classification of Industries
1. Primary industries: These include all those activities which are concerned with the extraction and production of natural resources and
reproduction and development of living organisms, plants, etc. Example: Mining of iron ore is a primary industry.
(a) Extractive industries: These industries extract or draw products from natural sources. Products of these industries are usually
transformed into many other useful goods by manufacturing industries. Examples: Farming, mining, lumbering, hunting and
fishing operations.
(b) Genetic industries: These industries are engaged in breeding plants and animals for their use in further reproduction. Examples:
Seeds and nursery companies, activities of cattle breeding farms, poultry farms, and fish hatchery.
2. Secondary industries: These are concerned with using materials, extracted at the primary sector, to produce goods for final
consumption or for further processing by other industrial units. Example: Manufacturing of steel by way of further processing of raw
iron is a secondary industry.
(a) Manufacturing industries: These industries are engaged in producing goods through processing of raw materials and, thus,
creating form utilities. They bring out diverse finished products through the conversion of raw materials or partly finished materials
in their manufacturing operations.
• Analytical industry which analyses and separates different elements from the same materials, e.g. oil refinery.
• Synthetical industry which combines various ingredients into a new product, e.g. cement.
• Processing industry which involves successive stages for manufacturing finished products, e.g. sugar and paper.
• Assembling industry which assembles different component parts to make a new product, e.g. television, car, computer, etc.
(b) Construction industries: These industries are involved in the construction of buildings, dams, bridges, roads as well as tunnels
and canals. Engineering and architectural skills are an important part in construction industries.
3. Tertiary industries: These are concerned with providing support services to primary and secondary industries as well as activities
relating to trade, e.g. transport, banking, insurance, warehousing, communication, packaging and advertising.
Hindrances removed by Commerce PPT FIR
Commerce is said to consist of activities of removing the hindrances of persons, place, time, risk, finance and information in
the process of exchange of goods and services.
1. Hindrance of Persons: The hindrance of persons is removed by trade, thereby, making goods available to consumers from the
possession or ownership producers.
2. Hindrance of Place: Transport (through road, rail or coastal shipping) removes the hindrances of place by moving goods from the
place of production to the markets for sale.
3. Hindrance of Time: Storage and warehousing activities remove the hindrance of time by facilitating holding of stocks of goods to
be sold as and when required.
4. Hindrance of Risk: Protection against risks is provided by insurance of goods as goods held in stock, as well as, goods in course of
transport are subject to a risk of loss or damage due to theft, fire, accidents, etc.
5. Hindrance of Finance: Capital required to undertake the above activities is provided by banking and financing institutions.
6. Hindrance of Information: Advertising makes it possible for producers and traders to inform consumers about the goods and
services available in the market.
1.6 Trade and Auxiliaries to Trade — Types
Types of Trade
1. Internal trade: Internal trade is concerned with the buying and selling of goods and services within the geographical boundaries of
a country. This may further be divided into wholesale trade and retail trade.
(i) Wholesale trade: It refers to buying and selling of goods and services in large quantities for the purpose of resale or intermediate
use. Traders dealing in wholesale trade are called wholesalers.
(ii) Retail trade: When goods are purchased and sold in comparatively smaller quantities, for final consumption it is referred to as
retail trade.
2. External trade: External trade consists of the exchange of goods and services between persons or organisations operating in two
or more countries.
(i) Import trade: If goods are purchased from another country, it is called import trade.
(ii) Export trade: If goods are sold to other countries, it is known as export trade.
(iii) Entrepot trade: When goods are imported for export to other countries, it is known as entrepot trade.
Auxiliaries to Trade B WAIT
1. Transport and Communication: Transport facilitates movement of raw material, to the place of production and the finished
products from factories to the place of consumption.
There is also a need for communication facilities (postal and telecom services) so that producers, traders and consumers may
exchange information with one another.
2. Banking and Finance: Banking helps business activities to overcome the problem of finance.
• Commercial banks, generally lend money by providing overdraft and cash credit facilities, loans and advances.
• Banks also undertake collection of cheques, remittance of funds to different places, and discounting of bills on behalf of traders.
• In foreign trade, commercial banks help exporters in collecting money from importers.
• Commercial banks also help promoters of companies to raise capital from the public.
3. Insurance: Insurance provides protection from various types of risks, such as loss of goods by fire or theft, risks of accident and
occupational hazards, etc. On payment of a nominal premium, the amount of loss or damage and compensation for injury, if any, can be
recovered from the insurance company.
4. Warehousing: Warehousing helps business firms to overcome the problem of storage and facilitates the availability of goods when
needed. Prices are, thereby, maintained at a reasonable level through continuous supply of goods.
5. Advertising and Public Relations: Advertising (on television, magazine, etc.) and Public Relations activities (e.g the use of press
release in print and social media platforms) are one of the most important methods of promoting the sale of goods and services in a market
place. They help in providing information about available goods and services and inducing customers to buy these goods and services.
1.7 History of Trade and Commerce in India
 India had a golden past and the trading activities had a significant contribution to its prosperity and gains. Trading
activities were carried out by both water and land routes. Silk route and maritime trade were quite prominent in transporting goods
and commodities for trading purposes.
 The goods were traded both internally and to the foreign lands, which generated surplus income. As a result, the people
were engaged in various economic activities such as agriculture and domestication of animals, weaving cotton, dyeing fabrics, making
clay pots, utensils and handicrafts, sculpting, cottage industries, masonry, etc. Family based workshops [karkhanas], for manufacturing,
were important components of economic life. This money was channelised into further investment, and led to the dominant growth
of indigenous banking system to finance the trading activities. An example of it is the use of age old Hundi and Chitties (used in
southern region). These were used as documents to facilitate transfer of money from one hand to another for trading activities. Travelling
long distances either by land or sea involved risk of theft and robbery. Hundi which literally means ‘to collect’ was written in vernacular
language and facilitated the safe transfer of money between parties and helped promotion of trading activities.
Hundi as practised by Indian Merchant Communities
Dhani-jog Darshani Payable to any person—no liability over who received payment.
Sah-jog Darshani Payable to a specific person, someone ‘respectable’. Liability over who received payment.
Firman-jog Darshani Hundi made payable to order.
Dekhan-har Darshani Payable to the presenter or bearer.
Dhani-jog Muddati Payable to any person—no liability over who received payment, but payment over a fixed term.
Firman-jog Muddati Hundi made payable to order following a fixed term.
Jokhmi Muddati Drawn against dispatched goods. If goods lost in transit, the drawer or holder bears the costs, and the drawee carries no liability.
 The emergence of credit transactions and availability of loans and advances enhanced commercial operations. The
Indian subcontinent enjoyed the fruits of favourable balance of trade, where exports exceeded imports with large margins and the
indigenous banking system benefitted the manufacturers, traders and merchants with additional capital funds for expansion and
development.
 Commercial and Industrial banks later evolved to finance trade and commerce and agricultural banks to provide both short and
long-term loans to finance agriculturists.
 Many leading trade centres were developed in ancient times for the import and export of goods, some of them being
Patliputra, Peshawar, Taxila, Indraprastha, Mithila, Maduram, Surat, Ujjain, Kanchi, Mithila.
 Major exports items were Spices, wheat, sugar, indigo, opium, sesame oil, cotton, parrot, live animals and animal products, etc.
 Major imports were Horses, animal products, Chinese silks, linen, wine, gold, silver, copper, etc.
 Business activities led to the growth of different aids to trade such as transportation, banking, finance and communication which
grew the prospects of trading activities. With the active contribution of Indian traders and other merchant communities, the Indian
sub-continent was popularly called ‘Swaran Bhoomi and Swaran Deep’ in the writings of many travellers, such as Megasthenes,
Faxian (FaHien), Xuanzang (Huen Tsang), Al Beruni (11th century), IbnBatuta (11th century), Frenchman Francois (17th century) and
others. They repeatedly refer to the prosperity of the country.
NOTES
Chapter 1
for
Slow
Learners
EVOLUTION AND FUNDAMENTALS OF BUSINESS
Economic and Non-economic Activities 2. Secondary industries
Economic activities are those activities which are undertaken (i) Manufacturing industries
to earn money and to create wealth, e.g. a teacher teaching in • Analytical industry e.g., an oil refinery separates crude oil
a school, etc. Business, profession and employment are economic into kerosene, diesel, lubricating oil, gasoline and petrol.
activities. Non-economic activities are those activities which are • Synthetical industry e.g., cement, soaps, paints.
undertaken to satisfy social, psychological and emotional needs, • Processing industry e.g., sugar and paper.
e.g., a housewife cooking food for her family, a boy helping an old • Assembling industry e.g., car, computer.
man cross the road, etc. (ii) Construction industries e.g., construction of buildings,
Concept and Characteristics of Business bridges, roads.
Business may be defined as an economic activity involving the 3. Tertiary industries: These provide services facilities,
production and sale of goods and services undertaken with a e.g., transport, communication, banking, insurance, etc.
motive of earning profit by satisfying human needs in society. Auxiliaries to Trade CWA - BIT
Characteristics of Business DPS PURE 1. Banking 2. Insurance
(1) Economic activity (2) Profit earning (3) Uncertainty of return 3. Transportation 4. Warehousing
(4) Element of risk (5) Production or procurement of goods and 5. Communication 6. Advertising and Public relations
services (6) Sale/exchange of goods and services for satisfaction of History of Trade and Commerce in India
human needs (7) Dealings in goods and services on a regular basis Hundi: It was an instrument of exchange which was used in
Objectives of Business Indian subcontinent. It involved a contract which warrants the
Economic objectives: (1) Earning profits (2) Market standing payment of money, the promise or order which is unconditional;
(3) Innovation (4) Optimum utilization of physical and financial and capable of change through transfer by valid negotiation.
resources (5) Increasing productivity Indigenous banking system
Social objectives: (1) Supply of desired quality of products — Helped in lending money and financing domestic and foreign
(2) Avoidance of anti-social and unfair trade practices trade with currency and letter of credit.
(3) Generation of employment (4) Community service — People began to deposit precious metals with bankers called
Role of Profit in Business PRES - G seths.
1. For long-term Survival of business — Money become an instrument for supplying the manufacturers
2. For Growth and expansion of business with a means of producing more goods.
3. For increasing Efficiency Rise of Intermediaries (Brokers, commission agents,
4. For building Prestige and recognition distributions) for wholesale and retail trade
5. For covering costs and Risks of the business (i) Intermediaries provided security to the manufactures by
Business Risks taking responsibility for risk involved.
Business risks refer to the possibility of inadequate profits or even losses (ii) Emergence of credit transactions and availability of loans and
due to uncertainties or unexpected events, e.g., decline in demand advances enhanced commercial operations.
for a firm’s product due to change in taste and fashion of customers. Transport: Transport by land and water was popular in ancient
Nature of Business Risks times
1. Business risks arise due to uncertainties. Trading communities
2. Risk is an essential part of every business. Different parts of the country had different communities
3. Degree of risk depends upon the nature and size of business. dominated trade e.g. Punjabi and Multani merchants in Northern
4. Profit is the reward for risk taking. India, Bhats in Gujarat and Rajasthan, Mahajans from western
Causes of Business Risks India etc. Merchant corporations were formed. Merchant
1. Natural causes e.g., flood, earthquake. communities derived power and prestige from guilds which were
2. Human causes e.g., theft, strikes. autonomous corporations formed to protect interest of traders.
3. Economic causes e.g., fluctuations in demand and prices. Major Trade Centres: Patliputra, Peshwar, Taxila, Indraprastha,
4. Other causes e.g., political disturbances. Mathura, Varanasi, Mithila, Ujjain, Surat, Kanchi, Madura, Broach,
Classification of Business Activities Kaveri patta, Tamralipti.
Various business activities may be classified into two broad Major Exports and Imports
categories— Industry and Commerce. Exports: Spices, wheat, sugar, indigo, opium, sesame oil, cotton,
Industry refers to economic activities which are connected with live animals & animal products like hides, furs, pearls etc.
conversion of resources into useful goods. Imports: Horses, animal products, Chinese silk flax and liner, gold,
Commerce includes trade and auxiliaries to trade. Buying and silver, tin etc.
selling of goods is termed as trade. Activities which are meant for Position of Indian sub-continents in the world economy
assisting trade are known as auxiliaries to trade or services, e.g., After independence five year plans were initiated. Despite these
transportation, communication, banking, insurance, etc efforts Indian economy could not develop at a rapid pace. Lack of
Types of Industries capital formation, rise in population, huge expenditure on defence
1. Primary industries and inadequate infrastructure were major reasons.
(i) Extractive industries e.g., farming, mining, fishing, oil Finally in 1991 India agreed to economic liberalisation. Because
extraction. of this, now India is one of the fastest growing economies in
(ii) Genetic industries e.g., poultry farms, pisciculture. the world. Initiatives like Digital India, Make in India, etc. are
expected to help the economy in terms of exports and imports.
Self Assessment Test 1

