PODAR INTERNATIONAL SCHOOL NAVSARI

Practice Paper - Specific Questions

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

General Instructions:
1. The Practice Paper comprises case-based and source-based questions.
2. Attempt all questions.

Q. No. Questions Marks

1. Imran, 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 opines,
“Let me tell you, young man, there is a lot more to business than merely
money.” He then gets
2
Busy with some other guests.
a) Is Mr Raghuraj correct in his assertion? On the basis of your 3
understanding of the chapter, state the features of business.
b) Joseph thinks that the only objective of business is to earn money. Is
he correct?
Ans. a) Yes, Mr Raghuraj is correct in his assertion. Business is much more
than merely earning money. As per my understanding of the chapter,
business possesses the following features
(i) It is an economic activity.
(ii) It involves sale or exchange of goods and services for value.

b) No, Joseph is not correct. Profit earning is not the only objective of
business. The objectives of business can be classified as economic
objectives and social objectives. Earning profit, survival, optimum use
of resources, creating market standing, growth, innovation,
productivity and manager’s development are economic objectives of
business. On the other hand, supply of good quality products, avoiding
unfair trade practices, employee welfare, generation of employment
and protection of environment are the social objectives of business.

2. . After competing his studies, Sarthak decided to enter into business to earn
profit and create employment opportunities in the country. Taking advantage

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 of the ‘Start-Up’ scheme of the government, he decided to venture into the
business of manufacturing ‘accu-pressure chairs’. He decided to sell his
products not only in India but also abroad.
He established his factory in a remote village of Madhya Pradesh and initially
employed 20 workers. Being of cautious nature, he also insured his machines
and factory building against fire, theft and natural calamities. For the purpose
of finance, he obtained a loan from State Bank of India. For creating demand 1
for his products, he gave a contract to an advertising company. 1
a) In which category of industry did Sarthak venture into? 1
b) Is Sarthak innovative? Support your answer. 1
c) “He decided to sell his products not only in India but also abroad”.
Which categories of trade are being referred here?
d) Sarthak used a number of auxiliaries of trade. Identify them.
Ans. a) Sarthak ventured into ‘assembling industry. In this industry two or
more components are combined together to make a new product.
b) Yes, Sarthak is innovative as he is thinking of making an uncommon
product i.e ., accupressure chair.
c) Internal and external trade are referred here.
d) Auxiliaries to trade used by Sarthak are
Insurance
Banking
Advertising

3. Nirmal, looking at the possibilities of doing 03 business, decided to start his

equity
Research firm online. He put his content on web for companies and also
advised them. Indian Infoline. Com launched by him also started e-booking in
1
India.
a) Nirmal is engaging in which type of business activity.
1
Explain it.
b) Name other business activities apart from the one stated above.

Ans. a) Ans. Services Service sector includes commercial firms engaged in

banking, communication, transport, insurance and warehousing.
b) Other Business Activities Apart from services, business activities can
be in manufacturing area and trading area.

4. Guari, a housewife, sells old newspapers every month. Her family is a joint
family and they daily subscribe to 4 newspapers. She is able to sell them for
about Rs. 800. 2
Is Gauri engaged business activity? Identify the characteristics of business
which are missing in the above act.

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 Ans. No, Gauri is not engaged in business activity. The characteristics of business
which are missing in the above act are
Production and procurement of goods and services.
Profit earning.
Dealing of goods and services on a regular basis.

5. Raghav had a very good hand at cooking and everyone appreciated his
culinary skills. Therefore, he did his graduation in Hotel Management. He got
an offer from Hotel Hyatt and got placed there. 1
a) Which economic activity is presented in this case? 2
b) Name other two types of economic activities.
Ans. a) Employment is presented in this case.
b) Other economic activities are
1) Business
2) Profession

6. Mohan Private Limited has commenced the business of Blue Pottery. Explain 1
the auxiliaries required for the smooth functioning of their newly set
enterprise.

Ans. Auxiliaries to trade means those services which smoothen the flow of
exchange between the trader and the consumer by removing hindrances of
place, contact, time, risk, finance and information. Thus, the various
auxiliaries to trade needed by Mohan Private Limited will be for Types of
Auxiliaries to Trade

7. Rohit sells his playstation to his friend at a profit of ? 1500. Is it a business

activity? Sohan has a shop which sells electronic toys including play stations.
He also buys second hand playstations and sells them to earn profit. 2
Is this a business activity?
2
Explain any two characteristics of business.
Ans. When Rohit sells his playstation to his friend, it is not a business activity,
since to be a business activity regular dealing in sale or purchase is required.
When Sohan sells second hand playstations from his shop for
A profit, then it is a business activity because he procures goods to exchange
them for a value, with a motive to earn profit, on a regular basis.

Characteristics of business are

1) Entrepreneur’s Presence:- There has to be someone who takes the
initiative for establishing the business and assumes the risk associated
with it.
2) Production or Procurement of Goods and Services:- A business
activity is one which either produces or procures goods and services
for offering it to consumers.

8. Rohan is running a petrol pump in his town. In context to it, what possible 3
political causes he can face which may lead to risk in his business?

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 Ans. Political causes of business risk which Rohan can face are
(i) Winning of a political party whose agenda is opposed to the business of
Rohan.
(ii) Creation of such laws which are detrimental to his business. E.g ., closing
petrol pumps by 7’o clock.
(iii) Increase or decrease in subsidy prices. (iv) Changes in taxation policy.

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