28 Important Short Questions with Answers on “Business Economies” for Commerce Students:
1. Write Wheeler’s view on business.
According to Wheeler, business is “an institution organized and operated to provide goods and services to the society under the incentive of private gain.” Wheeler considers ‘private gain’ as the primary motivating factor. There are certain undertakings whose primary aim is to provide services to the society but still they are covered under business. Public utility services are undertaken by the Government for the benefits of society, but still they are covered under business.
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2. Which type of activities can be included under business activities?
The term ‘Business’ includes all those activities which are related to the production and distribution of goods and services. It also includes all those activities which indirectly help in production and exchange of goods such as transport, insurance, banking and warehousing, etc.
3. What do you understand by entrepreneur?
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The person who recognizes the need for a product or service is known as entrepreneur The entrepreneur is a key figure in the process of economic growth. The quality of entrepreneurship existing in any region determines to large extent the development of that region.
4. What are economic activities?
Business includes only economic activities. All those activities relating to the production and distribution of goods and services are called economic activities. These activities are undertaken with economic motive.
5. What is the role of profit motive in business activities?
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The profit motive is an important element of business. Any activity undertaken without profit motive is not business. A business man tries to earn more and more profits but out of his business activities.
The incentive of earning profits keeps a person in business and is also necessary for the continuity of the business. This does not mean that they are forced out in business. The risk elements in business keeps a person vigilant and he tries to ward off his risk by executing his policies properly.
6. What is the significance of organization in the business?
Every enterprise needs an organization for its successful working. Various business activities are divided into departments, sections and jobs. An organization creates the framework for managerial performance and helps in coordinating various business activities. A proper organization is helpful in the smooth running of the business and helps to achieve its objectives.
7. What do you understand by economic and non-economic activities?
Economic activities are related to the production of wealth. Every human being undertakes some kind of work with a view to earn his living. All these activities create utilities.
Non-economic activities are not undertaken with economic motives, these may be in the form of religious, cultural or social activities. The element of profit which is prevalent in economic activities distinguishes them from non-economic activities.
8. Define business organization.
A business organization may be defined as the outcome of the efforts of one or more entrepreneurs by means of pooling together their resources and coordinating their activities to carry on business activity.
9. What is meant by business ownership?
Ownership of a business refers to the person who owns a particular business or to whom the business belongs. Business ownership has three kinds (i) Public enterprises (ii) Private enterprises (iii) Joint enterprises.
10. What economic objectives does a business have?
A business has the following economics objectives:
1. Profit earning
2. Production of goods
3. Creating markets
4. Technological improvement.
11. What are human objectives of a business?
The human objectives of a business are as follows:
1. Welfare of employees
2. Satisfaction of consumers
3. Satisfaction of shareholders
4. Helpful to government
12. Write down the social objectives of a business.
Social objectives of a business are as follows.
1. Availability of goods
2. Supply of quality goods
3. Co-operation with the Government
4. Creation of more employment
5. Utilising national resources properly
13. Write a short note on ‘profit maximization objective of business’.
Profit earning is one of the important objectives of business No business can exist for long if it does not earn profits. Normally people are of the view that a business’ main aim is to earn profits and as such it should try to earn as much as it can.
On the other hand there are others who are of the view that a business should earn reasonable profit. The exploitation of any section i.e. consumer, labour, society, etc. for the sake of increasing profits is unjustified. In their opinion a business should earn reasonable amount of profit only.
14. What is meant by a business undertaking?
A business undertaking is an institutional arrangement to conduct any type of business activity. The undertaking may be run by one person or association of persons. It may be based on formal or informal agreement among persons who undertake to run the concern.
According to Wheeler, a business undertaking is “a concern company or enterprise which buys and sells, is owned by one person or a; group of persons and is managed under a specific set of operating policies.” The persons join together and pool their resources and conduct the activities of the undertaking for the benefit of all.
15. Discuss social responsibility of the business.
Social responsibility of a business is the obligation of the business to pursue those policies, to make those decisions as to follow those lines of action which are desirable in terms of the objectives and values of our society.
The business is expected to undertake those activities which are essential for the betterment of the society. The responsibility of the business is to understand the needs and requirements of the society and then direct its energies to fulfil them Business should not undertake anything which is against the interests of society. So business and society are meant and exist for each other.
16. What do you understand by industry? How are the goods produced by an industry classified?
Industry is concerned with the making or manufacturing of goods. It is that constituent of production which is involved in changing the form of a good at any stage from raw material to the finished product e.g. weaving woollen yarn into cloth. Thus industry imparts utility to goods.