Time allowed : 45 min. Maximum Marks : 20
Q.1 Ratan sold an old radio of his grandfather to Seema, who is an antique collector at a price of `10000. The profit generated by Ratan
and his such a transaction will not be regarded as a business activity.
Which characteristic of business is highlighted in the above paragraph: (1)
(a) An economic activity
(b) Profit earning
(c) Sale or exchange of goods and services
(d) Dealing in goods and services on a regular basis.
Q.2 Business risk is not likely to arise due to (1)
(a) Changes in government policy
(b) Good management
(c) Employee’s dishonesty
(d) Power failure
Q.3 Match the following: (1)
Column I Column I
(i) The trade in which goods are bought from other countries. A. Import trade
(ii) The economic activities concerned with extraction, production, processing or B. Warehousing
fabrication of products.
(iii) The trade in which goods are imported and exported to some other country. C. Entrepot trade
(iv) The branch of commerce which removes the hindrance of time. D. Industry
(a) (i)-B, (ii)-D, (iii)-C (iv)-A
(b) (i)-A, (ii)-C, (iii)-D (iv)-B
(c) (i)-A, (ii)-D, (iii)-C (iv)-B
(d) (i)-C, (ii)-D, (iii)-A (iv)-B
Q.4 Which hindrance of trade is removed by the activity shown in image given below: (1)
(a) Hindrance of Information (b) Hindrance of Place

