Chapter business-trade-and-commerce: Business, Trade and Commerce Application Questions | business studies Class 11 CBSE

Chapter business-trade-and-commerce: Business, Trade and Commerce Application Questions | business studies Class 11 CBSE | ByteNotes.in

Application Question

Medium difficulty • Concept in a practical situation

Medium

Question 1

Applied Concept

Rajan regularly buys old smartphones at low prices, repairs them, and sells them at a profit from a small shop. His friend Ankit sold his personal laptop once at a profit. With reference to the characteristics of business, explain whether both Rajan and Ankit are engaged in a business activity.

Rajan is engaged in a business activity because he deals in goods on a regular basis. One of the essential characteristics of business is regularity of dealings—buying, repairing, and selling smartphones repeatedly from a shop constitutes business activity. The element of profit motive is also present.
Ankit is NOT engaged in a business activity. A single transaction of sale—even if made at a profit—does not constitute business. Business requires regularity; Ankit's one-time sale of his personal laptop is a casual transaction, not business.
This distinction is fundamental: business demands both regularity of dealings and profit motive. Rajan fulfils both conditions, while Ankit's transaction, though profitable, lacks the regularity essential for it to be classified as business.

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Application Question

Medium difficulty • Concept in a practical situation

Medium

Question 2

Applied Concept

Sunita is a doctor running her own clinic, earning a professional fee. Mohan works as a manager in a company drawing a monthly salary. Ram runs a grocery store and earns profit. With reference to economic activities, classify each person's activity and justify your answer.

Ram runs a grocery store and earns profit—this is business. Business is an economic activity involving the regular sale of goods with a profit motive, no specific qualification is required, and returns are uncertain.
Sunita is a doctor earning a professional fee—this is profession. Profession requires specific qualifications, membership of a professional body (Medical Council), and a certificate of practice. Income is relatively regular and some risk exists.
Mohan draws a monthly salary as a manager—this is employment. Employment is established through an appointment letter or service agreement, requires qualifications as prescribed by the employer, and offers fixed, regular pay with little or no risk.

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Application Question

Medium difficulty • Concept in a practical situation

Medium

Question 3

Applied Concept

A textile manufacturer in Surat produces high-quality fabric but finds that consumers in Delhi and Kolkata are unaware of the product. With reference to the auxiliaries to trade, suggest which two auxiliaries can help overcome this challenge and how.

Advertising can help overcome the information hindrance. By advertising through newspapers, television, digital media, or social platforms, the manufacturer can inform potential consumers in Delhi and Kolkata about the fabric's features, quality, and price, motivating them to purchase.
Transport can overcome the hindrance of place. The manufactured fabric in Surat can be moved to distribution points or retail stores in Delhi and Kolkata through road, rail, or other means, making the product physically available to consumers.
Together, advertising creates consumer awareness and demand while transport ensures physical delivery of goods. This combination illustrates how auxiliaries to trade directly bridge the gap between producers and geographically distant consumers.

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Application Question

Medium difficulty • Concept in a practical situation

Medium

Question 4

Applied Concept

Dipak Bharali, a silk weaver from Sualkuchi, Assam, invented a device called 'Chaneki' after 80 failed attempts. The device made machines run 40 times faster than manual operation. With reference to the objectives of business, identify the primary objective demonstrated and explain its importance.

The primary objective demonstrated is innovation. Dipak introduced a new idea—automating weft insertion using electromagnetic principles—resulting in a device that dramatically improved productivity. Innovation is defined as the introduction of new ideas or methods in the way something is done or made.
Innovation gave Dipak a competitive edge without requiring more looms or capital investment. It improved the productivity of the entire weaving community, increased output quality, and pleased both owners and weavers—showing how innovation creates value for multiple stakeholders.
This case also illustrates that innovation can involve modifying existing processes rather than creating entirely new products. Dipak's entrepreneurial approach, persisting through 80 attempts, demonstrates that innovation is central to business growth and is rewarded with expanded opportunities and income.

