Business Studies: CBSE Sample Question Papers (2020-21)- 3 Notes | Study Sample Papers for Class 12 Commerce - Class 12

Class 12: Business Studies: CBSE Sample Question Papers (2020-21)- 3 Notes | Study Sample Papers for Class 12 Commerce - Class 12

The document Business Studies: CBSE Sample Question Papers (2020-21)- 3 Notes | Study Sample Papers for Class 12 Commerce - Class 12 is a part of the Class 12 Course Sample Papers for Class 12 Commerce.
All you need of Class 12 at this link: Class 12

Class - XII
Business Studies Theory
TIME: 3 Hrs.
M.M: 80

General Instructions :
1. This question paper contains 34 questions.
2. Marks are indicated against each question.
3. Answer should be brief and to the point.
4. Answers to the questions carrying 3 marks may be from 50 to 75 worlds.
5. Answers to the questions carrying 4 marks may be about 150 worlds.
6. Answers to the questions carrying 6 marks may be about 200 worlds.
7. Attempt all parts of the questions together.

Q.1. ...................... is an activity which enables a manager to look ahead, anticipate change, consider the impact of change and develop appropriate responses.
(a)
Planning
(b) Controlling
(c) Organising
(d) Efficiency
Ans: a

Q.2. Identify the basic characteristic of management involved in this statement.
“The activities involved in managing an organisation are common to all organisations, whether financial economical, social or political”.    
(a)
It is an intangible force
(b) It is all-pervasive
(c) It is multidimensional
(d) None of these    
Ans: b

Q.3. The Purchase, Production and Sales managers at Sharda Ltd., a firm manufacturing readymade garments are generally at a conflict, as they have their own objectives. Usually each thinks that only they are qualified to evaluate, judge and decide on any matter, according to their professional criteria.  Identify the concept which will be required by the CEO Mr. Raman, to reconcile the differences in approach, interest or opinion in the organisation.
(a)
Delegation
(b) Decentralisation
(c) Co-ordination
(d) Controlling
Ans: c

Q.4. “In the next 2 years, the rupee is going to depreciate to 80 -82 levels on Dollar appreciation, benign macro data and recession, COVID crisis, higher forward premia rates, and declining interest rates. Also if inflation rises on supply-demand imbalances, the $ 3 trillion economy will see further depreciation of the domestic currency.”
Identify the dimension of the business environment stated above:
(a) 
Economic Environment
(b) Social Environment
(c) Political Environment
(d) Legal Environment
Ans: a

Q.5. ................... is the act of getting people together to accomplish desired goals and objectives using available resources efficiently and effectively.
(a) 
Co-ordination
(b) Planning
(c) Management
(d) Organising
Ans: c

Q.6. .................. is the act of getting people together to accomplish desired goals and objectives using available resources efficiently and effectively.
(a) 
Management
(b) Coordination
(c) Cooperation
(d) Control      
Ans: a

Q.7. Devendra, the Plant Superintendent of Faulty Works Inc., is very energetic and he likes to deal with severe situations. He is a perfectionist who pursues quality management. He prepares a timetable every week to minimize departmental work and time waste. However, he was disturbed by the brutal competition among employees, which had a negative impact on overall production. Even if all these problems occur, he can handle the situation well. On February 26, he informed his boss that the goal he had been given had been achieved and the quality was the highest.
The best part is that there are two days left for the deadline, which is February 28. However, his boss was dissatisfied because the expenses incurred by his team to complete the project exceeded the allowable upper limit.
Identify at which level of management does Devendra work?
(a)
top-level management
(b) Middle-level management
(c) lower-level management
(d) None of these
Ans: b

Q.8. “It is not a job which can be performed once and for all, but its need is felt at every step. Many activities are performed in a business. Sometimes or the other, if any one of the activities goes on fluctuating either for more or less than required, the whole organisational balance is disrupted. Thus, a close watch has to be kept on all the activities to maintain the balance.” Identify the characteristic of coordination discussed above.
(a) 
Coordination ensures unity of action
(b) Coordination is a deliberate function
(c) Coordination is a continuous process
(d) Coordination is an all-pervasive function  
Ans: c  