Q.5 Explain the reasons for the following: (3)
(i) Cooking food at home for the family is not business, but cooking food and selling it to others in a restaurant is business.
(ii) If a person sells his/ her domestic radio set even at a profit, it will not be considered a business activity. But if he/she sells radio
sets regularly either through a shop or from his/her residence, it will be regarded as a business activity.
Q.6 When a business person conceptualises and starts a business; runs it, scales it up then why ‘maximising business profit’ is not a sole
objective of business? Give reasons. (3)
Q.7 Identify the important document which was practised by Indian Merchant Communities in southern region,which has been shown
in the image given below. State any three types of such document. (4)
Q.8 Read the following and answer the questions that follow:
All human beings, wherever they may be, require different types of goods and services to satisfy their needs. If we look around, we
observe people require different types of products and services to satisfy their needs. How do they buy them? They go to the market,
either physical or electronic over internet, where they find variety of shops and sellers offering the required commodities and choose
the best which they require.
Have you ever wondered how these products and services are made available in the market? The necessity of supplying goods
and services is done by different set of people engaged in various economic activities such as production, manufacturing and
distribution and exchange so that the needs and wants of customers are satisfied. Business is a major economic activity which is
concerned with the production and sale of goods and services required by people. Business is central to our lives. Although our lives
are also influenced by many other institutions in modern society, such as schools, colleges, hospitals, political parties and religious
bodies; business has a major influence on our daily lives. It, therefore, becomes important that we understand the concept, nature
and purpose of business.
Business starts with production and end with consumption. Making the finished products reach the consumer involves a series of
steps. The work of production of goods is covered under Industry and the remaining activities belong to commerce. In a nutshell
we call them ‘Business’ which is a wider term and includes Industry, trade and commerce.
(i) Why is business considered as economic activity? (1)

(ii) Barter system is an old method of exchange of goods and/or services for another set of goods and/or services. Is barter system
an economic activity? Give reasons for your answer. (1)
(iii) How does business contribute to the economic development of a country? (1)
(iv) Name the different types of economic activities. (1)
(v) Explain the two broad categories of business activities. (2)

(a) Hindrance of Persons

(b) Hindrance of Place
(c) Hindrance of Time
(d) Hindrance of Risk
Q.2 Economic activities are sometimes defined as those by which people can earn their livelihood. A beggar earns his livelihood by
begging, yet begging is not considered an economic activity. For which of these reasons is begging not considered an economic
activity? (1)
(a) A beggar may sometimes not earn anything for hours or more.
(b) A beggar does not receive a regular salary or have a single employer.
(c) A beggar’s income does not contribute to or increase the nation’s GDP.
(d) Persons who give money to the beggar get nothing tangible or intangible.
Q.3 ‘Fraud by Employee’ is a type of business risk __________. (1)
(a) Human
(b) Natural
(c) Economic
(d) All of these
Q.4 Match the following: (1)
Column I Column II
(A) Buying soft toys from China and selling them in India (i) Export Trade
(B) Selling Basmati Rice to USA from India (ii) Import Trade
(C) Buying electronic items from Japan and selling them in Thailand. (iii) Entrepot Trade
(a) (A) - (iii), (B) - (i), (C) - (ii)
(b) (A) - (ii), (B) - (ii), (C) - (i)
(c) (A) - (i), (B) - (ii), (C) - (iii)
(d) (A) - (ii), (B) - (i), (C) - (iii)
Q.5 “Advertising is what you pay for and PR is what you pray for”. Do you agree with the given statement? Give reasons in support of
your answer. (3)
Q.6 Ganga Ltd. is a popular company manufacturing water coolers. Its product is very much liked by people in the market. The traders
are in a race to become the company’s distributors. The company had been earning huge profits for many years. However, in the
year 2020, the company’s half yearly report shows a great decline in the company’s profit. The top management is worried about
this. A team of specialists from outside is appointed to solve this serious problem. After a thorough examination, the specialists
presented the following reasons for the decline in the profits of the company.
(i) Increase in competition and change in taste of the consumers.
(ii) Theft of cash and goods by the employees.
Identify and explain the two causes of decline in profits. (3)
Q.7 Fill in the missing items and explain them briefly: (4)
(i)
(iv)
(ii) (iii)
Q.8 Explain briefly the History of Trade and Commerce in India. (6)