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Application Question

Medium difficulty • Concept in a practical situation

Medium

Question 5

Applied Concept

A large garment manufacturing company stores finished clothes in a warehouse for six months before the festive season sale. With reference to warehousing as an auxiliary to trade, explain how this decision benefits the company and consumers.

Warehousing removes the hindrance of time by allowing the company to store finished goods and release them when demand peaks during the festive season. This ensures goods are available when needed, maximising sales opportunity without losses from unsold inventory off-season.
By maintaining a steady supply of goods throughout the festive season, warehousing helps stabilise prices. Without warehousing, sudden demand spikes might cause shortages and price inflation; the stored stock prevents this, benefiting consumers with consistent availability and fair pricing.
Warehousing also protects goods from loss or damage during the storage period. Special arrangements within warehouses prevent deterioration, ensuring the quality of garments is maintained until they reach consumers, adding reliability to the supply chain.

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Application Question

Hard difficulty • Concept in a practical situation

Hard

Question 6

Applied Concept

A pharmaceutical company is considering starting operations in a new city. What factors related to location should it consider? Use the concept of 'factors for starting a business' to answer.

The company must consider the availability of raw materials—pharmaceutical companies require chemicals, compounds, and raw drug ingredients. Proximity to suppliers reduces transportation costs and ensures uninterrupted production.
Availability of labour—both skilled (pharmacists, chemists, researchers) and unskilled—is critical. Additionally, infrastructure like power supply, transportation, and banking and communication services must be evaluated to ensure smooth functioning.
Any mistake in location selection can result in high costs of production and inconvenience in sourcing inputs or serving customers. The company must also check for regulatory compliance requirements specific to the location, as pharmaceutical manufacturing is governed by strict regulations.

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Application Question

Medium difficulty • Concept in a practical situation

Medium

Question 7

Applied Concept

A small bakery owner in Kolkata takes a loan from a bank to buy modern equipment and insures the bakery against fire and theft. With reference to banking and insurance as auxiliaries to trade, explain how these decisions support business.

Banking removes the finance hindrance. By providing a loan, the bank enables the bakery owner to acquire modern equipment—a fixed asset—without depleting working capital. This helps the business scale up operations and improve productivity, which would not have been possible without the bank's financial support.
Insurance removes the risk hindrance. By insuring the bakery against fire and theft, the owner protects the business from pure risks. On payment of a nominal premium, the insurance company compensates for any loss or damage to machinery, equipment, and stock, ensuring business continuity.
Together, banking and insurance reduce the financial barriers and risk exposure of the small bakery, demonstrating that auxiliaries to trade are not just for large businesses—they are essential support systems that enable even small enterprises to operate with greater confidence and security.

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Application Question

Medium difficulty • Concept in a practical situation

Medium

Question 8

Applied Concept

An oil company extracts crude oil from underground reserves and then refines it into petrol, diesel, and kerosene at a refinery. Classify each of these activities under the appropriate type of industry and justify your classification.

Extracting crude oil from underground reserves is an extractive industry, which is a sub-type of primary industry. Extractive industries draw products from natural sources and supply basic raw materials to other industries. Oil in its crude form is a natural resource extracted from the earth.
Refining crude oil into petrol, diesel, and kerosene at a refinery is an analytical manufacturing industry, which belongs to the secondary sector. Analytical industries analyse and separate different elements from the same material—oil refining perfectly fits this definition as it separates crude oil into multiple products.
This example shows how primary and secondary industries are interdependent. The primary (extractive) industry supplies crude oil to the secondary (analytical manufacturing) industry, which then creates finished products of commercial value distributed through tertiary industries.

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Application Question

Hard difficulty • Concept in a practical situation

Hard

Question 9

Applied Concept

A businessman imports Chinese silk and pays customs duties. Later, the government raises import taxes significantly, impacting his profit margins. With reference to business risk, identify the type of risk and its cause, and explain how it affects the business.

