11th OCM Chapter 1 Exercise (Introduction of Commerce and Business) Maharashtra Board – Free Resource

11th OCM Chapter 1 Exercise

11th OCM Chapter 1 Exercise
11th OCM Chapter 1 Exercise

Chapter 1 – Introduction of Commerce and Business

Q.1 (A) Select the correct option and rewrite the sentences.

1) A Lawyer is _____.
a) a Professional person
b) a Businessman
c) an employee

2) Raw material is converted into finished product by _____ industry.
a) genetic
b) extractive
c) manufacturing

3) Actual buying and selling of goods is known as _____.
a) profession
b) trade
c) industry

4) National level code of conduct is prepared for _____.
a) professionals
b) businessmen
c) employees

5) Construction of dams is an activity done under _____ industry.
a) primary
b) secondary
c) tertiary

6) The problem of distance is solved by _____.
a) bank
b) transport
c) warehousing

7) Commerce is a branch of _____.
a) business
b) industry
c) trade

8) Monetory Returns in business is called _____.
a) fees
b) salary
c) profit

9) A business unit depends upon _____ for selling its output.
a) industry
b) society
c) employees

10) Warehousing creates _____ utility in goods.
a) place
b) time
c) form

Q.1 (B) Match the pairs.

Group AGroup B
a) Helping disabled person1) Social objective
b) Genetic Industry2) Foreign Trade
c) Local currency3) Sericulture
d) Solve social problems4) Non-economic activity
5) Internal Trade
6) Mining
7) Profit
8) Economic activity

Answers.
a. 4) Non-economic activity
b. 3) Sericulture
c. 5) Internal Trade
d. 1) Social objective

Q.1 (C) Give one word/phrase/term for the following statements.

1) A regular activity concerned with production and distribution of goods and services for profits.
Answer: Business

2) Human activities that are conducted for earning money.
Answer: Economic activities

3) Buying and selling of goods against money or money’s worth.
Answer: Trade

4) Activities that remove all the difficulties in trade.
Answer: Auxiliaries to trade

5) The type of industries that creates immovable wealth.
Answer: Construction Industry

6) Name the business activity which is concerned with production of goods and services.
Answer: Industry

7) Name the business activity which is concerned with distribution of goods and services.
Answer: Commerce

8) The activity which provides mobility to men and material.
Answer: Transport

9) An aid to trade which creates time utility.
Answer: Warehousing

10) An occupation by which a person agrees to provide expert services for a fees.
Answer: Profession

Solution of other subjects
Solution of all Chapters of OCM
12345678

Q.1 (D) State True or False.

1) Business is an economic activity. (True)

2) Every profession is practiced for earning money. (True)

3) Primary industries are concerned with nature. (True)

4) Trade includes commerce. (False)

5) Warehousing removes difficulty of time. (False)

6) Trade includes buying and selling of goods and services. (True)

7) Profit leads to an increase in the overall efficiency of the organization. (True)

8) Plant nursery is an example of an extractive industry. (False)

9) Industry creates form utility. (True)

10) Retailer is the link between manufacturer and wholesalers. (False)

Q.1 (E) Find the odd one.

1) Agricultural Industry, Extractive Industry, Genetic Industry, Manufacturing Industry.

2) Import Trade, Export Trade, Wholesale Trade, Entrepot Trade.

3) Banking, Insurance, Transport, Manufacturing.

4) Tea, Milk, Coffee, Machinery.

Q.1 (F) Complete the sentences.

1) Economic activities are those activities which are conducted to earn money .

2) Commerce includes marketing of goods and services.

3) Business is an economic activity.

4) The basic purpose of business is to earn profit.

5) Professionals, charge fees in exchange of expert services.

6) Employer is the person who offers the work.

7) Profit is considered as a reward for assuming several business risks.

8) Industry creates form utility.

9) In wholesale trade, goods are purchased and sold in bulk.

10) Retailer is the link between wholesaler and customer.

Q.1 (G) Complete the following table.

Group A Group B
1) Trade between different countriesExternal trade
2) Purchases of goods and services
from another country.
Import Trade
3) Export tradeSelling of goods and services to
foreign customer.
4) WholesalerLink between producer and retailer.

Q.1 (H) Answer in one sentence.