Q.9. An effort to control everything may end up in controlling nothing is related to:
(a)
Critical Point Control
(b) Management by Exception
(c) Management by Information
(d) Key Result Areas
Ans: b

Q.10. Name the management strategy in which managers will only step in when there are significant deviations from planned outcomes.
(a) 
Management by control
(b) Control by exception
(c) Critical point control
(d) Both (a) & (b)
Ans: b

Q.11.  A manager has to decide the number of subordinates to be functioned under a supervisor to carry on the function of organising.
Identify the concept being explained above.
(a)
Tenure of managers
(b) Number of managers
(c) Span of management
(d) None of these
OR
“This organisation structure allows flexibility and initiative.” Identify the type of organisation structure being discussed above.
(a)
Divisional
(b) Functional
(c) Both (a) and (b)
(d) None of these
Ans: c OR a

Q.12. Match the Tools of Sales Promotion in Column I with their respective examples in Column II.
Business Studies: CBSE Sample Question Papers (2020-21)- 3 Notes | Study Sample Papers for Class 12 Commerce - Class 12
(a)
(iii), (i), (ii)
(b) (i), (ii), (iii)
(c) (i), (iii), (ii)
(d) (ii), (i), (iii)
OR
....................... provides information required by Law.
(a)
Brand
(b) Packaging
(c) Labelling
(d) Trademark
Ans: a OR c

Q.13. Rajesh is the CEO of a leading petrochemical company. Recently, the company issued share capital to cover some expenses. However, in order to meet the floating cost of issuing shares, the company decided to conduct Bridge Financing. Therefore, it decided to issue a money market tool. The wise CEO’s wise decision wisely met the company’s requirements. Three months later, the company decided to issue new shares in the primary market again. According to the floating method it involves, it decided to adopt the method mainly adopted by listed companies and attract the masses by directly contacting the public. Again, success comes from the company’s approach and the realization of its goals. However, when the company tried the same type again three months later, the company had encountered many problems. The problem is to determine a key aspect related to the security of the new release. If the same process is carried out in the secondary market, the company will not care too much about this key aspect.
Which type of money market instrument was issued by the company in the earlier part?
(a)
Call money
(b) Treasury bill
(c) Commercial paper
(d) Certificate of deposit
Ans: c

Q.14. Rajni Auto Manufacturers have decided to give a special privilege to the existing shareholders to subscribe to the new issue of shares where they will be given shares according to the proportion of shares held by them. The company always gives special treatment to loyal stakeholders. Last year, the company was dealing through the capital market where both the buying and selling of securities were taking place. The owner of the company is a man of ethical business. He recently wrote an article about the watchdog of stock market. The article gained a lot of popularity and now is part of the curriculum of MBA students.
Which type of capital market was this company dealing in?
(a)
Primary market
(b) Secondary market
(c) Commodity market
(d) None of these
Ans: b

Q.15. Ramesh chooses a person who is authenticated to buy or sell securities on his behalf. He is registered by SEBI. Then, Ramesh opened an account in the bank through this person. Then he took the next step. He issues an order to the person in which he specifies the number and type of securities to be purchased or sold. This process moves forward. After obtaining instructions from Ramesh, the selected person purchases and issues d’paper. The file contains the name and price of the securities, brokerage fees and the names of the parties involved. Then comes the final stage of the process. Here, securities transactions are completed by a selected person on behalf of Ramesh.
What is the role of bank here?
(a) 
Underwriter
(b) Broker
(c) Depository Participant
(d) None of these
Ans: c

Q.16. Rajesh is the CEO of a leading petrochemical company. Recently, the company issued share capital to cover some expenses. However, in order to meet the floating cost of issuing shares, the company decided to conduct Bridge Financing. Therefore, it decided to issue a money market tool. The wise CEO’s wise decision wisely met the company’s requirements. Three months later, the company decided to issue new shares in the primary market again. According to the floating method it involves, it decided to adopt the method mainly adopted by listed companies and attract the masses by directly contacting the public. Again, success comes from the company’s approach and the realization of its goals. However, when the company tried the same type again three months later, the company had encountered many problems. The problem is to determine a key aspect related to the security of the new release. If the same process is carried out in the secondary market, the company will not care too much about this key aspect.
What key aspect the company would not have cared about in the secondary market?
(a) 
Pricing of securities
(b) Regulations from the government
(c) Safety of investor’s money
(d) None of the above
Ans: a