The goods produced may either be used by other enterprises as raw materials for further production or as final products by consumers. When goods are used by other enterprises for further production they are known as “producer’s goods”.
The productions of plant machinery equipment etc. are examples of produced goods. When goods are finally used by consumers they are known as consumer’s goods. The examples of such goods are cloth, bread, groceries, drugs, etc.
An enterprise may produce materials which will be further processed by yet another concern which converts them into finished goods. These goods are known as intermediate goods. The examples of this category are—plastics, rubber, aluminium, etc.
17. What is genetic industry?
Genetic industry is related to the re-producing and multiplying of certain species of animals and plants with the object of earning profits from their sale. Nurseries, cattle breeding, fish, hatcheries, poultry farms are all covered under genetic industry.
The plants are grown and birds and animals are bred and then sold on profit. Nature, climate and environment play an important role in these industries but human skill is also important.
18. What do you mean by extractive industry?
The extractive industry is engaged in raising some form of wealth from the soil, climate, air water or from beneath the surface of the earth. These industries are classified into two categories: In the first category, workers merely collect goods already existing.
Mining, fishing and hunting is covered in this category. In the second category the goods are produced by the application of human skill, i.e. agriculture and forestry. Extractive industries supply basic raw materials that are usually transformed into many useful products by manufacturing industries.
19. What is construction industry?
The construction industry is engaged in the creation of infrastructure for smooth development of the economy. These industries are engaged in the construction of buildings, roads, dams, bridges and canals.
These industries use the products of other industries such as cement, iron, bricks, and wood, etc. Engineering and architectural skills play an important role in construction industry. Engineering and contracting firms are organized for undertaking operations of construction industry.
20. Write a short note on manufacturing industries.
This industry is engaged in the conversion of raw materials into-semi finished or finished goods. This industry creates from utility in goods by making them suitable for human use. Most of the goods which are used by consumers are produced by manufacturing industries. These industries supply machines, tools and other equipments to other industries too.
21. Discuss the classification of manufacturing industries.
Manufacturing industries which may be classified as follows:
(a) Analytical Industry:
In this industry, any product is analysed and many products are received as final products. In the processing of crude oil we will get kerosene, petrol, gas and diesel, etc.
(b) Processing Industry:
In this industry a product passes through various processes to become a final product. The finished product of one process becomes the raw material of the receiving process and soon the final process produces the finished goods.
(c) Synthetic Industry:
In this industry many raw materials are brought together in manufacturing process to make a final product Soap making, plastics, paints are other examples of synthetic industry.
22. What do you understand by commerce? In how many categories can commerce be classified?
Commerce is concerned with the exchange of goods. It includes all those activities which help the expansion of trade. Commerce can be classified into two categories.
1. Trade and
2. Aids to trade
The aids to trade include transport, banking, insurance, warehousing, advertisement and salesmanship. Without the help of such agencies, it is not possible to take goods from one place to another so that they may reach the consumers who are spread all over the world.
23. What is trade?
Trade is the process of taking goods from the source of production or place of procurement to the consumers. The produce cannot come into direct contact with consumers, so there should be some channel which will facilitate the transmission of goods from the producers to the consumers. The channel which helps the exchange of goods is called trade.
24. Classify trade. Define internal trade.
The trade may be classified as follows:
1. Internal trade
2. External trade
3. Wholesale and retail trade
The purchase and sale of goods inside the country is called internal trade. Goods can be taken to any place but within the boundaries of the country.
25. What is meant by foreign trade?
When trade takes place between two countries, it is called foreign trade. External trade generally requires permission from the respective countries. External trade may be import trade or export trade when goods are purchased from outside countries, it is called import trade. On the other hand when goods are sold and sent out to the other countries, it is called export trade.
26. What do you understand by wholesale trade?
In wholesale trade, goods are purchased in large quantities and are sold to retailers. A wholesaler is link between the producers and the retailer. This helps the producers in making bulk production and selling in large quantities to traders. A wholesaler does not come into direct contact with the consumer.
27. What is retail trade?
Retail trade involves selling goods to the final consumers. The goods are sold in small quantities to the consumers. A retailer purchases goods from a wholesaler and sells them to the consumers. He provides a link between the wholesaler and the consumer.
28. What auxiliary services are included under commerce?
Commerce includes several auxiliary services which facilitate exchange of goods and services. These auxiliary services are as follows:
(i) Advertising
(ii) Banking
(iii) Insurance
(iv) Transportation
(v) Warehousing or storage.