INDIAN PUBLISHERS

BUSINESS STUDIES
CLASS-11
CHAPTER-1
1. Hundi payable to the party named in the hundi or his order. The party, however, has a
right to endorse it in favour of any other person as can be done in case of any other bill
of exchange.
a) Darshani hundi
b) Jokhmi hundi
c) Shahjog hundi
d) Namjog hundi
2. This is a hundi payable at sight. It must be presented for payment within a reasonable
time after its receipt by the holder. Thus, it is similar to a demand bill.
a) Firman jog
b) Namjog
c) Darshani
d) Jawabee hundi
3. Business refers to:
a) The exchange of goods and services takes place, for adequate consideration.
b) The organized effort of individuals to produce and sell, for a profit, the goods
and services that satisfy society's needs.
c) A human activity directed toward producing or acquiring wealth through buying
and selling goods.
d) All of these
4. Objectives of business do not include:
a) Higher returns to investors
b) Employee satisfaction
c) Maximum price-from consumers
d) Market standing.
5. It is a campaign launched by the Government of India to ensure that the Government's
services are made available to citizens electronically through improved online
infrastructure and by increasing Internet connectivity or making the country digitally
empowered in the field of technology.
a) Skill India
b) Make in India
c) Digital India
d) Start-up India
6. Business must involve the transfer of goods to the customer for value, through selling,
meaning that if the goods are acquired for personal consumption, then the transaction
will not amount to business activity. Identify which characteristics of business are being
highlighted in above case.
a) Economic Activity
b) Buying and Selling
c) Continuity in Dealings
d) Profit Earning
7. From the following pictorial presentations, identify the type of activities.
 a) Economic activities
b) Non-economic activities
c) Both (a) and (b)
d) None of these
8. It was launched in 2015, to prepare Indian youth from rural and urban areas for
employment. It aims to empower India's youth by providing them with the necessary
skills and training to increase their chances of finding work in various sectors. This also
increases a person's productivity and knowledge. The initiative aims to educate over 40
million people and create a workforce by 2022. It accomplishes this by providing free
courses and classes.
a) Make in India
b) Skill India
c) Digital India
d) None of these
9. Assertion (A): Warehousing facilitates the availability of goods as and when required.
Reason (R): Warehousing removes this hindrance of place by providing facility of
storage of goods.
a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct
explanation of Assertion (A).
b) Both Assertion (A) and Reason (R) are true and 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.
10. Service-based industry that is not involved in production and manufacturing, instead it
provides services that help in the development of the primary and secondary industries.
Activities like banking, insurance, healthcare, transportation etc., are covered in this
Industries. Identified which type of industries is being highlighted in above case.
a) Assembling industry
b) Tertiary Industry
c) Analytical Industry
d) Secondary industry
11. Which of the following is not an unsustainable risk?
a) Risk of theft
b) Risk of fire
c) Risk of change in pattern of demand
d) All of these
12. These industries developed products from natural sources. These industries supply
some basic raw materials that are mostly products of the geographical or natural
environment. Products of these industries are usually transformed into many other
useful goods by manufacturing industries. Identify which type of industries is
highlighted in above case.
 a) Extractive Industry
b) Assembling Industry
c) Construction Industry
d) Analytical Industry
13. Identify the persons who are conducting a non-economic activity.
a) Riya, a doctor, in a medical college.
b) Yogesh, a computer expert, running an Internet cafe.
c) Sahiba, a teacher, conducting free tuitions for poor students.
d) Prithvi, a lawyer, practicing in a court.
14. ______________type of Hundi was payable who present or bearer.
a) Sah Jog
b) Dekhan Har
c) Firman Jog
d) Dhani Jog
15. Find the odd one out: ___________
a) Offering goods at a reasonable price.
b) Giving fair wages to workers.
c) Keeping the environment pollution-free.
d) Expecting a high profit from the business.
16. Mr. Vijayshankar a businessman incurred some financial loss due to the dishonesty of
his workers. This loss is caused due to __________.
a) Natural cause
b) Financial reason
c) Human cause
d) Economic cause
17. Cochin Refineries Ltd. imports crude oil and separates different products like petrol,
diesel, etc. Name the type of manufacturing industry.
a) Synthetic
b) Analytical
c) Processing
d) Assembling
18. Match column A with column B.
COLUMN-A COLUMN-B
i. Extractive industry a. Building work
ii. Genetic industry b. Cement
iii. Constructive industry c. Animal husbandry
iv. Manufacturing industry d. Fishing

a) i-b, ii-d, iii-a, iv-c

b) i-c, ii-a, iii-d, iv-b
c) i-d, ii-c, iii-a, iv-b
d) i-d, ii-c, iii-b, iv-a
19. Which of the following is an economic activity?
a) Cooking food for self-consumption
b) Cooking food for sale
c) Cooking food for donation
d) All of these
20. 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 Assertion (A) and Reason (R) are true and Reason (R) is the correct
explanation of Assertion (A).
b) Both Assertion (A) and Reason (R) are true and 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.
21. From the following picture, identified the hindrance of commerce highlighted.