1) What is an Economic Activity?
Answer:
Activities that involve production, distribution and consumption of goods and services for money or money’s worth at all levels within a society is called economic activity. For e.g. worker working in a factory.

2) What is Non-economic Activity?
Answer: Non-economic activities are those human activities which are performed to satisfy personal, social, religious, cultural and sentimental requirement without monetary expectations. For e.g. reading books, serving people, cooking by mother etc.

3) What do you mean by Wholesale Trade?
Answer:
In wholesale trade, goods are purchased and sold in bulk. A wholesaler purchases in large quantities from the producers and sells in small quantities to the retailers.

4) What is the meaning of Retail Trade?
Answer:
Retail trade is business activity associated with the sale of goods to the final consumers. A retailer is the one who purchases from the wholesaler or sometimes directly from the producer and sells them in smaller quantities to final consumer

5) What do you mean by Import Trade?
Answer:
When goods and services are purchased from another country it is called as import trade.

6) What is the meaning of Export Trade?
Answer:
When goods and services are sold to foreign buyers then it is called as export trade.

7) What is an Entrepot Trade?
Answer:
It is the combination of import/export trade. It involves importing the goods from one country and reselling these goods to another country. e.g. Indian Seller importing goods from Japan and re-exporting same goods to Africa.

8) What is meant by Auxiliaries to Trade?
Answer:
All those activities that facilitate smooth flow of goods from manufacturing centers to the consumption centers are called aids to trade or auxiliaries to trade.

9) What is Trade?
Answer: Trade denote buying and selling of goods and services. Trade is an exchange of goods and services with money or money’s worth.

10) What do you mean by Commerce?
Answer: Commerce is that part of business activity which is concerned with distribution of goods and services produced by Industry.

11) What is Primary Industry?
Answer: Primary industry is concerned with nature. It is a nature-oriented industry. The products of primary industry may be used as the input of secondary industry.

12) What is Secondary Industry?
Answer: These industries depend on primary industries. They convert the raw material provided by primary industry into finished products. e.g. Tomatoes provided by primary industry are used for making sauce and ketchup.

13) What do you mean by Genetic Industry?
Answer: Genetic industries are engaged in reproduction and multiplication of plants and animals. e.g. animal husbandry, sericulture, horticulture etc.

Q.1(I) Correct the underlined word and rewrite the following sentences.

1) Business is non-economic activity.
Answer: Economic

2) Barter exchange is an exchange with money.
Answer: Goods

3) Profession can be transferred to other person.
Answer: cannot be transferred to other person.

4) Capital is required for employment.
Answer: Business

5) Industry creates place utility.
Answer: Transport

6) Commerce represents supply side of market.
Answer: Industry

7) The basic purpose of business is to provide services.
Answer: earn profit

Q.2 Explain the following terms/concepts.

1) Business
Answer: Business represents organized efforts by an individual or group of individuals’. It is a systematic attempt by business persons to produce goods and services and sell them in the market, to reap the reward by way of profit. It satisfies multiple and complex needs of the society .

Prof. Haney – “Business activities are all those human activities which are directed towards the production and processing of wealth.”

2) Profession
Answer: Profession is that part of economic activities under which a person uses his educational knowledge and special skill to render services for earning some income. e.g. Doctor, Lawyer, Chartered Accountant etc. Professionals get fees in exchange of their services.

3) Employment
Answer: It is an economic activity in which people work for others. There is employer employee relationship. Employer is the person who offers the job and the person who accepts the job is called employee. Remuneration and terms and conditions are agreed by both of them.

4) Home Trade
Answer: In this trade, buying and selling of goods and services takes place within the geographical boundries of a country. It uses local currency for the exchange of goods and services. Home trade if further divided into wholesale trade and retail trade.

5) Foreign Trade
Answer: When trade takes place between different countries, it is known as foreign trade. When boundaries of two countries are crossed then different currencies are used. It is further divided into Import trade, Export trade, and Entrepot trade.

6) Economic Activity
Answer: Activities that involve production, distribution and consumption of goods and services for money or money’s worth at all levels within a society is called economic activity. For e.g. worker working in a factory.

7) Non-economic Activity
Answer: Non-economic activities are those human activities which are performed to satisfy personal, social, religious, cultural and sentimental requirement without monetary expectations. For e.g. reading books, serving people, cooking by mother etc.

