Exercise Solutions Available
Step-by-step answers for all textbook questions in this chapter
How to Use This Solutions Page
1. Attempt the NCERT exercise questions on your own first. 2. Then compare your answers with the solutions below. 3. Focus on the structure of each answer — definition, features, examples. 4. For comparison questions, memorise the table format.
Key Concepts Recap
- Economic activities: Business, Profession, Employment.
- Business: Production and sale of goods/services for profit; involves risk.
- Profession: Expert knowledge, code of conduct, fee-based.
- Employment: Works under employer; salary/wage; no risk.
- Objectives: Survival, Profit, Growth (economic); Quality goods, Fair price, Employment (social); Employee welfare (human).
- Classification: Industry (primary, secondary, tertiary) and Commerce (Trade + Auxiliaries).
- Auxiliaries: Transport (place), Warehousing (time), Insurance (risk), Banking (finance), Advertising (information).
- Business risk: Natural, Economic, Human, Political causes.
Intext Questions
Q: Which of the following are economic activities? (a) A teacher teaching in a school (b) A mother cooking food for her children (c) A farmer growing wheat for self-consumption (d) A doctor treating patients in a hospital
| Activity | Economic/Non-Economic | Reason |
|---|---|---|
| (a) Teacher teaching | Economic — Employment | Done for salary |
| (b) Mother cooking | Non-Economic — Affection | Done out of love, no income |
| (c) Farmer for self-consumption | Non-Economic — Self-consumption | No sale, no profit motive |
| (d) Doctor treating patients | Economic — Profession | Expert knowledge, fee-based |
Q: Classify the following into business, profession, and employment: (a) A person running a grocery store (b) A lawyer practising in court (c) A clerk working in a bank (d) A doctor running a clinic
| Person | Classification | Reason |
|---|---|---|
| (a) Grocery store owner | Business | Goods sold for profit, risk involved |
| (b) Lawyer | Profession | Specialised legal knowledge, code of conduct, fee |
| (c) Bank clerk | Employment | Works under employer for salary |
| (d) Doctor running a clinic | Profession | Expert medical knowledge, professional code, fee |
Chapter-End Exercise Solutions
Q1: Define economic activities. How are they different from non-economic activities?
Economic activities are those activities that are performed to earn a livelihood or monetary income. Examples: a shopkeeper selling goods, a doctor treating patients, a teacher teaching in a school.
Non-economic activities are those activities that are performed out of love, affection, duty, or charity without any monetary motive. Examples: a mother cooking for her child, a person donating to an orphanage, a soldier on duty.
Difference:
| Basis | Economic Activities | Non-Economic Activities |
|---|---|---|
| Motive | Earning income | Love, duty, charity |
| Outcome | Monetary reward | Emotional/social satisfaction |
| Types | Business, Profession, Employment | Dutiful, Affectionate, Religious, Charitable |
| Example | Running a shop | Helping a neighbour |
Q2: Define business. Describe its essential features.
Business is an economic activity concerned with the production and sale of goods and services to earn profit.
Essential features: 1. Economic activity — performed to earn income. 2. Production or purchase of goods/services — business either produces or buys and resells. 3. Sale or exchange — goods must be sold; producing for self-use is not business. 4. Regular dealing — a single transaction is not business; regularity is essential. 5. Profit earning — the primary objective. 6. Risk and uncertainty — profit is uncertain; risk is inherent. 7. Element of service — business serves society by providing goods and services.
Q3: Distinguish between business, profession, and employment.
| Basis | Business | Profession | Employment |
|---|---|---|---|
| How to enter | No formal qualification required | Specialised degree/training required | Qualification as per job |
| Nature of work | Production/sale of goods/services | Expert service | Work assigned by employer |
| Motive | Profit | Service + fee | Salary/wage |
| Risk | High — uncertain returns | Low — fee is generally assured | No risk — fixed salary |
| Code of conduct | No formal code | Professional body's code | Employer's rules |
| Capital | Requires capital investment | Limited capital needed | No capital needed |
| Transferability | Can be transferred | Cannot be transferred | Cannot be transferred |
| Example | Running a garment factory | Practising as a CA | Working as a bank manager |
Q4: What are the objectives of business? Discuss.
Business has three categories of objectives:
(a) Economic Objectives: 1. Survival — the most basic objective; business must survive in the market. 2. Profit — the primary objective; profit is the reward for risk-bearing. 3. Growth — expanding operations, entering new markets, diversifying products.
(b) Social Objectives: 1. Supplying quality goods at reasonable prices. 2. Avoiding unfair trade practices (hoarding, black marketing, adulteration). 3. Generating employment opportunities. 4. Contributing to community welfare (schools, hospitals, environmental protection).
(c) Human Objectives: 1. Economic welfare of employees — fair wages, safe conditions. 2. Development of human resources through training. 3. Participation of workers in management. 4. Providing satisfying work environment.
Q5: Explain the classification of business activities.
Business activities are classified into two broad categories:
Q6: What are the causes of business risk? Discuss its nature.
Causes of Business Risk: 1. Natural causes — flood, earthquake, drought, fire. 2. Economic causes — changes in demand, competition, price fluctuations, recession. 3. Human causes — employee dishonesty, strikes, management errors, theft. 4. Political causes — change in government policy, tax rates, licensing rules, war.
Nature of Business Risk: 1. Risk arises due to uncertainties about future events. 2. Risk is an essential element of business — no business is risk-free. 3. The degree of risk depends on the nature and size of the business. 4. Risk can be minimised through precautions and insurance but cannot be eliminated completely. 5. Profit is the reward for risk-bearing — higher risk, higher potential profit.
Q7: What is commerce? How is it different from trade?
Commerce is that part of business which is concerned with the distribution of goods and services. It includes trade and all auxiliary services that facilitate trade.
Trade is that part of commerce which is concerned with the buying and selling of goods.
Difference:
| Basis | Commerce | Trade |
|---|---|---|
| Scope | Broader — includes trade + auxiliaries | Narrower — only buying and selling |
| Components | Trade + Banking + Insurance + Transport + Warehousing + Advertising | Only purchase and sale |
| Function | Distribution of goods and services | Exchange of goods |
| Example | A whole distribution chain including banking and transport | A shopkeeper selling to customers |
Internal Links
- [Chapter 1 Guide — Business, Trade and Commerce](/school/cbse/class/11/business-studies/cbse-business-trade-and-commerce)
- [All Class 11 Business Studies Solutions](/school/cbse/class/11/business-studies/solutions)
- [Class 11 Business Studies Subject Guide](/school/cbse/class/11/business-studies)