a) Hindrance of person
b) Hindrance of financing
c) Hindrance of Place
d) Hindrance of time
22. People work for others and get remuneration”.
i. Identify the economic activity involved in the above statement.
ii. Write any two features of that economic activity.
23. What is business risk? What is its nature?
24. Explain any two business activities which are auxiliaries to trade.
25. Why is business considered an economic activity?
26. How would you classify business activities?
27. No business is risk free in the light of this statement. Explain the concept of risk and its
any three causes.
28. What factors are important to be considered while starting a business? Explain.
29. Harsh is a well-known orthopedic doctor in Agra. He runs his private clinic under the
name 'Joint and Bone Clinic'.
In context of the above case:
i. Identify the type of economic activity that Harsh is engaged in.
ii. State the feature of the type of economic activity as identified in part (a) of the
question
30. Prince is desirous of starting a readymade shop exclusively for men in the city. He is not
aware of the hindrances he may face in his trading activities. Point out any four
hindrances and their possible remedies.
31. Abhinav Sharma wants to start a business of fashionable items. But he is hesitating to
go ahead with his plans because of the risk which are inherent in this business. He
consults his friend Abhimanyu in this regard for guidance about ways to overcome such
situations effectively in his business. In context of the above case.
i. Identify the types of business risk associated with such businesses.
ii. State any one suggestion which Abhimanyu is likely to give to Abhinav to
overcome such situations effectively in his business.
iii. Explain briefly any two causes of business risk.
 32. Shivam and Surya were classmates in a Law College. After completing his law degrees,
Shivam Maurya joined the Malabar Spinning Mill as a law officer on a full-time basis with
a monthly salary of ₹ 20,000. However, Surya Singh started practicing as an advocate in
the High Court. According to their neighbour Akash, both of them earn money. But he
does not know the differences between their economic activities. Can you make the
neighbour aware of the names of the two different economic activities and any three
differences between them?

Answer Sheet
1. D
2. C
3. D
4. C
5. C
6. B
7. B
8. B
9. C
10. B
11. C
12. A
13. C
14. B
15. D
16. C
17. B
18. C
19. B
20. B
21. C
22. Employment refers to that type of economic activity in which people engage in some work
for others regularly and get salary or wages in return for their services.
Features of Employment
 There must exist the employer-employee relationship
 There must be a service contract between the employer and employee
 Employees get salary or wages for their services
 Regularity in service.
23. Business risk is the possibility of failing to earn sufficient profits or incurring losses as a
result of various unforeseen circumstances which are beyond the control of a business.
The nature of business risk are:
 Business risks arise due to uncertainties,
 Risk is an essential part of every business,
 Degree of risk depends mainly upon the nature and size of business,
 Profit is the reward for taking risk. Business risks arise due to a variety of causes
including natural, human, economic and other causes.
24. Two business activities which auxiliaries to trade are:
  Insurance: Business involves various types of risks. Factory building, machinery,
furniture etc. must be protected against fire, theft and other risks also employees
are required to be protected against the risks of accident and occupational
hazards. Insurance provides protection in all such cases. On payment of a nominal
premium, the amount of loss or damage and compensation for injury, if any, can be
recovered from the insurance company.
 Advertising: It is one of the most important methods of promoting the sale of
products, particularly, consumer goods like electronic goods, automobiles, soaps,
detergents etc. This provides a medium to reach a large number of potential
buyers and increase the number of sales.
25. Business is considered to be an economic activity because it is undertaken with the object
of earning money or livelihood and not because of love, affection, sympathy or any other
sentimental reason.
26. The business activities can be classified as:
 Industry: It refers to economic activities, which are connected with conversion of
resources into useful goods. These included activities relating to producing or
processing of goods as well as breeding and raising of animals. Among the major
activities that are performed by an industry are production, processing and
manufacturing. Industries are classified into the three categories as primary,
secondary and tertiary.
 Commerce: It does not involve manufacturing or production. it basically involves
trading and its related activities. It includes both, buying and selling of goods as
well as auxiliaries such as transportation, banking, etc. It provides the necessary
link between producers and consumers. It includes all those activities, which are
necessary for maintaining a free flow of goods and services.
27. Yes, we agree. We cannot think of any business which is risk free. You start a general store
the simplest business. There is a risk of things you buy getting wasted due to changes in
demand pattern. You start a garments shop, fashion may change making your stock a
waste and so on. There is not even a single business where there is no risk.
It will be clear when we look at the nature and causes of risk.
 Nature of Business Risks Business risks arise due to uncertainties: Natural
calamities, change in demand and prices, change in technology, etc. are some of
the examples of uncertainty which create risks.
 Risk is an essential part of every business: No business can avoid the risk. Risk
can be minimised, but cannot be eliminated.
 Degree of risk depends mainly upon the nature and size of business: For small
scale business it is less and for large scale business it is more.
 Profit is the reward for risk taking: An entrepreneur bears risks and in
consideration, he gets rewarded in the form of profit. Greater the risk higher is the
chance of profit.
Causes of Business Risk
 Natural causes: These are beyond human control, e.g., flood, earthquake, heavy
rains, famine, etc. Human causes: It includes carelessness or negligence of
employees, e.g. theft, strikes, riots, misappropriation of cash and goods, etc.
 Economic causes: These are related to a chance of loss due to changes in market
condition, e.g., fluctuations in demand and prices, competition, change in
technology etc.
 Physical causes: Mechanical defects or failures may also lead to losses, e.g.
Bursting of the boiler or machine may cause death or destruction. Legal and
 
