Worksheet Solutions: Nature and Purpose of Business - 2 | Business Studies (BST) Class 11 - Commerce PDF Download

Short /Long Answer Type Questions

Q1: Different situations in different business are being elaborated below:
(a) Sahil had a match stick factory in Nepal which got destructed by the recent earthquake.
(b) Samsung company was charged with evasion of tax and asked to pay fine in crores which would lead to heavy losses for the company.
(c) Mr. Manish, a senior manager in a telecom company shared confidential information about the company with a competitor which led to huge losses for the company.
(d) Typewriters is becoming redundant.
Identify and explain types of business risk being referred to in all the above cases.
Ans: (a) Pure risks.
(b) Speculative risks.
(c) Non-insurable risks.
(d) Insurable risks.

Q2: Identify the characteristics of business in the following statements:
(a) Departmental stores purchasing goods from small manufacturers and selling under one roof.
(b) A car dealer buys and sells cars on regular basis.
(c) A furniture dealer buys office chairs at Rs. 500 each and sells them for Rs. 650 each. Rs. 150 per chair is the extra money earned to meet business expenses and for future growth.
(d) Workers at Maruti Udyog Ltd. went on strike for more than a month demanding raises in wages. The company suffered huge losses due to loss of production and sale.
Ans: (a) Production or procurement of goods and services.
(b) Dealing in goods and services on a regular basis.
(c) Profit earning.
(d) Element of risk.

Q3: Organic Tea Ltd. is a Singapore based company dealing in import of tea from India and re-exporting it to many South East Asian countries. It has a huge godown near the sea port where it has made scientific arrangements for storing tea till it is re-exported.
(a) Name the type of trade in the above case.
(b) Name the aids to trade being utilised by Organic Tea Ltd. and which utility does it create.
Ans:  (a) Entrepot trade.
(b) Warehousing services, time utility.

Q4: Phoenix Technologies Ltd. have developed such a washing machine through years of research which requires very less water for washing clothes and cleans them without damaging the cloth, as compared to other washing machines presently sold in the market. The profit margins are kept low to motivate people from lower middle class to buy the product. The company wants to provide information about new features, price, availability and brand name to the target market.
Name and state the service/facility/aids to trade which the company can utilise and what hindrance does it remove?
Ans: Advertising, hindrance of information.    

Q5: Yash is a student of class xii commerce and he is good in studies. His father gifted him a pen on his birthday. The cost of pen is RS. 80. After few days Sumit sold his pen to his friend Rounaq for RS. 100. He was very happy to earn profit of RS. 20. After completed his studies he has started a pen manufacturing company in the name of M/s Sumit Pvt. Ltd. Due to good image of his pen his sales increasing day by day and he is earning huge profits. Then he has decided to give scholarship to week girls child of his school.
(a) Can the transaction between Yash and Rounaq be termed as business transaction? Why?
(b) Can the transaction made by M/s Yash Pvt. Ltd. be termed as business transaction?
(c) Identify the one value involved here.
Ans: (a) No. Reason : Single transaction cannot constitute business.
(b) Yes. Reason : Regular transaction by M/s Yash Pvt. Ltd. to earn profits.
(c) Value Point : Promoting girls education.

Q6: All human beings fulfill their different needs by performing certain activities. Can you suggest and explain the activities undertaken by them?
Ans: Explain economic and non-economic activities.

Q7: Darshan Sharma prepares ‘Sohanpapri’ for customers during Diwali season every year. He prepared more ‘Sohanpapri’ due to increased demand with adulterated ingredients. He employeed women and children for packing and paid them less salary. This way he generated good profit from himself.
(a) Which objective of business is not fulfilled?
(b) Give any two values neglected by Darshan Sharma.
Ans: Social objective.
Value Points:
(i) Child labour. (ii) Pure ingredients.

Q8: Name and explain the two characteristics of business which involve possibility of loss.
Ans: The two characteristics of business which involve possibility of loss are:
(a) Uncertainty of Return. (b) Element of Risk.