Solution of other subjects
Solution of all Chapters of OCM
12345678

Q.3 Study the following case/situation and express your opinion.

1) Jaysukh oil mills produce refined oil. The entire production is purchased by Rupesh oil Depot, who in turn sells it to various retailers. Mrs. Prachi purchased 2 kg oil from Balaji Groceries.
Identify:

i) Wholesaler
ii) Retailer
iii) Consumer

Solution:
i) Wholesaler – Rupesh Oil Depot
ii) Retailer – Balaji Groceries
iii) Consumer – Mrs. Prachi

2) Mr. Pranav is a tin manufacturer in India. Mr. Jack of England sells goods to M/s. Frank Corporation in North America and Mr. Williams of USA buys various goods from Brazil.

i) Who is importer?
ii) Who is manufacturer?
iii) Who is exporter?

Solution:
i) M/s. Frank Corporation and Mr. Williams of USA are importer.
ii) Mr. Pranav is a manufacturer.
iii) Mr Jack of England is exporter.

Q.4 Distinguish between.

1) Industry and Commerce

Sr.
No.
Point of
difference
IndustryCommerce
1MeaningIndustry is engaged in production of goods and services.Commerce is engaged in distribution of goods and services.
2LocationIt is located in factories and
workshops.
It is conducted in markets and
offices.
3UtilityIt creates form utilityIt creates place, time and
possession utility
4ResourcesIt uses machine and manpowerIt requires more manpower
5CapitalHuge capital is required to start industryCommerce comparatively requires less capital
6InterdependenceIndustrial activities are meaningless without commerce.Commercial activities cannot be
started without the production of
goods & services.
7Conducted byProducers and manufacturersTraders, mercantile agents etc.
8ClassificationPrimary, Secondary and Tertiary
industry
Trade and Auxiliaries to Trade
9Market forceIt represents supply side of
market
It represents demand and supply side of market

2) Business and Commerce

Sr.
No.
Point of
difference
BusinessCommerce
1MeaningIt is an economic activity which deals in production and distribution of goods and services.It is a part of business which is concerned with distribution of goods and service
2ConceptIt is a broader concept as it includes commerce.It is a narrow concept as it is a
part of business.
3SkillIt requires technical as well as
marketing skill.
It requires only marketing skill
4ClassificationIt is classified into Industry and
Commerce.
It is classified as trade and
auxiliaries to trade.

3) Business and Profession

Sr.
No.
Point of
difference
BusinessProfession
1MeaningIn this economic activity, goods and services are produced
and distributed
In this economic activity, expert services are rendered.
2Reward / ReturnBusinessmen earn profit.Professional charges fees.
3Capital
investment
Capital investment depends on size and nature of business.Limited capital investment is
required except the self-employed professional.
4Nature of workIt provides goods and services to the public.It renders personalized expert
services.
5QualificationNo minimum qualification is
prescribed.
Expert knowledge and training in a particular field needed.
6Decision MakingBusinessmen are free to take the decisions.Professionals take expert decisions in their profession.
7RiskProfit is uncertain and irregular so high risk is present.Fees is generally not certain and regular.
8ExamplesBuilders, Grocers, Super market etc.Doctor, C.A., Lawyer etc.

4) Employment and Profession

Sr.
No.
Point of
difference
EmploymentProfession
1MeaningIn this economic activity, one person works under another person.In this economic activity, expert services are rendered.
2Reward / ReturnAn employee receives wages or
salary
Professional charges fees.
3Capital
investment
No capital investment is necessary.Limited capital investment is
required except the self-employed professional.
4Nature of workThey perform the work as per service contract.It renders personalized expert
services.
5QualificationIt is prescribed by the employer.Expert knowledge and training in a particular field needed.
6Decision MakingEmployee does not have any power to take any decision.Professionals take expert decisions in their profession.
7RiskFixed and regular pay is given by
employer as per contract so no risk
is involved.
Fees is generally not certain and regular.
8ExamplesClerk, Teacher, Officers etc.Doctor, C.A., Lawyer etc.

Q.5 Answer in brief.

1) State any four features of profession.

Answer: Profession is that part of economic activities under which a person uses his educational knowledge and special skill to render services for earning some income. e.g. Doctor, Lawyer, Chartered Accountant etc.

