COMPETENCY BASED QUESTIONS

CHAPTER-1

Q:1 DLF Ltd. is India's largest real estate developer operating in development of residential, commercial and retail properties.
Which type of industry does DLF belong to? State.

Q:2 Bhoomika moves from one place to another selling vegetables. She earns from the work and meets her daily
requirements. She saved money and opened a shop where she sold vegetables and also provided home delivery services.
(a) Identify the type of economic activity she is involved in.
(b) State any two features of the activity identified in (i) above.

Q:3 Hawa Ltd. is a popular company manufacturing water coolers.Its product is very much liked by people in the market.The
traders are in a race to become the company’s distributors.The company has been earning huge profits for many years.
However, in the year 2021, the company's half yearly report shows a great decline in the company's profit. The top
management is worried about this. A team of specialists from outside is appointed to solve this serious problem. After a
thorough examination, the specialists presented the following reasons for the decline in the profits of the company.
(a) Increase in competition and change in taste of the consumers.
(b) Theft of cash and goods by the employees.
Identify and explain the two causes of decline in profits.

Q:4 After completing their graduation, Karim and Sachin decided to set up a flour mill to earn income.Their main job is to
purchase wheat from the market and have ground it into flour. Their flour is available in the packets of 5 kg, 10 kg and 20 kg.
They sell these under the brand name 'Desh ka Atta', and earn a reasonable profit of 10% on cost. They worked very hard to
flourish the business on a regular basis, and hence in no time their brand became very popular in the market. The main
reasons for the success of their business are superior quality and low price. Their business was running very well. But one
day, the flour mill caught fire, and as a result they had to suffer a heavy loss. However, Karim and Sachin did not lose their
heart, and worked even harder. Gradually, their business was back to normal. Now, they are fully satisfied with their
business.Quoting the lines from the above para, explain any four characteristics of business.

Q:5 Guruansh's job involved travelling. As he was very fond of reading, he requested his father to buy him some books. His
father sold his old laptop on OLX.com and bought him a new 'kindle' from Amazon.com. While buying the 'kindle', he
noticed a message on the screen of the website that 1% of every purchase would be sent by the company to 'Sikh Sewadar
Foundation' an NGO for underprivileged children.
A) Can the transactions by Guruansh’s father be termed as business activity?Give reason with the help of relevant
characteristic of business.
b) Which objective of business is Amazon fulfilling?
c) State the industry in which online business organisations deal.

Q:6 Identify the characteristics of business in the following statements:

(a) Departmental stores purchasing goods from small manufacturers and selling under one roof.
(b) A car dealer buys and sells cars on regular basis.
(c) A furniture dealer buys office chairs at & 500 each and sells them for $ 650 each. $ 150 per chair is the extra money
earned to meet business expenses and for future growth.
(d) Workers at Maruti Udyog Ltd. went on strike for more than a month demanding raises in wages. The company suffered
huge losses due to loss of production and sale.

Q:7 Sarika is running an organic store under the brand name, 'Earth' in a popular market in Dehradun. She acknowledges
that risks in her business cannot be predicted with utmost accuracy as business environment is dynamic in nature.
Therefore, it is not possible to predict future events with accuracy like, change in consumer preferences, increase in
competition, natural calamities etc. Also, she feels that the risks in business can be minimised, but cannot be eliminated all
together. As her business is operated at a small scale she feels her quantum of risk is relatively low. At the same time she
truely believes in the saying that 'no risk, no gain' is applicable to all the business organisations.Identify and explain the
various characteristics of business risk being described in the above paragraph.

Q:8 Anuradha runs of fast food outlet in one of the shopping malls in Faridabad. Over the years, her business has earned
good reputation and high profits. However, over the past one month she has released that her clientele is gradually
declining.On introspection she identified two main reasons for the same. First, a new fast food joint has opened up in the
same mall and it is drawing huge crowd. Secondly, one of her chief chef has not been keeping good health and is not able to
work towards the business in the same dedicated manner as earlier.In contest of the given case:
(a) Identify and explain the causes of business risk mention in the given paragraph.
(b) Also, quote the relevant lines.