Q.1 Which of the following is a non-economic activity? (1)
(a) A doctor operating in his clinic (b) A manager working in an office
(c) A housewife cooking food for her family (d) A teacher teaching in a school
Q.2 Read the following statements carefully and choose the correct alternative: (1)
Statement I: No business can survive for long without profit.
Statement II: No business can altogether do away with risks.
Q.3 Match the columns and choose the correct alternative: (1)
Column I Column II
A. The industries which provide support services to other industries. i. Primary industries
B. The broad categories of industries which cover oil refinery and sugar mills. ii. Secondary industries
C. The industries which are concerned with the extraction of natural resources from the earth. iii. Tertiary industries
D. The industries which are concerned with breeding , reproduction and multiplication of species. iv. Genetic industries
(a) A - i, B - ii, C - iii, D - iv (b) A - iii, B - ii, C - i, D - iv
(c) A - ii, B - iii, C - i, D - iv (d) A - iv, B - ii, C - iii, D - i
Q.4 Match the Columns (1)
Column I Column II
(i) Pataliputra (A) major centre for export of stones
(ii) Peshawar (B) major centre of textile industry
(iii) Indraprastha (C) commercial junction on the royal road
(iv) Varanasi (D) important exporting centre for wool and for the import of horses
(a) (i)– (A), (ii) – (D), (iii) – (C), (iv) – (B) (b) (i)– (D), (ii) – (A), (iii) – (C), (iv) – (B)
(c) (i)– (A), (ii) – (C), (iii) – (D), (iv) – (B) (d) (i)– (A), (ii) – (D), (iii) – (B), (iv) – (C)
Q.5 State the meaning of business. Why is business considered as an economic activity? (3)
Q.6 Sameer is the owner of a restaurant in old Delhi area. In recent years, many other restaurants sprung up in the vicinity. Due to
increasing competition, Sameer introduced new variety of dishes in his restaurant. He is hopeful that by offering new dishes he will
be able to flourish in the competitive world.
Identify and explain the objective of business stated in the above paragraph. (3)
Q.7 Explain the main causes of business risks with suitable examples as highlighted in the image given below. (4)
Natural causes
Human causes
Economic causes
Physical causes
Other causes
Q.8 Read the following and answer the questions that follow on the basis of the same and your previous knowledge.
Imran, Manpreet, Joseph and Priyanka have been classmates in Class X. After their exams are over, they happen to meet at a
common friend Ruchita’s house. Just when they were sharing their experiences of examination days, Ruchika’s father Raghuraj
Chaudhary intervenes and asks about their well-being. He also enquires about their career plans. But none of them had a definite
reply. Raghuraj who himself is a successful businessman tells them about business as a career opportunity. Joseph gets excited by
the idea and says “yes, business is really good for making lots of money”. Raghuraj tells them that ‘there is a lot more to business
than merely money’. Business activities lead to growth and development of any country, he added. He further tells them that the
roots of business activities can be traced back to ancient times and how trading helps in the prosperity of the Indian subcontinent.
Priyanka said that they have read about the Silk Route in their history textbooks. Raghuraj then gets busy with his day-to-day tasks.
However, the four classmates begin raising questions. The conversation of the four classmates focused on how trading activities were
conducted during ancient times. How far can the roots of trading activities be traced? Why was the Indian subcontinent referred
to as ‘Swaran Bharat and Swaran Dweep’ by the then travellers to India? What made Columbus and Vasco da Gama undertake
journeys to locate India?
Source: Angus Maddison (2001 and 2003), The World Economy: A Millennial Perspective, OECD, Paris; Angus Maddison, The
World Economy, Historical Statistics
The Indian economy is emerging as one of the fastest growing economies in the world today and a preferred FDI destination.
Rising incomes, savings, investment opportunities, increased domestic consumption and younger population ensures growth for
decades to come. The high growth sectors have been identified, which are likely to grow at a rapid pace and the recent initiatives
of the Government of India such as ‘Make in India’, Skill India’, ‘Digital India’ is expected to help the economy in terms of exports
and imports with steady and sustainable trade balance.
Questions:
(i) Which factors led to the dominant growth of indigenous banking system in Indian subcontinent? (1)
(ii) Name any four leading trade centres which were developed in ancient times for the import and export of goods. (1)
(iii) Name any two major exports and imports items of ancient India. (1)
(iv) Why was the Indian subcontinent referred to as ‘Swaran Bharat and Swaran Dweep’ by the then travellers to India? (1)
(v) State any two factors responsible for the Indian economy emerging as one of the fastest growing economies in the world today
and a preferred FDI destination. (2)

Q.1 The First Five Year Plan was implemented in 1952. Due importance was given to the establishment of __________. (1)
(a) modern industries (b) modern technological and scientific institutes
(c) space and nuclear programmes (d) All of these
Q.2 Match the following and select the correct alternative: (1)
Column I (Images) Column II (Causes of Business Risks)
1. A. Economic causes
2. B. Human causes
3. C. Natural causes
4. D. Other causes
(a) 1-A, 2-C, 3-D, 4-B (b) 1-D, 2-A, 3-B, 4-C
(c) 1-C, 2-A, 3-B, 4-D (d) 1-B, 2-D, 3-C, 4-A
(a) Hindrance of Persons

(b) Hindrance of Place
(c) Hindrance of Time
(d) Hindrance of Risk
Q.4 Read the following statements carefully – Assertion (A) and Reason (R) and choose the correct alternative: (1)
Assertion (A): Auxiliaries to trade are an integral part of commerce in particular and business activity in general.
Reason (R): These are the activities which facilitate movement, storage, financing, risk coverage and sales promotion of goods.
Q.5 Explain the concept of business risk and its types. (3)
Q.6. MVT Construction Pvt. Ltd. deals in constructing building, bridges, roads and dams by using cement, steel, bricks and wood.
There are 1000 employees in all working in this company. The managing director of the company, Mr. Shyamsundar, takes full care
of the quality of work done. Recently, the company got a contract of constructing five big buildings, two bridges, one long road
and one dam. The company has got a special division also, which owns one hundred trucks. These trucks are used for transporting
goods on hire. This division is working quite successfully under the supervision of the divisional manager, Radhika Dasi.
Identify and state two types of industrial activities from the above para by quoting the lines. (3)
Q.7 lmran, Manpreet, Joseph and Priyanka have been classmates in Class X. After their exams are over they happen to meet at a common
friend Ruchika’s house. Just when they are sharing their experiences of examination days, Ruchika’s father, Mr. Raghuraj Chaudhury
intervenes and asks about their well-being. He also enquires from each one of them about their career plans. But none of them has
a definite reply. Mr. Raghuraj. who himself is a businessman suggests to them that they can opt for business as a promising and
challenging career. Joseph gets excited by the idea and says, “Yes, business is really good for making lots of money even more than is
possible by becoming an engineer or a doctor.” Mr. Raghuraj says “Let me tell you, young man, there is a lot more to business than
merely money?”
Do you agree with Mr. Raghu Raj Chaudahry’s statement? What according to you are other objectives of business? (4)
Q.8 Identify the types of economic activities shown in the pictures (i),(ii) and (iii) given below. Also, explain the differences between
then on any three bases. (6)
(i) (ii) (iii)