Features of Profession:

1) Aim

Every profession is practiced for earning money. Also they render services to their clients and solve their problems.

2) Qualification

A profession can be practiced only after acquiring required qualifications. Each profession has a certain set of body of knowledge. This knowledge has to be acquired only by systematic and formal training. One cannot practice profession, unless this knowledge is acquired.

3) Financial Returns

Professionals get fees in exchange of their services. Income received by professional is not fixed. Professionals can be employed in an organization or self employed. A working Chartered Accountant gets salary but those who practice privately i.e. self-employed get fees.

4) Capital

Profession can be practiced independently or professionals accept a job in any organization. Independent practicing professional requires huge capital for setting his practice. It differs from profession to profession.

2) State any two types of industries.

Answer:
The term industry also means group of firms producing similar or related goods e.g. Sugar industry refers to all manufacturing units producing sugar from sugarcane.

A) Primary Industry : Primary industry is concerned with nature. It is a nature-oriented industry. The products of primary industry may be used as the input of secondary industry. Primary industries are of three types.

a) Agriculture Industry
b) Extractive Industry
c) Genetic Industry

B) Secondary Industry : These industries depend on primary industries. They convert the raw material provided by primary industry into finished products. e.g. Tomatoes provided by primary industry are used for making sauce and ketchup.
Secondary Industries are of two types.

a) Manufacturing Industry
b) Construction Industry

3) Give two types of Foreign Trade.

Answer:
When trade takes place between different countries, it is known as foreign trade. When boundaries of two countries are crossed then different currencies are used.
It is further divided as :

i) Import Trade
When goods and services are purchased from another country it is called as import trade.

ii) Export Trade
When goods and services are sold to foreign buyers then it is called as export trade.

iii) Entrepot Trade
It is the combination of import/export trade. It involves importing the goods from one country and reselling these goods to another country. e.g. Indian Seller importing goods from Japan and re-exporting same goods to Africa.

4) State any four Auxiliaries to Trade.

Answer:
All those activities that facilitate smooth flow of goods from manufacturing centers to the consumption centers are called aids to trade or auxiliaries to trade. These activities play supportive role. They help in removing hindrances which arise during the production and distribution of goods and services.

Following are various Auxiliaries to Trade.

i) Transport
The goods are produced at one place but they are demanded over a wide area. So goods are to be sent to different places where they are demanded. Modes of transport facilitate movement of men and materials from one place to another.

ii) Warehousing
There is a gap between production and consumption. Certain goods are produced throughout the year but consumed only in a particular part of the year and vice versa. Warehouses are also called godowns. Price is maintained at a reasonable level and there is a continuous supply of goods and services.

iii) Insurance
There are various risks involved in the business. The goods may be destroyed while in production process or in transit due to accidents or in storage due to fire or theft. The businessmen would like to cover these risks Insurance companies come to their rescue. to insure his goods and pay premium regularly. Risks cannot be avoided completely but they can be minimized by taking insurance policy.

iv) Banking
We require money to start the business and to run it smoothly. Banks supply money. Adequate funds can be obtained from the bank. Bank provides loans, overdraft, cash credit etc. to businessmen. Banks also provide many services like cheques, drafts debit cards, credit cards, online transactions etc. It helps the traders to carry their business activities smoothly.

5) State any four features of employment.

Answer:
It is an economic activity in which people work for others. There is employer-employee relationship. Employer is the person who offers the job and the person who accepts the job is called employee. Remuneration and terms and conditions are agreed by both of them.

1) Aim
The main aim is to earn money for meeting needs of the employees and employers.

2) Qualifications
Each job requires some qualification. Skilled or unskilled labour is required as per the nature of the job. For skilled job some specific qualifications are required e.g. Job of nurse. But no specific qualification for unskilled job is necessary. e.g. Office boy.

3) Monetary Returns
Wages or salaries is given as a financial return to employee after completion of work. Wages are decided in advance before appointment. Wages are paid. daily or weekly. Salary is paid monthly. Along with salary other benefits like bonus, quarters to stay, subsidized food in canteen etc. also can be given to employees.

4) Capital
No capital is required for employment because employer invests and provides everything to the employee for completing the job.

6) Write any four objectives of business.