Q.17. A tea manufacturing company has put labels on its packets stating the variety of tea it is selling. Currently it has three varieties—red, green and black. The tea of the company comes from a garden in Assam which is 100 years old. So the price of the tea is high but recently in order to stay in the market it has lowered down its prices by 20%. The company sells its tea in different markets of the world. Next year the company is thinking of selling its tea in the market of a nation having a very high population. The top management hasn’t yet decided the type of channel it should choose. Two years back the company started selling its tea online; the decision brought an indirect change in one of the elements of the marketing mix and, of course, one element saw change directly.
Which decision related to product mix has been highlighted in above case?
(a)
Labelling
(b) Branding
(c) Packaging
(d) None of these
Ans: a

Q.18. An FMCG company has recently launched a new type of biscuit in the market. The name of the biscuit is ‘Standard’. The company has made the biscuits of the highest quality possible. It wants to create an irreplaceable place for the new brand in the market. The price of the biscuit is also the highest in the market suggesting its quality. The CEO of the company in an interview said that the branding of the new biscuit will help the company to connect with the customers. A customer can ask for the promised quality in case the company deviates from it. As far as packaging of the biscuit is concerned it is different from others. The immediate outer covering is beautiful and an additional layer of cardboard box is provided to ensure protection to the shape of the biscuits.
What do you think is the pricing objective of the company?
(a)
Obtaining market share
(b) Surviving in competitive market
(c) Attaining product quality leadership
(d) None of these
Ans: c

Q.19. That part of a brand which can be recognised but which is not utterable is called ................
(a)
Brand Mark
(b) Trade Mark
(c) Brand Name
(d) None of these
Ans: a

Q.20. A tea manufacturing company has put labels on its packets stating the variety of tea it is selling. Currently it has three varieties—red, green and black. The tea of the company comes from a garden in Assam which is 100 years old. So the price of the tea is high but recently in order to stay in the market it has lowered down its prices by 20%. The company sells its tea in different markets of the world. Next year the company is thinking of selling its tea in the market of a nation having a very high population. The top management hasn’t yet decided the type of channel it should choose. Two years back the company started selling its tea online; the decision brought an indirect change in one of the elements of the marketing mix and, of course, one element saw change directly.
Which element of marketing mix has changed directly?
(a)
Product
(b) Price
(c) Place
(d) Promotion
Ans: c

Q.21. Management does not have some features of Profession. Explain any three such features.
Ans:
The features of management that do not establish it as a profession are:
(i) Restricted entry : The entry to a profession is restricted through a prescribed qualification. But there is no restriction on anyone being appointed as a manager in any business enterprise.
(ii) Professional association : All professions are affiliated to a professional association which regulates entry, grants certificate of practice. There is no compulsion for managers to be members of such an association.
(iii) Service motive : The motive of a profession is to serve their client’s interests by rendering dedicated and committed service. The basic purpose of management is to help the organisation to achieve its stated goal which may be profit maximisation. However, profit maximisation as the objective of management does not hold true and is fast changing. So, presently this feature of profession is not fully present in management.
(iv) Ethical code of conduct : All professions are bound by a code of conduct which guides the behaviour of its members. AIIMA has devised a code of conduct for Indian managers but there is no statutory backing for this code.    
(Note : In case an examinee has combined ‘professional association’ and ‘ethical code of conduct’, full credit be given).

