Nature and Purpose of Business (Class-XI)

Business involves dealings in goods or services on a regular basis. One single transaction of sale or purchase, therefore, does not constitute business. Thus, sale of a second hand car to a buyer through an online portal will not be considered as a business activity.

The activities, which are connected with the extraction and production of natural resources and reproduction and development of living organisms, plants, etc. are called primary industries. Poultry farming is a genetic industry and is a type of primary industry.

Marketing refers to all those activities, which facilitate exchange of goods and services from producers to the people who need them, according to their choice of place, time and price. Transportation is a part of marketing and not a separate major business function.

A business generates employment opportunities for the people in the society. This is not an economic objective, but a social objective.

It is the right answer, as both b and c are correct. These activities are generally referred to as services because these are in the nature of facilitating the activities relating to industry and trade. The activities that help in removing various hindrances, which arise in connection with the production and distribution of goods.

This is an economic objective. A business has its focus on its customers, all its activities are undertaken with the end point of the customer. Thus, a customer is an economic objective.

This is correct. Businesses can usually plan even in case of breaking up of partnerships. This does not constitute an unforeseeable event.

This is correct, as various raw materials are combined together to make a final product in synthetical industry.

This involves both the possibility of gain and loss.

Communication is a part of tertiary industry.

This is incorrect. Advertising removes the hindrances to information.

Risk sharing decreases the chances of losses.

This is a pure risk. Pure risks involve only the possibility of loss or no loss. The chance of fire, theft or strike are examples of pure risks. Their occurrence may result in loss.

The time gap that exists between production and consumption of goods is called a hindrance of time. Yes, it is the right answer.

This is the correct matching.
A. Natural risks are risks of losses caused by natural calamities like famine, etc.
B. Human risks are risks of losses caused by unexpected events such as strikes, etc.
C. Economic risks are risks of losses caused by uncertainities related to collection of dues from consumers or financial problems like rise in interest rates or tax policy changes, etc.

Hindrances of person occurs due to lack of contact and communication between producers and consumers. Commerce removes this hindrance through trade which provides an organised market where buyers and sellers can contact each other.

This is the correct matching, as business involves providing goods and services to public, profession involves rendering of personalised expert services and employment involves performing work as per service contract.

All the statements about extractive industries are correct.

This is correct, as all these are auxiliaries to trade.

Uncertainty of return refers to the lack of knowledge relating to the amount of money that the business is going to earn in a given period. Every business invests money or capital to run its activities with the objective of earning profit. But it is not certain as to what amount of profit will be earned. Also, there is always a possibility of losses being incurred, in spite of the best efforts put into the business.