Q9: Vijay sells his mobile to his friend at a profit of RS. 1,000. Will it be considered as a business? Name and explain the characteristic of business which is being highlighted in the given example.
Ans: No, it will not be considered as a business as it is a single transaction of sale. To be a business activity, dealing of goods must be on a regular or daily basis. The characteristic highlighted in the given example is ‘Dealings in goods and services on a regular basis’.  

Q10: Identify the service which is related to the following cases:
(a) The service which helps in removing hindrance of time.
(b) The service which helps in removing hindrance of risk.
(c) The service which helps in removing hindrance of knowledge.
(d) The service which helps in removing hindrance of place.
(e) The service which helps in removing hindrance of exchange of information among producers, consumers and traders.
Ans: (a) Warehousing. (b) Insurance. (c) Advertising. (d) Transport. (e) Banking.

Q11: Categorise the following into business, profession and employment.
(a) A person repairing motorcycles on roadside.
(b) A doctor.
(c) A salesman.
(d) An advocate.
(e) A hawker selling toys for children.
(f) Anandpal is the advocate of High Court.
(g) Vikram is the manager of a car company.
(h) Vinayak sells mobile phones on behalf of his employer.
(i) Angad working as labour in a factory.
(j) Rahul running a shop to sell stationery items.
Ans: (a) Business.
(b) Profession.
(c) Employment.
(d) Profession.
(e) Business.
(f) Profession.
(g) Employment.
(h) Employment.
(i) Employment.
(j) Business.

Assertion-Reasoning MCQs :

Q1: Assertion (A) Obsessed with profit, business managers may neglect all other responsibilities towards customers, employees, investors and society at large.
Reason (R) There is hardly any sizable business enterprise whose only objective is maximisation of profit.
(a) Both the Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A)
(b) Both the 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
Ans: (a)

Q2: Assertion (A) Business follows only one objective and expect to achieve excellence.
Reason (R) Objectives are needed in every area where performance and results affect the survival and prosperity of business.
(a) Both the Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A)
(b) Both the 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
Ans: (d)

Q3: Assertion (A) For centuries, pepper remained the reason for rivalry and conflict between various empires and trade powers to dominate the route for its trade.
Reason (R) 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.
(a) Both the Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A)
(b) Both the 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
Ans: (a)

Q4: Assertion (A) Every profession restricts the entry on the basis of examination or education.
Reason (R) A strict code of conduct exists in every profession.
(a) Both the Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A)
(b) Both the 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
Ans: (b)

Q5: Assertion (A) Speculative risks involve both the possibility of gain, as well as, the possibility of loss.
Reason (R) Speculative risks arise due to changes in market conditions, including fluctuations in demand and supply.
(a) Both the Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A)
(b) Both the 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
Ans: (a)

Case Based MCQs 

Sampat Prasad, a small shopkeeper in Jaipur, Rajasthan used to sell the famous ‘Bhujia-Sev’. It was a quick-selling product for local customers. His son after completing his studies joined his father’s business and wanted to expand the business by forming a company named Sampat Bhujia Ltd, offering a wide range of products to its local and to foreign customers like namkeen, sweets, bakery items, etc. under the same brand name. For fulfilling all the legal formalities to form the company, he appointed professionals. Now ‘Sampat Bhujia Ltd., is a renowned name in snacks industry which offered its products at competitive prices even while offering customer services like gift packaging and free home delivery to become a household name.
‘Sampat Bhujia’ has an efficient marketing department working on minimising business risks from their competitors by making effective marketing plans, related to physical distribution, promotion of the brand, effective pricing policies and product development. It has also worked upon managing public opinion by developing relations with the masses through sponsoring cultural and sporting events, maintenance of public parks, etc.
Q1: Name the service used by ‘Sampat Bhujia Ltd, to remove the hindrance of information.
(a) Transportation
(b) Warehousing
(c) Promotion
(d) Marketing
Ans: (c)