Q:9 Rishabh had to face heavy losses in tourism business due to the devastating floods in Kerala. In order to revive business,
he has introduced many attractive travel packages and invested huge amount in promoting these lucrative offers to the
prospective consumers.In context of the above case:
(a) Identify and differentiate between the types of business risk being mentioned in the above paragraph.
(b) Also, suggest any three ways in which business risk can be minimised.

Q:10 Sridhar is planning to set up a book store in a popular complex in Lucknow.His prime idea of promoting this business is
to reinstate the diminishing reading habits among the people of all age groups. The publication of books usually takes place
in particular locations. Besides, he also a needs communication facilities so as to enable publishers, traders and consumers
exchange information with one another. He is planning to take a loan of & 2 lakh from bank for his business. Moreover, he
will be using facilities of cheque payment, online payment etc. for various transactions. Considering the fact that his business
involves various types of risks and must be protected against fire, theft and other risks. Also, material and goods kept in stock
or in transit are subject to the risk of loss or damage. At the same time, employees are also required to be protected against
the risks of accident and occupational hazards. Furthermore, he needs to inform and persuade the target market about his
business so as to promote his business.In context of the above case:
(a) Identify the different auxiliaries to trade which Sudhir will require by quoting the relevant lines.
(b) Also, mention the type of utility created by each of these auxiliaries to trade as identified in part(a) of the question.

Q:11 Farhan, a young man, wants to provide employment to the local people of his village. He decided to do the wholesale
business of mobile phones made by the latest technique. But so many questions began to crop up in his mind: how will the
goods be brough from distant places, how will the finance be arranged, and how will the information on his modern
business be conveyed to the people? He consulted a business expert, Mr. Balram who gave him information on the
auxiliaries to trade, which could solve his problem. Farhan understood what the expert told him. He employed 50 workers
and started his business.
a) Which economic activity is Farhan going to do?
(b) On which part of business was the information given to Farhan by the business expert?
(c)If we add the answer of a) to the answer of (b) which part of business shall we have?
(d) Explain the auxiliaries to trade which may solve the problem of Farhan, as suggested by the business

Q:12 Dr. Rajiv Mishra is working against the post of a senior doctor in a government hospital. He does not discriminate
between the rich and poor while treating his patients medically. When he returns home from the hospital, he attends to the
poor patients at home free of charge between 6 pm and 8 pm.Besides, he gives them the information about the
employment opportunities. He advises many young people to go into the field of advertising and transportation. They went
into these fields and remarkably succeeded there.

A) What type of activities does Dr. Rajiv Mishra perform in the hospital and at home?
B) Explain the auxiliaries to trade mentioned in the above para.

Q:13 Define Auxiliaries to Trade. Identify and explain the auxiliaries to trade required in the following cases:

a)Production of goods generally takes place in particular locations. For instance, tea is mainly produced in Assam; cotton in
Gujarat and Maharashtra; jute in West Bengal and Odisha; sugar in U.P., Bihar and Maharashtra and so on. But these goods
are required for consumption in different parts of the country.

b)Business activities cannot be undertaken unless funds are available for acquiring assets, purchasing raw materials and
meeting other expenses.

c)Business involves various types of risks. Factory building, machinery, furniture, etc., must be protected against fire, theft
and other risks. Material and goods in transit are subject to the risk of loss or damage. Employees are also required to be
prorected against the risks of accident and occupational hazards.
d) Usually, goods are not sold or consumed immediately after production. They are held in stock to make them available as
and when required. Special arrangement must be made to prevent loss or damage.

e) It is practically impossible for producers and traders to contact each and every customer. Thus, for promoting sales,
information in made available about their features, price, etc., to the potential customers. Also, there is a need to persuade
potential customers and buyers about the utility features, quality, price, competitive information about the goods and
services, etc.

Q:14 Shree Radhey Industries Pvt. Ltd. is a large company which produces agricultural products like sugarcane, cotton, etc.
Instead of selling these agricultural products in the market, the company uses these as raw materials to produce sugar and
cloth in its own established sugar mill and cloth mill at some rural area where there was a high unemployment. In this way,
the company provided employment to about 200 local people.To which type and sub-type of industries are related the
different products described in the above para? Explain.

Q.15 Rising Heights Ltd. wants to expand and grow. For this it needs funds to acquire land, building, machinery etc. Also
since these assets cost a lot they want the risk associated with them to be reduced. Identify the hindrances and explain how
they can be removed.