Answer:
a) Earning Profit
Profit is required for survival of the business and for its growth.

b) Searching New Customers
Business organizations have to work hard to create new customers and also to maintain the existing customers.

c) Innovations
It is a development or positive change which results into improvement in product or process of production. It has to spend money on R& D (Research and Development), market survey, use of technology etc.

d) Best Possible Use of Resources
Resources are scarce and have alternative uses. They should be used to its maximum and should not be wasted. Optimum use of resources ultimately leads to increasing profits.

7) State any four features of business.

Answer:
1) An Economic Activity
Business is an economic activity as it is undertaken to earn money or livelihood. It is not because of love, affection, feelings, sentiment etc.

2) Two Parties
Every business transaction involves an exchange. Minimum two parties are required for exchange i.e. the seller and the buyer. Business transaction is a result of an agreement between the buyer and the seller which may be oral or written.

3) Profit Motive
The basic purpose of business is to earn the profit from its activities. Businessmen try to maximize profits either by increasing the volume of sales or reducing its costs. It is the spine of business which keeps the business going on in the long term. The amount of profit may differ from business to business.

4) Production of Goods and Services
Before exchanging the goods and services, they should be produced by business enterprises. Goods are either manufactured or procured from the supplier, with the aim of selling it further to the consumers for profit.

8) State any two types of primary industry.

Answer:
Primary Industry
Primary industry is concerned with nature. It is a nature-oriented industry. The products of primary industry may be used as the input of secondary industry.
Primary industries are of three types.

a) Agriculture Industry
This includes farming and cultivation of land. The quality of products depend on many factors like fertility of land, climatic conditions, rainfall etc.

b) Extractive Industry
This industry draws out products from natural resources i.e. soil, air and water. Generally the products are in raw form and they are used by manufacturing and construction industries for producing finished products e.g.. extracting oil and minerals from underground, fishing and forestry etc. It may be used in crude form and may be sent to other industries for further processing.

c) Genetic Industry
Genetic industries are engaged in reproduction and multiplication of plants and animals. e.g. animal husbandry, sericulture, horticulture etc.

Solution of other subjects
Solution of all Chapters of OCM
12345678

Q.6 Justify the following statements.

1) Retailer is in direct contact with ultimate consumers.

Answer:
a) Retailer is a trader operating in the chain of distribution.
b) Retailer deals with the ultimate consumer.
c) Retailer is the last link in the chain of distribution.
d) Goods flow from the producer to the consumer in the given way:-
Producer –> Wholesaler –> Retailer –> Consumer
e) Therefore, retailer comes into direct contact with the ultimate consumer.

2) Commerce is a wider term than Trade.

Answer:
a) Commerce is a part of business activity. Business is Divided into industry and commerce.
b) Commerce is concerned with the distribution of goods and services produced by Industry.
c) Commerce is further divided into Trade and Auxiliaries to Trade.
d) Trade means buying and selling of goods and services.
e) All those activities that facilitate the smooth flow of goods from manufacturing centers to the consumption centers are called aids to trade or auxiliaries to trade.
f) Thus, it is said that commerce is a wider term than trade.

3) Risk is inevitable in business activities.

Answer:
a) Risk is the key element of every business which is concerned with exposure to loss.
b) These risks include changes in consumer tastes, likes-dislikes, fashions, changes in the methods of production, fire, theft, natural calamities, etc.
c) No business is free from the above-mentioned factors.
d) It is due to some unfavorable or undesirable event. Every business will have some or other risk.
e) Intensity of risk can be minimized but can’t be avoided.
f) Thus, risk is inevitable in business activities.

4) Combination of Import-export trade is entrepot trade.

Answer:
a) Import, export, and entrepot are the parts of foreign trade.
b) When goods and services are purchased from another country it is called as import trade.
c) When goods and services are sold to foreign buyers then it is called as export trade.
d) Entrepot is the combination of import and export trade.
e) It involves importing the goods from one country and reselling these goods to another country.
f) E.g. Indian Seller importing goods from Japan and re-exporting same goods to Africa.
g) Thus, a combination of Import-export trade is entrepot trade.

5) Transport creates place utility.

Answer:
a) Transport is one of the important auxiliaries to trade.
b) Because the goods are produced at one place but they are demanded over a wide area.
c) So goods are to be sent to different places where they are demanded.
d) Different modes of transport facilitate the movement of men and materials from one place to another.
e) Transport carries goods to the place where they are demanded and it creates place utility.
f) Thus, we can say that transport creates place utility.