Q.22. Name and define the process in which candidates are eliminated at every stage and a few move on to the next stage till the right type of candidate is found.
Ans:
Selection : Selection is the process of choosing from among the pool of prospective job candidates developed at the stage of recruitment

Q.23. “Under this style of leadership, the leader consults subordinates in the decision-making process and encourages them to give suggestions in the setting of goals and in the implementation of decisions.” Identify and explain the style of leadership stated above.
OR
An element of the directing function seeks to provide inducement to employees to act in a particular manner. Identify and explain this element. Can this inducement be in a negative manner also? If yes, give example.
Ans:
Democratic Leadership or Participative Leadership
(i) This style of leadership wins greater confidence, co-operation, loyalty and initiatives of the group.
(ii) It is suitable when juniors are competent enough to participate in discussion and handle assigned task on their own.
(iii) Though subordinates participate in the decision-making process the final decision lies with the leader.
Business Studies: CBSE Sample Question Papers (2020-21)- 3 Notes | Study Sample Papers for Class 12 Commerce - Class 12
OR
Element: 
Motivation
Motivation means stimulating people to act in a desired manner to achieve certain organisational goals.  
Yes, Motivation can be negative. It is the process of motivation through punishment for poor performance.
Example: Threat of demotion, suspension and termination to those employees who are shirker by nature to encourage them to work more.  

Q.24. ‘Money market is essentially a market for short term funds’. In the light of this statement, state any three features of Money Market.          
OR
What is meant by ‘Capital Market’? Name the two segments of Capital Market.
Ans:
Features of Money Market:
(i) It is a market for short-term funds which deals  in monetary assets whose period of maturity is up to one year.
(ii) Money market instruments are highly liquid.
(iii) Money market instruments are less risky.
OR
Capital Market: Capital market includes all those organisations, institutions and instruments that provide long-term and medium-term funds through shares, bonds, debentures, etc. It consists of development banks, commercial banks and stock exchanges.
Two segments of Capital Market:
(i) Primary Market
(ii) Secondary Market      

Q.25. Banwari Lal is a cloth merchant in Karol Bagh. His grandsons are requesting him to let them diversify the business into bridal wear. Banwari Lal has agreed but on the condition that they will follow the function of management he has always followed, which helps an organisation in keeping track of the progress of activities and ensures that the activities conform to the standards set in advance so that the organisational goals are achieved. Name the function of management which Banwari Lal is asking his grandsons to follow. List any three reasons why it is considered an indispensable function of management.  
Ans:
Controlling
It is considered an indispensable function of management because of the following reasons:
(i) Accomplishing organisational goals.
(ii) Judging accuracy of standards.
(iii) Making efficient use of resources.
(iv) Improving employee motivation.
(v) Ensuring order and discipline.
(vi) Facilitating coordination in action.
Detailed Answer
Importance of Controlling :
(i) Accomplishing organisational goals :
It helps in accomplishing organisational goals by bringing to light, deviations if any and indicating corrective action.
(ii) Making efficient use of resources : It helps in making efficient use of resources by ensuring that each activity is performed in accordance with predetermined standards.
(iii) Ensuring order and discipline : It ensures order and discipline among employees by keeping a close check on their activities.
(iv) Improving employee motivation : It improves employee motivation as the employees’ know well in advance the standards of performance on the basis of which they will be appraised.
(v) Judging accuracy of standards : It helps in judging accuracy of standards in the light of changes taking place in the organisation and in the environment.
(vi) Facilitating coordination in action : It facilitates coordination in action as each employee and department is governed by pre-determined standards which are well coordinated with one another.

Q.26. Rudrakshi Ltd. is engaged in manufacturing high end luxury pens. The target production is 700 units daily. The company had been successfully attaining this target until three months ago. Over the last few month, it has been observed that daily productions varies between 600-650 units.
(i) Identify the function of management, which has been highlighted in the above context.
(ii) Discuss the first three steps involved in the process of the function identified above.  
Ans:
(i) Controlling.
(ii) Following are the first three steps involved in the Controlling process:
(a) Setting Performance Standards: The first step in the controlling process is setting up of performance standards. Standards are the criteria against which actual performance would be measured. Thus, standards serve as benchmarks towards which an organisation strives to work. Standards can be set in both quantitative as well as qualitative terms.
(b) Measurement of Actual Performance: Once performance standards are set, the next step is measurement of actual performance. Performance should be measured in an objective and reliable manner. There are several techniques for measurement of performance.
These include personal observation, sample checking, performance reports, etc. As far as possible, performance should be measured in the same units in which standards are set as this would make their comparison easier.
(c) Comparing Actual Performance with Standards: This step involves comparison of actual performance with the standard. Such comparison will reveal the deviation between actual and desired results.
Comparison becomes easier when standards are set in quantitative terms.  