Q.1 Match the following and select the correct alternative: (1)
Column I Column II
1. A. Electrical Goods
2. B. Food Products
3. C. Jewellery
4. D. Agricultural Products
(a) 1-A, 2-C, 3-D, 4-B (b) 1-D, 2-A, 3-B, 4-C
(c) 1-C, 2-D, 3-A, 4-B (d) 1-B, 2-D, 3-C, 4-A
Q.2 Read the following statements carefully – Assertion (A) and Reason (R) and choose the correct alternative: (1)
Assertion (A): A housewife cooking food for her family, or a boy helping an old man cross the road is performing non-economic
activities.
Reason (R): They are doing so out of love or sympathy.
Q.3 Match the columns and choose the correct option: (1)
Business Risks Causes of Business Risks
A. Flood, earthquake, lightning, heavy rains, famine, etc. 1. Other causes
B. Stoppage of work due to power failure, strikes, riots, etc. 2. Economic causes
C. Financial problems, like rise in interest rate for borrowing, levy of higher taxes, etc. 3. Natural causes
D. Political disturbances, mechanical failures, such as the bursting of boiler, fluctuations in exchange 4. Human causes
rates, etc.
(a) A-2, B-4, C-1, D-3 (b) A-1, B-2, C-3, D-4
(c) A-3, B-4, C-2, D-1 (d) A-2, B-1, C-4, D-3
Q.4 Which of the following industry/industries is/are classified as primary industries?
(i) (ii) (iii) (iv)

(a) Only (ii)
(b) Only (i) and (ii)
(c) Only (ii) and (iii)
(d) Only (ii) and (iv)
Q.5 (a) Distinguish between economic and non-economic activities. (2)
(b) A beggar earns his livelihood by begging. Is begging considered an economic activity? Explain giving reason in support of your
answer. (1)
Q.6 Explain the following: (3)
(i) Risk is an essential part of every business.
(ii) Profit is the reward for risk taking.
Q.7 Business is a core activity in the society that contributes to social and economic development. Explain the importance of the
Auxiliaries to Trade in supporting business activity in the economy with any four examples. (4)
Q.8 Read the following case study and answer the questions that follow:
Nestled in the beautiful district of Assam is the district of Kamrup. In Kamrup, lies a small, tight knit community village called
Sualkuchi. Sualkuchi is known for its silk weavers and the intricate art of silk weaving. There is a part of silk weaving called
weft insertion or buta weaving. This requires complete attention, dedication and precision. The slow process is mentally and
physically exhausting. It slows down productivity and leads to the workers being unable to take extra work. In this community of
the quiet workers lived Dipak Bharali. Born in a simple family, he knew the weaving occupation was going to be his livelihood. The
resourceful young man wanted to be a success and achieve something substantial. He purchased a silk weaving loom and started
a business with it. The venture was growing and income was quite good. Yet, something bothered Dipak. To expand the business
of silk weaving, there was no other option but to keep purchasing more looms. He tried to find other means of investment and
progress. The simple minded villagers told him just to increase the number of looms. Dipak was frustrated with their answers and
pushed himself to think outside the box. He thought he could make a machine that will automate the process of weft insertion or
buta weaving.
One fine day, Dipak and his brother were reminiscing about their childhood. A good part of their childhood had revolved around
creating fun games out of simple objects and ideas. He remembered his brother trying to make an electro-magnet by using some
wires and nails. Another game involved placing a safety pin or nail on paper and moved using a magnet below the paper. Like the
proverbial light bulb going on in somebody’s mind, Dipak’s brain was triggered by this memory.
He knew this was the push he needed to create a solution to his dilemma. Now that he had the idea, he had to create the device.
An entrepreneur is one who succeeds despite failing numerous times. After a mind boggling 80 tries, he developed the ideal device
‘Chaneki’. ‘Chaneki’ is made of recyclable materials, making not only a useful but an eco-friendly invention. The device made
machine to run 40 times faster than manual weft insertion of motifs! Several weavers have now mastered Chaneki and increased
output majorly. This difference has allowed productivity and quality to increase, pleasing both the owners and weavers.
It is always easy to walk the path taken by everybody. The ones who carve their own route and plant flags on unknown territories
are the real risk takers and entrepreneurs. Dipak Bharali well deserves all he has achieved. Small things come in big packages. And
sometimes the biggest questions of life are answered in the simplest of ways.
Questions:
(i) Which objective of business is discussed in the above case? State. (1)
(ii) How has the identified objective of business contributed to the growth of business unit? Give reasons. (2)
(iii) Why does business require multiple objectives for its sustainable growth? Explain any three objectives of business other than
that identified in (i) and ‘earning profits’. (3)
Practice Question Papers for Annual 2025 Exam SUBHASH DEY (Shree Radhey Publications) PQ.31
Practice Question Paper - 10