6) Industrial activities take place before commerce starts its role.

Answer:
a) Industry and commerce are the two parts of the business.
b) Both the parts are complimentary to each other. They are dependent on each other.
c) Industry converts the raw material into usable finished products.
d) Commerce is that part of business activity that is concerned with the distribution of goods and services produced by Industry.
e) Production of goods comes first and it is followed by the distribution or selling of goods.
f) Thus, Industrial activities take place before commerce starts its role.

7) Available resources should be used to its maximum.

Answer:
a) Resources are always scarce. The demand for resources is more and the availability of resources is less.
b) Similarly, resources belong to society but businesses use them for production and provide the finished goods to society.
c) So it is necessary to use the resources carefully. Wastage of resources should be avoided.
d) Wherever possible, recycling and reusing the resources should be considered by the businesses.
e) Thus, available resources should be used to their maximum.

8) Wholesaler is a link between retailer and manufacturer.

Answer:
a) Wholesalers and retailers are the important intermediaries in trade.
b) They help to bring the goods from the manufacturer to the final consumer.
c) A wholesaler purchases in large quantities from the producers and sells in small quantities to the retailers.
d) Both the wholesalers and retailers are part of the chain of distribution, which is shown below,
Producer –> Wholesaler –> Retailer –> Consumer
e) Thus, we can say that wholesaler is a link between retailer and manufacturer.

9) Business is a part of economic activities.

Answer:
a) Economic activities are those activities that are done with the intention of making money.
b) A person has to earn money for his livelihood.
c) Economic activities are mainly of three types.
i) Employment ii) Profession iii) Business
d) Business is an economic activity as it is undertaken to earn money or livelihood. It is not because of love, affection, feelings, sentiment, etc.
e) The basic purpose of business is to earn a profit from its activities.
f) Thus, business is a part of economic activities.

Q.7 Attempt the following.

1) What do you mean by commerce?

Answer:
Commerce is that part of business activity that is concerned with the distribution of goods and services produced by Industry. It includes all those activities which are essential for maintaining a free and uninterrupted flow of goods.

Commerce bridges the gap between producers and consumers by exchanges of goods and services for money or money’s worth.
Commerce is further divided into Trade and Auxiliaries to Trade.

Trade

Trade denote buying and selling of goods and services. Trade is an exchange of goods and services with money or money’s worth. Goods are made available to consumers in different markets. Trade facilitates the transfer of ownership and possession of goods and services from the seller to the buyer.

Auxiliaries to Trade

All those activities that facilitate the smooth flow of goods from manufacturing centers to the
consumption centers are called aids to trade or auxiliaries to trade.

These activities play a supportive role. They help in removing hindrances that arise during the production and distribution of goods and services. Following are various Auxiliaries to Trade.

2) What is the meaning of export trade?

Answer:
Foreign Trade / External Trade:
When trade takes place between different countries, it is known as foreign trade. When the boundaries of two countries are crossed then different currencies are used. It is further divided as :
i) Import Trade: When goods and services are purchased from another country it is called as import trade.
ii) Export Trade: When goods and services are sold to foreign buyers then it is called as export trade.
iii) Entrepot Trade: It is the combination of import/export trade. It involves importing the goods from one country and reselling these goods to another country. e.g. Indian Seller importing goods from Japan and re-exporting same goods to Africa.

3) State the role of auxiliaries to trade in trading activities.

Answer:
Role of auxiliaries to trade:

1) All those activities that facilitate the smooth flow of goods from manufacturing centers to the consumption centers are called aids to trade or auxiliaries to trade.
2) These activities play a supportive role.
3) They help in removing hindrances that arise during the production and distribution of goods and services.
4) Different auxiliaries to trade such as transport, warehousing, insurance, banking, advertising, etc. help trading activities.
5) Modes of transport facilitate the movement of men and materials from one place to another.
6) With the help of warehouses, price is maintained at a reasonable level and there is a continuous supply of goods and services.
7) Risks can be minimized by taking an insurance policy.
8) Advertising is an effective aid in selling goods.
9) Mercantile Agents bridge the gap between buyer and seller.

4) What are the different types of secondary industries?