Q2: For fulfilling all the legal formalities to form the company, he appointed professionals. Who among the following is appointed as a professional?
(a) Promoter
(b) Broker
(c) Banker
(d) All of these
Ans: (d)

Q3: ‘Sampat Bhujia’ has an efficient marketing department working on minimising business risks from their competitors. Which type of risk is this?
(a) Pure risk
(b) Speculative risk
(c) Financial risk
(d) Insurable risk
Ans: (b)

Q4: It has also worked upon managing public opinion by developing relations with the masses through sponsoring cultural and sporting events, maintenance of public parks, etc.
Identify the objective fulfilled by the company by doing so.
(a) Economic
(b) Social
(c) Ethical
(d) Legal
Ans: (b)

Q5: Which type of industry is ‘Sampat Bhujia Ltd.’?
(a) Genetic
(b) Construction
(c) Manufacturing
(d) Extractive
Ans: (c)

Saloni, Rupali, Mukesh and Rakesh - all the four are members of the same family. Saloni passed her M.B.B.S examination recently. Immediately, she got the job of a doctor in a government hospital. Rupali has completed her studies in engineering and has given her interview for the post of a production manager in Sharda Cement Limited. She is waiting for the result and is quite hopeful of her getting selected.
Mukesh has his own transport company. His company has about 150 vehicles. He had to suffer a heavy loss because of the pandemic Corona (Covid-19). His company is on the edge of getting closed.
Rakesh is working in the Research and Development Department of Balaji Services Limited. His full attention is focused on effecting innovation in the services provided by his company. He knows that in order to sustain for a long-time in market, it is necessary to do something new and better.
Q6: Identify the type of work done by Dr. Saloni.
(a) Employment
(b) Profession
(c) Business
(d) Trade
Ans: (a)

Q7: Identify the class of company in which Rupali has given her interview.
(a) Assembling Industry
(b) Synthetic Industry
(c) Processing Industry
(d) Analytical Industry
Ans: (b)

Q8: Which business risk is Mukesh’s company struggling against?
(a) Human cause
(b) Economic cause
(c) Natural cause
(d) None of these
Ans: (c)

Q9: Identify the objective of business being fulfilled by Balaji Services Limited.
(a) Profit making
(b) Creation of customers
(c) Providing employment
(d) Innovation
Ans: (d)

Q10: Identify the type of work done by Mukesh.
(a) Employment
(b) Profession
(c) Business
(d) None of these
Ans: (c)

Deepti an electronic engineer after completing her MBA from IIM Kolkata, wants to open her own business of generation of electricity through garbage. She knew that the demand for electricity is increasing day by day whereas it’s generation is not sufficient. Secondly, India is facing the problem of garbage disposal also. She shared her business idea with some of her friends and they all liked it and agreed to join the business as owners. After detailed investigation about the idea, i.e., economically viable, technically feasible, Deepti gave her idea a practical shape and got her company incorporated as ‘‘Eco Electricity Ltd.’’ After incorporation, the company issued share capital of 1 crore in the capital market.
Q11: Name the type of business activity eco electricity is engaged in
(a) primary industry
(b) secondary industry
(c) service industry
(d) trade
Ans: (b)

Q12: Deepti wants to open her own business of generation of electricity through garbage. Specify the category of such type of industry.
(a) Analytical
(b) Extractive
(c) Synthetic
(d) Processing
Ans: (d)

Q13: “Deepti an electronic engineer after completing her MBA from IIM Kolkata”. Which type of economic activity highlighted in above lines?
(a) Employment
(b) Profession
(c) Business
(d) Job
Ans: (b)

Q14: Which type of trade can be assumed in above case?
(a) Internal
(b) External
(c) Both (a) and (b)
(d) None of these
Ans: (a)

Q15: In the above case, hindrance of information is being removed by following which auxiliary?
(a) Transportation
(b) Warehousing
(c) Advertising
(d) Banking
Ans: (c)