Q.1 A government company is any company in which the paid up
capital held by the government is not less than: (1)
(a) 49% (b) 51% (c) 50% (d) 25%
Column I Column II
A. Bank Draft i. A short-term cash loan to a company. The
borrower is sanctioned a credit limit upto (iii) (iv)
which it may draw amounts from the bank. (a) Only (ii) (b) Only (i) and (ii)
This credit limit is determined by the bank’s (c) Only (ii) and (iii) (d) Only (iii) and (iv)
estimation of the borrower’s credit-worthiness. Q.7 The principal international body concerned with solving trade
B. Bank Overdraft ii. Drawn by a bank branch on another branch problems between countries and providing a forum for multilateral
or some other bank at the place of destination. trade negotiations is: (1)
The bank charges some commission in lieu of (a) World Health Organisation (b) World Trade Organization
issuing. (c) World Bank (d) World International Bank
C. Cash Credits iii. The bank allows a customer to overdraw
Q.8 The term “Emerging” in Emerging Modes of business includes
his current account balance up to an agreed
trends. (1)
limit. The customer has to pay interest on the
(a) Digitisation
amount overdrawn by him.
D. e-Banking iv. Automated Teller Machines (ATM) and Point (b) Outsourcing
of Sales (PoS), Electronic Data Interchange (c) Internationalisation and globalisation
(EDI) and Credit Cards Electronic or Digital (d) All of the above
cash and Electronic bank transfer (EFT) Q.9 Match the columns and choose the correct alternative: (1)
(a) A-iii, B-ii, C-i, D-iv (b) A-iv, B-iii, C-i, D-ii Column I Column II
(c) A-ii, B-iii, C-i, D-iv (d) A-ii, B-i, C-iii, D-iv A. Patent i. It is a type of variety which is bred and developed
Q.3 The Chief Executive Officer (CEO) and other higher level managers by farmers. This helps in conserving, improving
need to be openly and strongly committed to ethical conduct. They and making available plant genetic resources.
B. Geographical ii. It identifies agricultural, natural or manufactured
must give continuous leadership for developing and upholding
Indication products (handicrafts, industrial goods and food stuffs)
the values of the organisation. Which of the following elements of
originating from a definite geographical territory.
business ethics is highlighted above? (1) C. Design iii. An exclusive right granted by the Government
(a) Involving employees at all levels (b) Top management commitment which provides the exclusive ‘right to exclude’
(c) Measuring results (d) Establishment of compliance mechanisms all others and prevent them from making, using,
Q.4 The sources for raising borrowed funds include: (1) offering for sale, selling or importing the invention.
(i) Loans from commercial banks (ii) Loans from financial D. Plant Variety iv. It includes shape, pattern, and arrangement of
institutions (iii) Issue of debentures (iv) Trade credit lines or colour combination that is applied to
(v) Public deposits (vi) Retained earnings any article. It is a protection given to aesthetic
(a) (i), (ii) and (iii) (b) (i), (ii), (iii) and (iv) appearance or eye-catching features.
(c) (i), (ii), (iii), (iv) and (v) (d) All of these (a) A-iii, B-i, C-iv, D-ii (b) A-iv, B-i, C-iii, D-ii
Q.5 Which hindrance of trade is removed by the activity shown in image (c) A-iii, B-ii, C-iv, D-i (d) A-iii, B-i, C-ii, D-iv
given below: (1) Q.10 Statement I: The GST has replaced 17 indirect taxes
(8 Central + 9 State levels) and 23 cesses of the Centre and
the States, eliminating the need for filing multiple returns and
assessments and rationalising the tax treatment of goods and services
along the supply chain from producers to consumers.
Statement II: GST comprises Central GST (CGST) and the State
GST (SGST), subsuming levies previously charged by the Central
and the State governments respectively.
(a) Statement I is true, Statement II is false.
(b) Statement II is true, Statement I is false.
(c) Both the statements are true.
(a) Hindrance of Persons (b) Hindrance of Place
(d) Both the statements are false. (1)
Q.11 Match the columns and select the correct alternative: (1)
Q.6 Which of the following industry/industries is/are classified as
Forms for Articles of a Company
secondary industries? (1)
1. Table F A. AOA of a company limited by guarantee and having
share capital
2. Table G B. AOA of a company limited by shares
3. Table H C. AOA of a company limited by guarantee and not having
share capital
4. Table I D. AOA of an unlimited company and not having share
capital
(i) (ii) 5. Table J E. AOA of an unlimited company and having share capital
PQ.32 SUBHASH DEY (Shree Radhey Publications) BUSINESS STUDIES Class XI (2024-25 Edition)
(a) 1-A, 2-B, 3-C, 4-D, 5-E (b) 1-B, 2-A, 3-C, 4-D, 5-E Q.20 Which of the following industry/industries is/are classified as
(c) 1-A, 2-B, 3-D, 4-C, 5-E (d) 1-B, 2-A, 3-C, 4-E, 5-D primary industries? (1)
Column I Column II
A. Policy i. The person whose life is insured.
B. Assured ii. The consideration paid periodically in
instalments.
C. Insurer iii. The agreement or contract which contains
all the terms and conditions in writing. (i) (ii)
D. Premium iv. The insurance company
(a) A-ii, B-i, C-iv ,D-iii (b) A-iii, B-iv, C-i, D-ii
(c) A-iii, B-ii, C-iv, D-i (d) A-iii, B-i, C-iv, D-ii
Q.13 Which of the following is a benefit of e-Commerce to Business
Organisations? (1)
(i) Expands the marketplace to national and international markets
(ii) Proper time management and support business processes (iii) (iv)
(iii) Competitive price/discounts/waive offs (a) Only (ii) (b) Only (i) and (ii)
(iv) Quick and Timely delivery (digitised products) (c) Only (ii) and (iii) (d) Only (ii) and (iv)
(v) Small firms co-exist with big firms (win-win) Q.21 Vrinda Ltd. is facing a declined in demand for its products due to
(a) Only (i) and (ii) (b) Only (i), (ii) and (iii) change in tastes and preferences of consumers as well as increased
(c) Only (i), (ii) and (v) (d) Only (ii), (iii) and (v) competition from other producers. Lower demand results in low sales
Q.14 Which of the following statement is not true for raising funds and profits. Moreover, the shortage of raw materials in the market
through issuing preference shares? (1) shoots up its price. So the company has to pay more for buying them.
(a) Preference shares provide reasonably steady income in the form As a result, cost of production increases which, in turn, reduces profits
of fixed rate of return and safety of investment. of the company.
(b) Preference shares are useful for those investors who want fixed (a) State the concept highlighted above. (1)
rate of return with comparatively low risk. (b) Explain two main causes of the concept identified. (2)
(c) It affects the control of equity shareholders over the management OR
as preference shareholders have voting rights. Identify and explain the three major categories of economic
(d) Preference capital does not create any sort of charge against the activities. (3)
assets of a company. Economic Activities
Q.15 Statement I: It is not compulsory to insure the goods before export.
Statement II: Bills of exchange is a document that contains the
details of the imported good. (i) (ii) (iii)
(a) Both statements are true. (b) Both statements are false. Q.22 Identify and explain the types of partnership models shown in the
(c) Only Statement I is true. (d) Only Statement II is true. (1) following pictures: (3)
Q.16 Assertion (A): The exporter need not wait for the payment till the
release of money by the importer.
Reason (R): The exporter can get immediate payment from his/her
bank on the submission of documents by signing a letter of indemnity.
(a) Both Assertion (A) and Reason (R) are true.
(b) Both Assertion (A) and Reason (R) are false.
(d) Assertion (A) is false, but Reason (R) is true. (1)
Kundli Manesar Expressway
Q.17 Rajiv, an exporter sent complete information about the quality, grade,
size, weight, type of packaging, etc. about the product on his enquiry.
(i) (ii)
Q.23 Mr. Gurudutt is a trader from Assam and a leading Supplier of
Such quotation is known as ________. (1)
“Assam Tea” to wholesalers and retailers in different parts of India.
(a) Performa Invoice (b) Intent
He is facing problem while communicating with his customers,
(c) Letter of Information (d) Enquiry Performa
which is given as below:
Q.18 Arrange the following steps in the export procedure in sequential
(a) Asgar, big retailer in Mumbai, asked for a quotation for different
order: (1)
flavours of tea from Mr. Gurudutt. Gurudutt wants to send the
(i) Excise clearance (ii) Obtaining pre-shipment finance
quotation as quickly as possible along with sample so that Asgar
(iii) Pre-shipment inspection (iv) Production or procurement of goods
does not shift to his competitors.
(a) (ii), (iv), (i), (iii) (b) (ii), (iv), (iii), (i)
(b) Chaman, a big wholesaler in Delhi asked Mr. Gurudutt to send
(c) (i), (ii), (iv), (iii) (d) (i), (ii), (iii), (iv)
a bag of 10 kg special. Assam tea.
Q.19 The definition used by the Government of India to describe MSME
(c) Dholu is a customer of Mr. Gurudutt, who is making default in
is based on: (1)
payment even after three reminders. Now, Mr. Gurudutt wants
(i) Investment in plant and machinery
to send him a legal notice and also wants to get assured that it
(ii) Turnover of business
must reach him without fail.
(iii) Number of persons employed in business
Suggest Mr. Gurudutt, with explanation, the different types of
(a) Only (i) (b) Only (i) and (ii)
postal services, which he can use to communicate with different
(c) Only (i) and (iii) (d) All of these
customers described in the above cases (3)
Practice Question Papers for Annual 2025 Exam SUBHASH DEY (Shree Radhey Publications) PQ.33
Q.24 State any three points highlighting the need for entrepreneurship
development. (3)
OR
State any three objectives of Startup India Scheme. (3)
Q.25 Read the following and answer the questions that follow on the
basis of the same and your previous knowledge:
Have you ever thought if there were no markets, how products of different
manufacturers would reach us? We are all aware of our general provisions
store round the corner which is selling items of our daily need. But is that
enough? When we need to buy items of a specialised nature, we like to look
at bigger markets or shops with variety. Our observation tells us that there
are different types of shops selling different items or specialised goods and (i) Which factors led to the dominant growth of indigenous banking
depending on our requirements we purchase from certain shops or markets. system in Indian subcontinent? (1)
In rural areas, we may have noticed people selling their goods on the streets, (ii) Name any four leading trade centres which were developed in
these goods may range from vegetables to clothes. This is a completely ancient times for the import and export of goods. (1)
different scene from what we see in the urban areas. In our country, all (iii) Name any two major exports and imports items of ancient India. (1)
kinds of markets co-exist in harmony. With the advent of imported goods (iv) Why was the Indian subcontinent referred to as ‘Swaran Bharat and
and multinational corporations, we have shops selling these products Swaran Dweep’ by the then travellers to India? (1)