Answer:
Secondary Industry industries depend on primary industries. They convert the raw material provided by the primary industry into finished products. e.g. Tomatoes provided by the primary industry are used for making sauce and ketchup.

Secondary Industries are of two types.

a) Manufacturing Industry
These industries are engaged in transforming raw materials into finished products with the help of machines and manpower. The final goods may be capital goods or consumer goods. e.g. textiles, sugar, paper industry, etc.

b) Construction Industry
These industries are engaged in the construction of buildings, dams, bridges, roads, tunnels, canals, metro, etc. In the case of other industries, goods can be produced at one place and sold at another place but goods made and sold by these industries are at one place. This is the only industry that creates immovable wealth.

5) State the types of human activities.

Answer:
All human beings require different types of goods and services to satisfy their needs. So they
keep themselves busy and do some activity throughout their life.
All activities can be classified as economic and non-economic activities.

Non-Economic Activities

Non-economic activities are those human activities that are performed to satisfy personal, social, religious, cultural, and sentimental requirements without monetary expectations. For e.g. reading books, serving people, cooking by mother, etc.

Economic Activities

Activities that involve the production, distribution and consumption of goods and services for money or money’s worth at all levels within a society are called economic activities. For e.g. worker working in a factory.
Thus, economic activities facilitate earning a livelihood.
Economic activities are divided into three types.
1) Business
2) Profession
3) Employment

6) Describe the scope of internal trade.

Answer:
Home Trade / Internal Trade

In this trade, buying and selling of goods and services take place within the geographical boundaries of a country. It uses local currency for the exchange of goods and services.

It is further divided as follows:

i) Wholesale Trade
In wholesale trade, goods are purchased and sold in bulk. A wholesaler purchases in large quantities from the producers and sells in small quantities to the retailers. He is the link between the producer and the retailer.

ii) Retail Trade
Retail trade is a business activity associated with the sale of goods to the final consumers. A retailer is the one who purchases from the wholesaler or sometimes directly from the producer and sells them in smaller quantities to the final consumer. The retailer is the link between the wholesaler or sometimes manufacturer and the ultimate consumer.

7) How does banking and insurance help trading?

Answer:
All those activities that facilitate the smooth flow of goods from manufacturing centers to the consumption centers are called aids to trade or auxiliaries to trade. These activities play a supportive role. They help in removing hindrances that arise during the production and distribution of goods and services.

Banking

We require money to start the business and to run it smoothly. Banks supply money. Adequate funds can be obtained from the bank. Bank provides loans, overdrafts, cash credit, etc. to businessmen. Banks also provide many services like cheques, drafts debit cards, credit cards, online transactions, etc. It helps the traders to carry out their business activities smoothly.

Insurance

There are various risks involved in the business. The goods may be destroyed while in the production process or in transit due to accidents or in storage due to fire or theft. The businessmen would like to cover these risks Insurance companies come to their rescue.

They undertake to compensate for the loss suffered due to such risks. The businessman has to insure his goods and pay premium regularly. Risks cannot be avoided completely but they can be minimized by taking an insurance policy.

Solution of other subjects
Solution of all Chapters of OCM
12345678

Q.8 Answer the following.

1) Give a comparative analysis of business, profession, and employment.

Answer:

Give comparative analysis of business profession and employment 1
Give comparative analysis of business profession and employment 2

2) Define business. Explain its features.

Answer:
Business represents organized efforts by an individual or group of individuals. It is a systematic attempt by business persons to produce goods and services and sell them in the market, to reap the reward by way of profit. It satisfies multiple and complex needs of society.

Prof. Haney – “Business activities are all those human activities which are directed towards the production and processing of wealth.”

Features of Business

1) An Economic Activity

Business is an economic activity as it is undertaken to earn money or livelihood. It is not because of love, affection, feelings, sentiment etc.

2) Two Parties

Every business transaction involves an exchange. Minimum two parties are required for exchange i.e. the seller and the buyer. Business transaction is a result of an agreement between the buyer and the seller which may be oral or written.

3) Profit Motive

The basic purpose of business is to earn a profit from its activities. Businessmen try to maximize profits either by increasing the volume of sales or reducing its costs. It is the spine of business that keeps the business going on in the long term. The amount of profit may differ from business to business.