Q:16 Ramesh sells winter wear in the month of December, January and February but he is not able to sell his complete
(i) Identify the hindrance.
ii) How can Ramesh resolve this hindrance?
(iii) Will this hindrance always occur? Why?

Q:17 It is one of the activities means for assisting trade and help in the promotion of the product by providing information
to the consumers. Business does not exist in isolation, it has to communicate with others and the activity helps in making
consumers aware and informed about the product of the company and inducing them to buy particular items.
(i) Which activity is discussed in the above para ?
Ii) What are those activities called which are meant for assisting trade ?

Q:18 In business activities, there are some activities that are involved in the removal of hindrances in process of exchange
i.e. from the producer to the consumer.
(a) Identify them.
(b) Also classify the activities which help in removing the following hindrances.
(1) Hindrance of place (i) Hindrance of risk (il) Hindrance of time (iv) Hindrance of finance v) Hindrance of information

Q.19 Answer the following:

(a) Name the business activity which is concerned with conversion of resources into useful products.
(b) Name the category of industry which involves breeding or reproduction of plants and animals.
(c) Name the manufacturing industry in which TV sets or computers are produced.
d) Name the auxiliary to trade which re moves the hindrance of time.

Q:20 Answer the following:

(a) Why do we insure goods?
(b) Name the type of manufacturing industry in which one material is separated into several useful products.
(c) Name the type of manufacturing industry wherein two or more ingredients are combined into one product.
(d) Name the type of manufacturing industry wherein a finished product is produced through successive stages.
(e) Is furniture making a manufacturing industry? Why?
(f) Why is mining called a primary industry?

Q.21 Answer the following:

(a) Why is construction industry called a secondary industry?
(b) Why is insurance known as a tertiary industry?
(c) Is dairying a genetic or an extractive industry? Why?
(d) Why is the insurance known as a tertiary industry?

Q.22 State, giving reasons, whether the following statements are true or false:

(a) Industry and commerce are interchangeable terms.

(b) Trade between two countries is known as internal trade.

(c) Conversion of cotton into cloth is an example of genetic industry.

Q:23Vrinda Ltd. is facing a decline in demand for its products due to change in tastes and preferences of consumers as well
as increased competition from other producers. Lower demand results in low sales and profits. Moreover, the shortage of
raw materials in the market shoots up their price. So the company has to pay more for buying them. As a result, cost of
production increases which, in turn, reduces profits of the company.
(a) State the concept highlighted above.
(b) Explain three main causes of the concept identified.

Q.24 Business enterprises constantly face two types of risks. Some business risks arise due to changes in market conditions,
including fluctuations in demand and supply, changes in prices or changes in fashion and tastes of customers. Favourable
market conditions are likely to result in gains, whereas, unfavourable ones may result in losses. The chance of fire, theft or
strike are examples of other type of business risks. Their occurrence may result in a loss, whereas, non-occurrence may
explain an absence of a loss, instead of a gain.
(a) Identify and explain, by quoting lines from the above paragraph, the two types of business risks.
(b) Explain, with examples, the two main factors which determine the amount of risk in a business.
(c)Explain the age-old principle 'No risk, no gain.

Q.25 Mr. Ramesh is running a Grocery store in Karol Bagh, New Delhi. Due to the entry of many big retail. stores in the area,
he fears that it will affect the Sales and revenue of his business. He lacks the knowledge to ascertain the real effect of entry
of big retail stores. But he knows that "No risk No Gain". So he decided to invest more money to upgrade his small store so
as to compete with large stores. He thus tried to minimise the risk.Identify any three points of nature of business risk
depicted the above paragraph.

Q:26 Different situations in different businesses are being elaborated below:

* Raghunath Gorkha had a matchstick factory in Nepal which got destroyed by the recent earthquake.

* Mr. Arya a senior manager in a telecom company shared confidential information about the company with a competitor
which led to huge losses for the company.

* Vodafone Co. was charged with an evasion of tax and asked to pay a fine in crores which would lead to heavy losses for the
company.

* Typewriters becoming redundant because of laptops.

(a) Which characteristic of business is being referred to in all the above cases ?

(b) How can you classify the different cases based on this characteristic?

Q:27 State, giving reasons, whether the following statements are true or false:

(a) Risks arise in business due to uncertain future.