Q.27. Identify and explain the type of training involved and also categorise whether it is ‘on the job’ training or ‘off the job training’:
(i) In a steel plant training is given to the new employees on sophisticated machines which are not being operated at the workplace. These machines are kept away. Actual work environment is created inside the classroom and the trainees are guided properly there itself.
(ii) Ravi who has three years of work experience in the shipping industry has recently joined a new company. The new job is challenging and requires him to go through a training programme offered by the company. The fourteen-day programme will help him gain practical knowledge and skills related to his job.
OR
Why recruitment is a positive process and selection as a negative process?      
Ans: Vestibule training (Off-the-job training)
(i) Vestibule Training is a method of training which is conducted on the equipment & machines they will be using, away from the actual place of work.
(ii) It is generally used where the employees are required to handle sophisticated machinery.
Internship training (On-the-job training)
(a) Internship Training is a joint programme of training between educational institutions and business firms.
(b) Besides carrying out regular studies, the trainees also work in some factory or office to acquire practical knowledge and skills.  
OR
Recruitment is the process of searching the candidates for employment and stimulating them to apply for jobs in the organization. The basic purpose of recruitment is to create a talent pool of candidates to enable the selection of best candidates for the organisation, by attracting more and more employees to apply in the organization. Thus, recruitment is a positive process, i.e., encouraging more and more employees to apply.
Selection involves the series of steps by which the candidates are screened for choosing the most suitable persons for vacant posts. The basic purpose of selection process is to choose the right candidate to fill the vacant position in the organisation. Thus, selection is a negative process as it involves rejection of the unsuitable candidates.

Q.28. ‘Financial market plays an important role in the allocation of scarce resources in an economy by performing many important functions.’In the light of the given statement, state any four functions performed by Financial Market.  
Ans: Functions of Financial Market :

(i) Financial markets mobilise savings of households and channelize them into the most productive uses.
(ii) It facilitates price discovery of a financial asset through interaction between supply and demand of funds.
(iii) Financial markets provide liquidity to financial assets, so that they can be easily converted into cash whenever required.
(iv) Financial markets provide valuable information about securities being traded in the market and thereby, help to reduce cost of transaction in terms of time, effort and money.

Q.29. What is meant by ‘Capital Structure’? Explain any two factors that affect capital structure of a company.
OR
Explain any four factors that affect the fixed capital requirements of a company.  
Ans:
The capital structure means the proportion of debt and equity used for financing the operations of a business.
Following are the factors affecting the choice of capital structure of a company :
(i) Cash Flow Position : Decision regarding capital structure depends upon the ability of business to generate enough cash flow. If company is sure of generating enough cash flow, it may have more of debt securities whereas if there is shortage of cash, it may go for equity.
(ii) Interest Coverage Ratio (ICR) : It shows how many times the earning before interest and tax is available to the payment of interest. Higher ICR means company has less of borrowed funds whereas, it is possible that inspite of better ICR the cash flow position of the company may be weak.
(iii) Debt Service Coverage Ratio (DSCR) : It is one step ahead of ICR. It takes care of return of interest as well as principal repayment. Higher DSCR means, the company can have more of debt and lower DSCR means, the company should go for equity capital.
(iv) Return on Investment : If return on investment is more than rate of interest then company can prefer debt in its capital structure but if return on investment is less than rate of interest then, company should prefer equity as it will not be able to pay interest.  
(v) Cost of Debt : If rate of interest is less, i.e., cost of debt, more debt can be utilised in the capital structure.
(vi) Tax Rate : Interest on debt is tax-deductible, which makes debt cheaper. So, high-end tax means prefer equity in capital structure.  
(vii) Cost of equity : More of debt capital increases the cost of equity as it increases the risk of the equity shareholders. So, debt should be used to a limited level as increased cost of equity adversly affects the market value of shares.
OR
Factors that determine the fixed capital requirement of the company are:
(i) Nature of business
(ii) Scale of operations
(iii) Choice of technique
(iv) Technology upgradation
(v) Growth prospects
(vi) Diversification
(vii) Financing alternatives
(viii) Level of collaboration.
Detailed Answer 
(i) Nature of business : As a trading concern needs a lower investment in fixed assets as compared to a manufacturing concern since it doesn’t require to purchase the plant and machinery.
(ii) Scale of operations : As a larger organisation operating at a higher scale needs bigger plant and more space and hence higher investment infixed assets.
(iii) Choice of technique : As a capital intensive organisation requires higher investment in plant and machinery and thus requires higher fixed capital than a labour intensive organisation.
(iv) Technology upgradation : As industries where assets become obsolete sooner requires higher fixed capital to purchase such assets.
(v) Higher growth prospects : Require higher investment in fixed assets to meet anticipated demand quicker
(vi) Availability of financing alternatives : Like leasing requires lower investment in fixed assets and hence requires less fixed capital.
(vii) Collaboration : Reduces the level of investment in fixed assets.