The risk arising from government policy changes (higher import taxes) is an economic cause of business risk. Economic causes include uncertainties relating to financial problems like the levy of higher taxes, which results in higher unexpected costs of business operation.
This falls under speculative risk as well as economic risk, because the businessman's profit margin is affected by a market-influencing policy change. The tax increase directly raises the cost of importing silk, reducing the businessman's profit or potentially making the business unviable.
Business risks arising from government policies are difficult to predict or control. The businessman can minimise this risk through strategies like diversifying supply sources, exploring domestic alternatives, hedging against currency risks, or lobbying for policy reconsideration—but cannot eliminate it entirely, as risk is an inherent part of business.

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Application Question

Medium difficulty • Concept in a practical situation

Medium

Question 10

Applied Concept

With reference to the case of ancient Indian trade, explain why travellers like Megasthenes and Ibn Batuta referred to India as 'Swaran Bhoomi'. What factors contributed to this prosperity?

India was called 'Swaran Bhoomi' (Golden Land) because of its immense economic prosperity generated by flourishing trade. Between the 1st and 7th centuries CE, India controlled about one-third of the world's wealth—the largest regional contribution—making it the world's largest economy during that period.
India enjoyed a favourable balance of trade where exports exceeded imports by large margins. Major exports included spices, wheat, sugar, indigo, cotton, and handicrafts, while imports were mainly luxury goods like horses, gold, silver, and Chinese silks. This surplus generated great wealth for Indian merchants and the state.
Key factors contributing to this prosperity included the Silk Route and maritime trade routes, a thriving indigenous banking system (Hundi, Chitties), prominent trade centres (Pataliputra, Taxila, Surat, Kanchi), and diverse economic activities like farming, weaving, sculpting, and cottage industries—all reflecting a vibrant, integrated business ecosystem.

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Chapter business-trade-and-commerce: Business, Trade and Commerce | Application Questions

Rajan regularly buys old smartphones at low prices, repairs them, and sells them at a profit from a small shop. His friend Ankit sold his personal laptop once at a profit. With reference to the characteristics of business, explain whether both Rajan and Ankit are engaged in a business activity.

Sunita is a doctor running her own clinic, earning a professional fee. Mohan works as a manager in a company drawing a monthly salary. Ram runs a grocery store and earns profit. With reference to economic activities, classify each person's activity and justify your answer.

A textile manufacturer in Surat produces high-quality fabric but finds that consumers in Delhi and Kolkata are unaware of the product. With reference to the auxiliaries to trade, suggest which two auxiliaries can help overcome this challenge and how.

Dipak Bharali, a silk weaver from Sualkuchi, Assam, invented a device called 'Chaneki' after 80 failed attempts. The device made machines run 40 times faster than manual operation. With reference to the objectives of business, identify the primary objective demonstrated and explain its importance.

A large garment manufacturing company stores finished clothes in a warehouse for six months before the festive season sale. With reference to warehousing as an auxiliary to trade, explain how this decision benefits the company and consumers.

A pharmaceutical company is considering starting operations in a new city. What factors related to location should it consider? Use the concept of 'factors for starting a business' to answer.

A small bakery owner in Kolkata takes a loan from a bank to buy modern equipment and insures the bakery against fire and theft. With reference to banking and insurance as auxiliaries to trade, explain how these decisions support business.

An oil company extracts crude oil from underground reserves and then refines it into petrol, diesel, and kerosene at a refinery. Classify each of these activities under the appropriate type of industry and justify your classification.

A businessman imports Chinese silk and pays customs duties. Later, the government raises import taxes significantly, impacting his profit margins. With reference to business risk, identify the type of risk and its cause, and explain how it affects the business.

With reference to the case of ancient Indian trade, explain why travellers like Megasthenes and Ibn Batuta referred to India as 'Swaran Bhoomi'. What factors contributed to this prosperity?

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