Political Causes: These causes of business risk include:
 Changes in government policies regarding foreign trade
 Entry of multinational companies
 Changes in laws affecting the business like to license, taxation, etc
 Changes in consumer laws and labour laws. Think of any business. Risk in
one way or the other must be applied to it. Hence, we may conclude that no
business is risk free.
28. The following are important factors needs to be considered while starting a business:
i. Selecting the line of business: The line of business is the foremost decision that
involves choosing the kind of product to produce, analysing its existing and future
market demand, profit considerations and the level of technical knowhow
possessed by the entrepreneur.
ii. Scale of the business: Once the line of business is selected, the entrepreneur
needs to decide the scale of the business, i.e., the business size, whether to
operate on large scale or small scale. The choice of scale of business is made on
the degree of risk embedded in
 the line of business
 the ease of obtaining capital and
 the projected demand for the product
A larger scale of business is preferred if the risk involved is low and the
entrepreneur is confident about the high demand for the product. Similarly, the
greater the ease of obtaining capital, the greater is the ease of operating a
business on a large scale and vice versa.
iii. Location: The choice of business location is dependent on numerous factors such
as easy and cheap availability of raw material and labour, well-connected
transportation facilities, and power and other infrastructure facilities. Generally,
locations where good infrastructure available are preferred.
iv. Financial requirement: Finance is required for every aspect of business from the
purchase of raw material and machinery to further investment for the growth of the
business. Therefore, while starting a business, the availability of alternatives to
raise funds must be carefully analysed.
v. Efficient workforce: A competent and trained workforce is the basic input to carry
on various business activities. In this regard, the entrepreneur must appropriately
identify the requirement of human resources for the business, both at the worker
level and at the managerial level.
vi. Physical requirements: These requirements include machinery, other equipment,
tools and technology that add to the efficiency of a business. The entrepreneur
must carefully consider and decide the physical requirements on the basis of the
nature and production scale of the business.
29.
i. Professional
ii. Features of profession:
 Every professional body has a code of conduct which every member
must follow. It contains norms of behaviour for members.
 Professionals charge fees from clients for providing their services
 A professional cannot advertise himself if it is banned by the
professional body.
 The membership of a particular professional body is compulsory before
entering that profession. A Chartered Accountant must be a member of
 the Institute of Chartered Accountants of India and this is necessary for
other professions also.
30. The various hindrances (Functions of commerce) are
i. Hindrance of person: There is a wide gap between producers and consumers.
Traders help the exchange of goods by acting as a link between producers and
consumers. Trade removes the hindrance of a person.
ii. Hindrance of place: Goods are produced in one place and they are consumed in
various parts of the world. So goods must be moved from the production centre to
the consumption centre. This is done with the help of transportation. Transport
removes the hindrance of place.
iii. Hindrance of time: Goods are produced at one time and they are consumed at
another time. Goods must be stored till they are consumed by the consumers. This
function is performed by warehouses. Warehousing removes the hindrance of
time.
iv. Hindrance of risk: There may be chances of loss in trade due to fire, theft, accident,
etc. Insurance removes the hindrance of risk.
31.
i. Business enterprises face two types of risks namely, Speculative and pure risks
Speculative risks may arise due to change in market conditions that are caused
by fluctuations in demand and supply, price change and also based on changes
in tastes of consumers. Favourable conditions may result in profits in business
while unfavourable conditions may result in losses. Pure risks include only the
possibility of two conditions, loss or no loss. For example, the situations of theft,
fire and strike. Their occurrence may result in loss or their non-occurrence may
result either in loss or gain
ii. Abhimanyu may give suggestions to Mr. Abhinav Sharma that every business
has certain degree of risks and it is highly dependent on volume of production,
and may also advise him to start the business in small scale with small volume
of production and can increase if the market for the products pick up in the
market.
32.
 Shivam Maurya: Employment
 Surya Singh: Profession
Difference between Employment and Profession