too. In big towns and cities, there are many retail shops selling particular Q.27 The vast space of the internet allows persons to globally search for
branded products only. Another aspect of all this is, how these products potential buyers. Additionally, internet technology provides market
reach the shops from the manufacturers? There must be some middlemen system security to such transactions which otherwise would have
doing this job. Are they really useful or do prices increase because of them? been missing if the buyers and sellers were to interact in anonymity
(a) Explain any two types of small scale fixed shops retailers selling of one-to-one transactions? An excellent example of this is found
particular branded products such as grocery items, soft drinks, at eBay where consumers sell their goods and services to other
children’s garments, men’s wear, ladies shoes, toys and gifts, school consumers. To make this activity more secure and robust, several
uniforms, etc. in big towns and cities. (2) technologies have emerged. Firstly, eBay allows all the sellers and
(b) Explain the services of the type of middlemen which help these buyers to rate one another. In this manner, future prospective
products reach the shops from the manufacturers. (2) purchasers may see that a particular seller has sold to more than
Q.26 Read the following and answer the questions that follow on the 2,000 customers — all of whom rate the seller as excellent. In
basis of the same and your previous knowledge. another example, a prospective purchaser may see a seller who has
Imran, Manpreet, Joseph and Priyanka have been classmates in Class previously sold only four times and all four rate the seller poorly.
X. After their exams are over, they happen to meet at a common friend This type of information is helpful.
Ruchita’s house. Just when they were sharing their experiences of PayPal is another good example of this kind. Instead of
examination days, Ruchika’s father Raghuraj Chaudhary intervenes and purchasing items directly from an unknown, untrusted seller;
asks about their well-being. He also enquires about their career plans. But the buyer can instead send the money to Pay Pal. From there,
none of them had a definite reply. Raghuraj who himself is a successful PayPal notifies the seller that they will hold the money for them
businessman tells them about business as a career opportunity. Joseph gets until the goods have been shipped and accepted by the buyer.
excited by the idea and says “yes, business is really good for making lots (a) Identify the emerging mode of business discussed above. State
of money”. Raghuraj tells them that ‘there is a lot more to business than its meaning. (1)
merely money’. Business activities lead to growth and development of any (b) Identify and explain the constituent of the emerging mode of
country, he added. He further tells them that the roots of business activities business discussed above. (3)
can be traced back to ancient times and how trading helps in the prosperity OR
of the Indian subcontinent. Priyanka said that they have read about the Internet is truly without boundaries. On the one hand, it allows the
Silk Route in their history textbooks. Raghuraj then gets busy with his seller an access to the global market; on the other hand, it affords to
day-to-day tasks. However, the four classmates begin raising questions. The the buyer a freedom to choose products from almost any part of the
conversation of the four classmates focused on how trading activities were world. It would not be an exaggeration to say that in the absence
conducted during ancient times. How far can the roots of trading activities of internet, globalisation would have been considerably restricted in
be traced? Why was the Indian subcontinent referred to as ‘Swaran Bharat scope and speed.
and Swaran Dweep’ by the then travellers to India? What made Columbus Use of Internet has considerably reduced dependence on paperwork
and Vasco da Gama undertake journeys to locate India? and the attendant ‘red tape.’ You know that Maruti Udyog does
bulk of its sourcing of supplies of materials and components in a
Source: Angus Maddison (2001 and 2003), The World Economy: A paper less fashion. Even the government departments and regulatory
Millennial Perspective, OECD, Paris; Angus Maddison, The World Economy, authorities are increasingly moving in this direction whereby they
Historical Statistics allow electronic filing of returns and reports. In fact, e-commerce
The Indian economy is emerging as one of the fastest growing economies in tools are effecting the administrative reforms aimed at speeding up
the world today and a preferred FDI destination. Rising incomes, savings, the process of granting permissions, approvals and licences. In this
investment opportunities, increased domestic consumption and younger respect, the provisions of Information Technology Act 2000 are
population ensures growth for decades to come. The high growth sectors quite noteworthy.
have been identified, which are likely to grow at a rapid pace and the recent (a) Identify the emerging mode of business discussed above. State
initiatives of the Government of India such as ‘Make in India’, Skill India’, its meaning. (1)
‘Digital India’ is expected to help the economy in terms of exports and (b) Identify three benefits of the emerging mode of business
imports with steady and sustainable trade balance. discussed above. (3)
PQ.34 SUBHASH DEY (Shree Radhey Publications) BUSINESS STUDIES Class XI (2024-25 Edition)
Q.28 A business can raise funds from various sources. Each of the source Identify the type of retail trade highlighted above and write any
has unique characteristics, which must be properly understood so three other features also. (4)
that the best available source of raising funds can be identified. Q.31 Read the following and answer the questions that follow on the
There is not a single best source of funds for all organisations. basis of the same and your previous knowledge:
Depending on the situation, purpose, cost and associated risk, a Traders dealing in wholesale trade are called wholesale traders and those
choice may be made about the source to be used. For example, if a dealing in retail trade are called retailers. Both retailers and wholesalers are
business wants to raise funds for meeting fixed capital requirements, important marketing intermediaries who perform very useful functions
long term funds may be required which can be raised in the form of in the process of exchange of goods and services between producers and
owned funds or borrowed funds. users or ultimate consumers. Internal trade aims at equitable distribution of
(a) Distinguish between owners’ funds and borrowed funds. (2) goods within a nation speedily and at reasonable cost.
(b) Explain any two sources each of owners’ funds and borrowed (a) Give the meanings of the two types of Internal trade viz., (i)
funds. (2) wholesale trade and (ii) retail trade. (2)
Q.29 Read the following and answer the questions that follow on the (b) Is custom duty or import duty levied on internal trade? (1)
basis of the same and your previous knowledge: (c) Explain the services of retailers to consumers. (any three) (3)
Business ethics concerns itself with the relationship between business Q.32 Give the meaning and any four exemptions and privileges of the
objectives, practices, and techniques and the good of society. A type of company shown in the picture given below: (6)
businessperson behaves ethically when her or his actions are upright and
serve the interests of society. This, of course, also applies to those not in
business. The essential difference is perhaps that businesspersons by virtue
of their widespread control over society’s resources have a much greater
effect on what happens in a society than persons in other areas of activity
do. Business people and politicians are expected to have higher standards
over and above other people. This is perhaps the price they pay for being
allowed to make decisions on behalf of society.
There is a growing realisation all over the world that ethics is vitally
important for every business and for the progress of any society. Ethical OR
business is good business. Ethical business behaviour improves public Identify and explain the features of the form of organisation shown
image, earns people’s confidence and trust, and leads to greater success. in the picture given below: (6)
Ethics and profits go together in the long run. Ethics alone, and not
government or laws, can make a society great. An ethically responsible
enterprise develops a culture of caring for people and environment and
commands a high degree of integrity in dealing with others. Ethical activity
is indeed valuable in itself, for its own sake, because it enhances the quality
of our lives and that of the work we do.
(a) What is business ethics? Give a few examples. (2)
(b) Explain any two elements of business ethics. (2)
OR
Read the following and answer the questions that follow on the basis of
the same and your previous knowledge:
What is the right thing to do when it comes to social responsibility? Should a
business enterprise be run for the benefit of its owners who may desire to get
as much profit as is possible or else, it needs to be responsible for serving the
interest of other sections of society such as customers, employees, suppliers,
government and community? The very concept of social responsibility
implies that it is essentially an ethical issue, since it involves the question
of what is morally right or wrong in relation to the firm’s responsibilities.
Social responsibility also has an element of voluntary action on the part of
the business person who may feel free to perform or not to perform such
responsibilities. They may also exercise their freedom for deciding the extent Q.33 State the meaning of borrowed funds. Discuss the concept of
to which they would like to serve various sections of society. In fact, all Debentures and Bonds, Loans from financial institutions and
business people do not feel equally responsible towards society. There has commercial banks, Trade credit and Inter-corporate deposits as the
been a debate, for some time now whether business should assume social sources of borrowed funds. (6)
responsibilities or not. Some people strongly believe that a firm’s only social OR
responsibility is towards its owners. Some others, however, hold an opposite State the meaning of owners’ funds. Explain three sources of owners’
view and argue that the firm has a social responsibility to serve all sections of funds. (6)
society who are affected by its decisions and actions. Q.34 Discuss the process involved in securing payment for exports in
(a) What do you understand by social responsibility of business? How is international trade. (6)
it different from legal responsibility? (2) OR
(b) Justify the case of social responsibility by giving any two points. (2) Your firm is planning to import textile machinery from Canada.
Q.30 Jass in running an artificial jewellery business on the basis of Describe the procedure involved in importing after obtaining the
advertisement only. She has not opened any shop and sends goods import licence and placing the import order or indent with the
to her customers through VPP. exporter for supply of textile machinery. (6)

