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Test: Nature & Purpose of Business - 1 - Commerce MCQ


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15 Questions MCQ Test - Test: Nature & Purpose of Business - 1

Test: Nature & Purpose of Business - 1 for Commerce 2024 is part of Commerce preparation. The Test: Nature & Purpose of Business - 1 questions and answers have been prepared according to the Commerce exam syllabus.The Test: Nature & Purpose of Business - 1 MCQs are made for Commerce 2024 Exam. Find important definitions, questions, notes, meanings, examples, exercises, MCQs and online tests for Test: Nature & Purpose of Business - 1 below.
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Test: Nature & Purpose of Business - 1 - Question 1

What is the fundamental economic concept that involves the transfer of goods and services through either a monetary system or barter system?

Detailed Solution for Test: Nature & Purpose of Business - 1 - Question 1

The concept of exchange is fundamental to economics, involving the transfer of goods and services between parties. Exchange can occur through monetary transactions or barter, where goods are traded directly without the use of money. In an exchange-based economy, individuals and businesses trade goods and services to satisfy their needs and wants.

Test: Nature & Purpose of Business - 1 - Question 2

In the context of economic activities, what term refers to the division of income among the factors of production?

Detailed Solution for Test: Nature & Purpose of Business - 1 - Question 2

The division of income among the factors of production is referred to as distribution. This process involves allocating the earnings generated from economic activities to the various factors of production, including land, labor, capital, and entrepreneurship. Distribution plays a crucial role in determining how income is shared among individuals and entities involved in the production process.

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Test: Nature & Purpose of Business - 1 - Question 3

How did business, trade, and commerce contribute to the prosperity of ancient India, according to historical evidence?

Detailed Solution for Test: Nature & Purpose of Business - 1 - Question 3

Historical evidence indicates that business, trade, and commerce played a significant role in the prosperity of ancient India. Trading activities, conducted through land and water routes such as the Silk Route and maritime trade, were vital components of the economy. These trading networks facilitated the exchange of goods and commodities, contributing to economic growth, cultural exchange, and the prosperity of ancient Indian civilizations.

Test: Nature & Purpose of Business - 1 - Question 4

What was the primary purpose of utilizing Hundi and Chitties in trading activities during ancient times?

Detailed Solution for Test: Nature & Purpose of Business - 1 - Question 4

Hundi and Chitties were instrumental in ancient trading activities primarily to mitigate the risks associated with theft and robbery during long-distance trade. These instruments, written in vernacular languages, facilitated secure money transfers between parties, thereby promoting and safeguarding trading activities from potential threats during transit.

Test: Nature & Purpose of Business - 1 - Question 5

What major economic activities were prevalent among the people in ancient times ?

Detailed Solution for Test: Nature & Purpose of Business - 1 - Question 5

The people in ancient times engaged in a variety of economic activities such as agriculture, domestication of animals, weaving cotton, dyeing fabrics, making clay pots, utensils, handicrafts, sculpting, and cottage industries. These activities not only sustained their livelihoods but also contributed to the flourishing economic landscape of the era.

Test: Nature & Purpose of Business - 1 - Question 6

How did the indigenous banking system in the Indian subcontinent support economic growth during ancient times?

Detailed Solution for Test: Nature & Purpose of Business - 1 - Question 6

The indigenous banking system in the Indian subcontinent played a crucial role in fostering economic growth by offering additional capital funds to manufacturers, traders, and merchants for expansion and development. This support facilitated increased trade and commerce, fueling the prosperity of the region and contributing to the evolution of various financial institutions over time.

Test: Nature & Purpose of Business - 1 - Question 7

During which period did India control about one-third and one-fourth of the world's wealth?

Detailed Solution for Test: Nature & Purpose of Business - 1 - Question 7

India is estimated to have had the largest economy of the ancient and medieval world between the 1st and 7th centuries CE, controlling about one-third and one-fourth of the world's wealth during that time. This period marked a significant economic influence that India held on a global scale.

Test: Nature & Purpose of Business - 1 - Question 8

Which ancient city served as a major centre on the important land route between India and Central Asia and was also known for its financial and commercial banks?