(b) Profit is the reward for bearing risks.

(c) Risk is an essential element of every business activity.

Q:28 we should keep clear of the anti-social activities like adulteration, hoarding and profiteering, and contribute to the
benefits of the society like opening charitable dispensary, educational institution, etc.What are the objectives of business
Shreya and Vrinda focusing on? Explain.

Q:29 Manjeet Pvt. Ltd. is a reputed company manufacturing computers. The company is earning a considerable profit. Both
the proprietors and the employees are putting in their best effort to make good quality products available to the customers
at a low price, paying its shareholders a good amount of dividends and the employees a reasonable remuneration. This
contributes to the successful operations of the business. With increased profits over time, the company's foundation
becomes strong, and it earns a good reputation in the society. It utilises its profits to finance its growth and expansion
requirements.Explain the role of profit in business of Manjeet Pvt. Ltd. by quoting the lines from the above para.
Q:30 Mr. X and Y are having a discussion. Mr. X says that business is based on a selfish desire to gain higher and higher profits
while Mr. Y thinks that profit is essential for a business. Can you support Mr. Y's case by giving strong points in his favour?

Q:31 A factory emits a lot of smoke and pollutants while manufacturing Sugar. It is overlooking the impact of its activities on
the environment and is engaged in profit maximization.
(i) Which objectives is not being fulfilled by the manufacturers? State any three such objectives.
(ii) Which type of industry will you classify sugar manufacturing?

Q:32 A company has decided to donate 1% of its sales to an NGO, serving mentally disabled people. This initiative by the
company was highly appreciated by the public and their sales increased by 10% .Identify the objectives depicted in the given
example.State any three such objectives.

Q: 33 Ms Meena is a lecturer in a college. She gets Rs 72,000 p.m. as remuneration. Mr. Kunal is a farmer producing 20
quintals of wheat for his own consumption and 2,000 quintals for sale. Ms. Kirti, a journalist in an agency, teaches slum
children after her office hours. She doesn't charge anything from them. This gives her psychological and mental
satisfaction.Production of wheat by Mr. Kunal for his own consumption refers to which human activity? Explain.

0.34 All the four children of Mr. Madan Mohan Lal are doctors. Shyam is a skin specialist, Krishna is a heart specialist,
Radhika is a child specialist and Gauri is a physician. Dr. Shyam joined a multi-speciality private hospital. Dr. Krishna
established his own nursing home. Dr. Radhika works in a government hospital and also treats the poor people free of
charge in a charitable dispensary. Dr. Gauri opened a medical store wherein she sells genuine medicines, getting the
minimum profit margin.
(a) State, giving reasons, whether they are engaged in economic or non-economic activities.
(b) Also explain in which form of the economic activities and non-economic activities they have been engaged.

Q:35 Anshul is a farmer. His elder brother Ankur is an advocate while his sister Priyanka is a clerk in a government office.
Name the economic activities in which they are engaged and distinguish among them on the basis of: (i) Reward/Return (ii)
Capital investment (ifi) Risk.

Q:36 Answer the following:

(a) Rajni, a house wife exchanges utensils for old clothes on a regular basis. Is it a business and why?

(b) 'Only sale or exchange of goods/services for profit is business.' Do you agree with the statement? Give reason in support
of your answer.

(c) Mr. Rajnesh sold his furniture & bike on OLX as he was moving base to London. Is this a business activity ? Which element
of business is being referred to here?

Q:37 Answer the following:

(a) A housewife sells old newspapers for 100. Is it a business activity? Why?
(b) If a person sells his/her domestic T.V. set at a profit, will it be considered as a business? Why?
(c) Ritika produces goods not for the purpose of sale but for personal consumption. Will it be a business activity? Why?
(d) Chhavi cooks food at home for her family but Shelly cooks food and sells it to others in a restaurant. Who is engaged in
business activity?
(e) A person repairs scooters by the roadside. How will you describe this activity?
(f) Lalita, a housewife sells old newspaper of two months at & 300, will you classify it as business activity? Why?

Q:38 Babita is a qualified Chartered Accountant and is practicing independently. While her friend Chitra has done her B.
Tech. from IIT Kanpur and got a campus placement in an MNC. In what kind of business activities are Babita and Chitra
engaged?