Q.30. Beside a ‘Consumer ’, name any three parties who can file a complaint before the appropriate consumer forum.
Ans:
Beside a ‘Consumer’, a complaint may be filed before the appropriate consumer forum by:
(i) Any registered consumer ’s association.
(ii) The Central Government or any State Government.
(iii) One or more consumers, on behalf of numerous consumers having the same interest and
(iv) A legal heir or representative of a deceased consumer.

Q.31. Describe any four characteristics of ‘Coordination’.  
Ans:
Characteristics of Coordination:
(i) Coordination integrates group efforts : Coordination unifies unrelated or diverse interests into purposeful work activity. It gives a common focus to the group efforts to ensure that performance is same as it was planned and scheduled.
(ii) Coordination ensures unity of action : The purpose of coordination is to secure unity of action in the realisation of a common purpose. It acts as the binding force between different departments and ensures that all actions are aimed at achieving the goals of the organisation.
(iii) Coordination is a continuous process : Coordination is not a one-time function but a continuous process. It begins at the planning stage and continues till controlling.
(iv) Coordination is an all-pervasive function : Coordination is required at all levels of management due to the interdependent nature of activities of various departments. It integrates the efforts of different departments and different levels.
(v) Coordination is the responsibility of all managers : Coordination is the function of every manager in the organisation. Top-level managers need to coordinate with their subordinates to ensure that the overall policies of the organisation are duly carried out. Middle-level management coordinates with both the top level and the first-line managers. Operational level management coordinates the activities of its workers to ensure that work proceeds according to the plans.
(vi) Coordination is a deliberate function : A manager has to coordinates the efforts of different people in a conscious and deliberate manner. Even where members of a department willingly cooperate and work, coordination gives a direction to that willing spirit. Cooperation in the absence of Coordination may lead to a wasted effort and Coordination without Co-operation may lead to dissatisfaction among employees.