Detailed Solution for Test: Nature & Purpose of Business - 1 - Question 8

Taxila, an ancient city, served as a major centre on the important land route between India and Central Asia. It was not only a city of financial and commercial banks but also a significant hub on the trade route between these regions. Additionally, Taxila was renowned for its status as a Buddhist center of learning.

Test: Nature & Purpose of Business - 1 - Question 9

Which ancient Indian city was famous for its gold silk cloth and sandalwood workmanship, and had trade connections with Taxila and Bharuch?

Detailed Solution for Test: Nature & Purpose of Business - 1 - Question 9

Varanasi was well-known for its production of beautiful gold silk cloth and sandalwood workmanship. The city's strategic location on trade routes, linking North with the East, facilitated its growth as a major center of the textile industry. Varanasi also established trade connections with other important trade centers such as Taxila and Bharuch.

Test: Nature & Purpose of Business - 1 - Question 10

What term is defined as an economic activity involving the production and sale of goods and services with the motive of earning profits by satisfying human needs in society?

Detailed Solution for Test: Nature & Purpose of Business - 1 - Question 10

Business is defined as an economic activity involving the production and sale of goods and services with the motive of earning profits by satisfying human needs in society. It differentiates itself from non-economic activities by its primary focus on generating revenue and fulfilling market demands.

Test: Nature & Purpose of Business - 1 - Question 11

Which of the following activities is considered an economic activity ?

Detailed Solution for Test: Nature & Purpose of Business - 1 - Question 11

The correct answer is B: A health worker treating her patient.

- Economic activities involve the production, distribution, and consumption of goods and services for monetary gain.
- In this scenario, the health worker is providing a service (treatment) to the patient, which is a part of the healthcare industry.
- The health worker is compensated for their services, making it an economic activity.
- The other options involve personal or voluntary actions without a direct economic transaction, making them non-economic activities.

Test: Nature & Purpose of Business - 1 - Question 12

What is the fundamental characteristic that distinguishes business activity from other activities in society ?

Detailed Solution for Test: Nature & Purpose of Business - 1 - Question 12

The fundamental characteristic that distinguishes business activity from other activities in society is the profit motive. Business activities are primarily undertaken with the objective of earning money or livelihood, rather than being driven by emotions, social responsibilities, or personal satisfaction. Profit motive serves as a key driver in the realm of business, guiding decisions and strategies for sustainable growth and success.

Test: Nature & Purpose of Business - 1 - Question 13

Which activity can be undertaken either on a small and individual level or on a large scale in a more formal and organized level?

Detailed Solution for Test: Nature & Purpose of Business - 1 - Question 13

The activity that can be undertaken either on a small and individual level or on a large scale in a more formal and organized level is the production or procurement of goods and services. This process involves either producing goods within a business enterprise or acquiring them from producers to further sell to consumers or users. It forms a fundamental aspect of business operations, encompassing the manufacturing or acquisition of goods for subsequent distribution or sale.

Test: Nature & Purpose of Business - 1 - Question 14

What essential characteristic of business involves the transfer or exchange of goods and services for value?

Detailed Solution for Test: Nature & Purpose of Business - 1 - Question 14

An essential characteristic of business involves the sale or exchange of goods and services for value between the seller and the buyer. This exchange mechanism underpins the transactional nature of business activities, where goods and services are transferred in return for a monetary value or other forms of compensation. It signifies the core function of businesses to provide products or services to customers in exchange for payment.

Test: Nature & Purpose of Business - 1 - Question 15

Which aspect of business activity is crucial for its sustainability and long-term survival?

Detailed Solution for Test: Nature & Purpose of Business - 1 - Question 15

One of the main purposes of business is to earn income through profit. Profit earning is crucial for the sustainability and long-term survival of a business entity. It serves as a key metric of success, indicating the effectiveness of operations in generating revenue that surpasses costs. Businesses strive to maximize profits by enhancing sales volume or reducing expenditure, ensuring their financial viability and ability to reinvest in growth opportunities.

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