PODAR INTERNATIONAL SCHOOL NAVSARI.

Practice Paper - General Questions

Subject: BUSINESS STUDIES Date:
Std: XI COMMERCE Chapter: 01 NATURE & SIGNIFICANCE OF
BUSINESS

General Instructions:
1. The Practice Paper comprises objective and short and long answer type questions.
2. Attempt all questions.

Q. No. Questions Mar

ks
1 Differentiate between Economic and Non-economic activities. 3
Basis Economic Activities Non-Economic Activities

These activities are undertaken by

These activities are of social and religious nature and do not gene
1. Meaning people to earn income to meet
economic gain.
their material needs.

These activities are undertaken

2. with economic motives, for the These activities are undertaken by social or psychological motive

Purpose/Motive generation of income and wealth purpose is to serve other segments of society.

to earn a living.

These satisfy the economic needs

3. Need
of people engaged such as food, These satisfy the social and psychological needs of people engage
Satisfaction
clothing, shelter, etc.

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 People engaged in economic

4. Types of activities include traders. People engaged in household activities, charitable work, social w

Examples Manufacturer. Teacher. Doctor. of the poor. etc. are said to be engaged in non¬economic activitie

Electrician. Worker, etc.

These activities are guided by

5. Logic rational considerations of cost Sentiments and emotions guide these activities.

and profits.

2. Give an example of activity which is economic in one side and non-economic on

other side.
Ans Profession requires specialized knowledge and it is economic on one side and non
economic on the other side.

3. State different types of economic activities?

Ans Economic activities can be categorised as:
• Business
• Employment
• Profession

4. Name the economic activity in which specialized knowledge is required.

1
Ans Profession requires specialized knowledge.

5. Why is insurance known as a tertiary industry? 1

Ans. Insurance is known as a tertiary industry because it provides supporting services
finance and mitigation of risk to primary and secondary industries.

6. Which industries provide support services to other industries?

Ans Tertiary industries provide supporting services to other industries. Such as
telecommunication, banking, insurance, advertising etc.

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 7. Give the concept of Business?
Ans Business refers to those economic activities involving the purchase production and /
or sale of goods and services with a motive of earning profit by satisfying human
needs in society.

8 List out any three characteristics of business?

Ans. The characteristics of business are as under:
1) An economic activity
2) Production of goods and services
3) Exchange or Sale of goods or Services
4) Dealing of goods and services on regular basis
5) Profit Earning
6) Uncertainty of return
7) Element of Risk

9. What do mean by Employment?

Ans People are hired to work regularly by organisations. Salaries or wages are paid to
employees in exchange for the working hours which they provide to a company.

10 How would you classify business activities?

Ans Business activities are categorised as follows:
i. Industry: It refers to economic activities involving that constituent of
production where raw materials undergo change and get converted to
finished products. It creates form utility as form of raw materials is
converted to useful finished products. It is also the group of firms
producing the same type of goods. For example, the sugar industry
comprises all the firms producing sugar. Industries are again classified
into three categories-primary, secondary and tertiary.
ii. Commerce: After manufacturing and production, comes the task of
distribution of goods. Activities which fall under the purview of
commerce involve helping directly or indirectly in distributing goods and
services from the producers to the users or ultimate consumers.
Sometimes, high-in-demand goods are produced at one place and needs to
be circulated and distributed to consumers living at different places. In
such situations, commerce or commercial activities take a lead in
distributing and delivering the goods. Thus, the major commercial
activities are transport, advertisement, packaging, warehousing, banking
and communication. Hence, we can say that the gap between producers
and consumers is removed by commerce. Commerce can then be further
classified into trade and auxiliaries to trade.

11. What are the various types of industries?

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 Ans Industries refers to economic activities involving processing and converting of raw
materials into final products, either for the use of customers or to satisfy the needs of
other industries for further production. The various types of industries are
i. Primary industries: Activities related to extraction and production of
natural resources and reproduction and development of living species are
undertaken. Farming, mining, lumbering, hunting, fishing operations,
breeding farms and poultry farms are examples of primary industries.
These industries are classified into extractive industries and genetic
industries.
ii. Secondary industries: The final products of primary industries are
processed and converted to final goods by secondary industries. Iron
mining belongs to primary industries, whereas manufacturing of steel falls
under secondary industries. Secondary industries are further classified as
manufacturing industries and construction industries.
iii. Tertiary industries: These industries act as a service provider for the
primary and secondary industries and for trade-related activities.
Examples of these industries are transport, banking, insurance,
warehousing and advertising.

12 Give the meaning of Extractive Industries:-

Ans. Extractive Industry refers to those industries under which something is extracted out
of the earth, water or air e.g., coal, iron, gas etc. Farming, mining, lumbering, hunting
& fishing come under this category of industry

13 Give the meaning of Genetic Industry?

Ans Genetic Industry refers to those industries under which the breed of animals and
vegetables are improved and made more useful e.g., poultry farms, dairy farming, fish
hatchery, cattle breeding etc.

14. Give the meaning of Commerce?

Ans. Commerce refers to all those activities which are concerned with the transfer of goods
and services from the producers to the consumers. It embraces all those activities
which are necessary for maintaining a free flow of goods and services.

15. What do you mean by Trade?

Ans. Trade refers to buying and selling of goods and services with the objective of earning
profit.

16. What is meant by business risk?

Ans. 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 preferences of consumers, or increase in competition
etc.

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