Q.32. ‘Organising helps in the growth and survival of an enterprise in a dynamic environment.’ Do you agree? Explain any four reasons in support of your answer.
OR
‘The function of organising is to arrange, direct, coordinate, and control the activities of an enterprise.’ In the light of this statement, explain the various steps in the process of organising.  
Ans:
The importance of organising can be described as follows :
(i) Benefits of specialisation: In organising, the whole work is divided into manageable activities and systematic allocation of work is done. It increases productivity and the efficiency of workers. As a result, due to repetitive work, workers get experience in particular fields which leads to specialisation.
(ii) Adaptation to changes: It facilitates business enterprise to accommodate changes in the workload caused by business environment. In case of change, organisation paves the way for revision of relationships at organisational levels.
(iii) Clarity in working relationships: Authority and responsibility are clearly defined in such a way that every person knows as to who is reporting to whom and for what, etc.
(iv) Optimum utilisation of resources: Proper allocation of resources helps in avoiding overlapping of work and ensures optimum use of all human, physical and financial resources.
(v) Effective administration: By clearly describing the jobs related duties, duplication of work and confusion can be avoided in the organisation. Thus, it ensures effective administration.
(vi) Development of the personnel: Delegation of authority reduces the work load of a manager and enables him to explore new areas of growth for his organisation. It enables the subordinates to effectively deal with the challenges and to realise their full potential.
(vii) Expansion and growth: Organising enables an enterprise to take up new challenges. For example, more job positions, departments, new product lines, new geographical territories, etc. to increase sales/ profits, market share and growth of the enterprise.
OR
Organising as a process involves following steps :
(i) Identification and Division of Work: The first step in the organising process is identifying  and dividing the whole work into manageable activities, so that duplication of work can be avoided and the burden of work can be reduced.
(ii) Departmentation: Departmentation refers to the process of grouping the activities of similar nature under the same department. Departmentalisation can be done on the basis of function, type of product, territory, etc. It facilitates specialisation in an organisation.
(iii) Assignment of Duties: This implies assigning duties to the workers according to their abilities and competencies. For getting the best results, a proper match should exist between the nature of work and ability of the individual.
(iv) Establishing Reporting Relationships: Next step is to allocate authority and responsibility among employees in such a way that each person knows who is reporting to whom and for what, etc.

Q.33. “While setting prices for its products, i.e. goods or services, the business takes into account various aspects of production.” Explain those aspects which affects the price of goods or services.      
OR
‘Branding adds to cost e.g. the cost of packaging, labelling, legal protection and promotions. However, it provides several advantages to the sellers as well as the customers.’ Do you agree? State any six reasons in support of your answer.      
Ans:
Factors affecting Pricing:
(i) Product Cost : One of the most important factors affecting the price is its cost. It includes cost of producing, distributing and selling the product.
(ii) Utility and Demand : The product cost set the lower limit of price; the utility provided by the product and intensity of demand of product sets the highest price of the product.
(iii) Extent of Competition in the Market : when a firm does not face any competition,  it has complete freedom in fixing up the price. But when competition is more the price of the product is fixed keeping in mind the competitor’s price.
(iv) Government Regulations : In order to protect the interests of the consumers, the government has all rights to control prices of important commodities and services.
(v) Marketing Methods used : The price of a product is also affected by the methods & techniques used to promote the product. (vi) Pricing Objectives : Apart from profit maximization other objectives are :
(a) Obtaining market share leadership : If a firm wants to capture a big share of the market, it has to keep its price low.
(b) Surviving in competitive market : To survive in a competitive market the firm has to offer discounts.
(c) Attaining product quality leadership : Generally high prices are charged to cover cost of R&D.    
OR
‘Branding adds to cost, e.g. to the cost of packaging, labelling, legal protection and promotions however, it provides several advantages to the sellers as well as the customers.’
Yes, We agree with the statement.
The reasons are :
(i) It helps in product identification because if a customer is satisfied with the product, he need not make a close inspection every time he has to buy the product.
(ii) It ensures quality because if there is any deviation in the quality, the customers can have recourse to the manufacture which builds up their confidence.
(iii) It is a status symbol and the consumers of branded products feel proud of using them adding to their level of satisfaction.
(iv) Branding helps the firm in differentiating its product from those of the competitors.
(v) Branding helps in advertising and display programmes.
(vi) Branding enables a firm to charge differential price for its products.
(vii) Branding helps in introduction of a new product under the same brand name.

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Business Studies: CBSE Sample Question Papers (2020-21)- 3 Notes | Study Sample Papers for Class 12 Commerce - Class 12

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Business Studies: CBSE Sample Question Papers (2020-21)- 3 Notes | Study Sample Papers for Class 12 Commerce - Class 12

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MCQs

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Summary

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Previous Year Questions with Solutions

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video lectures

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ppt

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Exam

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Objective type Questions

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past year papers

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Important questions

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Business Studies: CBSE Sample Question Papers (2020-21)- 3 Notes | Study Sample Papers for Class 12 Commerce - Class 12

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pdf

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shortcuts and tricks

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mock tests for examination

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Extra Questions

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