Subhash Dey's BST XI 2024-25 (Sample PDF

Uploaded by

Copyright:

Available Formats

Subhash Dey's BST XI 2024-25 (Sample PDF

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Subhash Dey's BST XI 2024-25 (Sample PDF

Uploaded by

Copyright:

Available Formats

Chapter 1

Business, Trade and Commerce

Economic Activities Non-economic Activities

Basis Economic Activities Non-Economic Activities

Competency Based Question

Business Functions at Enterprise Level

2. Production or procurement of goods and services

3. Sale or exchange of goods and services

4. Dealings in goods and services on a regular basis

Business, Profession and Employment

Professions Professionals Professional bodies

Comparison of Business, Profession and Employment

Multiple Choice Questions (MCQs) 1.1

Q.5 Which of the following is not a characteristic of profession?

Competency Based Questions 1.1

(i) (ii) (iii)

(i) (ii) (iii)

Subjective Questions 1.1

Objectives of Business — Economic and Social; Role of Profit in Business 1.2

Economic Objectives Social Objectives

1. Earning profits 1. Production and supply of

Social objectives of business are as follows:

Earning profit cannot be the only objective of business

Multiple Choice Questions (MCQs) 1.2

Competency Based Questions 1.2

Subjective Questions 1.2

Business Risk — Concept, Nature and Causes 1.3

Types of Business Risks

SPECULATIVE RISKS PURE RISKS

Nature of Business Risks

Causes of Business Risks

Multiple Choice Questions (MCQs) 1.3

Competency Based Questions 1.3

Subjective Questions 1.3

Classification of Business Activities — Industry and Commerce 1.4

Multiple Choice Questions (MCQs) 1.4

(a) A - ii, B - i, C - iii, D - iv (b) A - iii, B - i, C - ii, D - iv

Q.41 Which of the following is Extractive Industry?

(a) Hindrance of Information (b) Hindrance of Place

(a) Hindrance of Persons (b) Hindrance of Place

Competency Based Questions 1.4

Subjective Questions 1.4

Q.18 Describe the activities relating to commerce. (6)

History of Trade and Commerce in India 1.5

Indigenous Banking System

Major Trade Centres

Major Exports and Imports

Position of Indian Subcontinent in World Economy (1 AD up to 1991)

India begins to Reindustrialise

Multiple Choice Questions (MCQs) 1.5

Competency Based Questions 1.5

Subjective Questions 1.5

CASE STUDY Based Multiple Choice Questions (MCQs)

Q.1 Shreya is focusing on _________ objectives of business.

Q.5 Name the hindrance of trade removed by the insurance.

1.1 Concept and Characteristics of Business

Economic and non-economic activities

1.3 Objectives of Business and Role of Profit in Business

Causes of Business Risks