4) Production of Goods and Services

Before exchanging the goods and services, they should be produced by business enterprises. Goods are either manufactured or procured from the supplier, with the aim of selling it further to the consumers for profit.

5) Exchange of Goods and Services

Business involves transfer of goods and services directly or indirectly with money or money’s worth. Monetary exchange is the exchange with money e.g. buying a notebook for cash. On the other hand in case of Barter Exchange goods and services are exchanged for some other goods and services. e.g. wheat is exchanged for rice.

6) Dealings in Goods and Services

Every type of business transaction is concerned with either goods or services. In the absence of goods and services business can not take place. These goods are consumer goods or capital goods. However, services created for business purposes are intangible which are essential for doing business e.g. transportation, banking, insurance etc.

7) Continuity in Dealings

Every business requires regularity in transactions. One single transaction does not constitute business e.g. If a person sells his own motor car and earns profit then it will not be considered as business activity. But if he is a car dealer so he sells and purchases cars regularly then, it is considered as business activity.

8) Uncertain Returns

In business, the returns are never predictable or guaranteed. Businessmen may earn a profit or suffer a loss.

9) Element of Risk

Risk is the key element of every business which is concerned with exposure to loss. It is due to some unfavorable or undesirable event. Every business will have some or other risk. The intensity of risk can be minimized but can’t be avoided. Certain factors are beyond the control of businessmen like changes in consumer tastes, likes-dislikes, fashions, changes in the methods of production, fire, theft, natural calamities, etc. No business is free from the above mentioned factors.

10) Customer Satisfaction

Customer satisfaction is the ultimate aim of all economic activities and business is not an exception to it. The modern business believes in satisfying the customers by providing quality products and services at a reasonable price. The purpose of the business is to create and retain customers.

3) Describe various objectives of a business.

Answer:
All business activities are guided by objectives. They are further classified as

1) Economic Objectives
2) Social Objectives

1) Economic Objectives

a) Earning Profit

Profit is required for survival of the business and for its growth.

b) Searching New Customers

Business organizations have to work hard to create new customers and also to maintain the existing customers.

c) Innovations

It is a development or positive change which results into improvement in product or process of production. It has to spend money on R& D (Research and Development), market survey, use of technology etc.

d) Best Possible Use of Resources

Resources are scarce and have alternative uses. They should be used to its maximum and should not be wasted. Optimum use of resources ultimately leads to increasing profits.

2) Social Objectives

a) Supplying Quality Products

Every business has to provide quality products to its customers. Quality means a combination of purity, safety, durability, utility etc.

b) Avoiding Unfair Trade Practices

Unfair trade practices like black marketing, misleading advertisements, wrong measurement etc. should be avoided. It is important for survival and growth of a business unit.

c) Employment Generation

Business is a socio-economic institution. Businesses should create jobs for skilled and unskilled people. It should provide employment opportunities to economically backward and divyang persons.

d) Welfare of Employees

Skilled and unskilled workers are part of society. So if employees are properly taken care of, it brings welfare to society. This can be achieved by providing fair and regular remuneration, good working conditions, impartial personnel policies, offering incentives, etc.

e) Help to Solve Social Problems

Due to rapid industrialization, many social problems arise like traffic jams, growth of slums, air and water pollution, etc. Businesses should be aware of this and should try to reduce them.

f) Contributing to the Welfare of the Society

The business houses should take care of the general welfare of society. For that they should give donations for good causes, offer scholarships for higher education, etc.

4) Explain the importance of profit in business.

Answer:
Every business operates with an aim to earn profit which is the excess of revenue over cost.
Profit = Revenue – Total cost

Following are the importance of profit in business:

1) Returns to Investors

The people who invest money in the business expect fair returns on their capital. This is possible if adequate profits are earned by the business.

2) Research and Development (R&D)

Adequate profit enables a firm to spend more on R & D . This can lead to better technology and lower costs. Innovative products benefit the whole nation.

3) Growth and Expansion

Retention of profit is the internal source of funds. This profit can be used for increasing the volume of business through expansion and diversification. The portion of the profit is re-invested in the business for further development.

4) Increases Efficiency

Profits facilitate payment of various dues in time. It also motivates the employees working in the organization. This finally leads to an increase in the overall efficiency of the organization.

5) Means of Livelihood

Businessmen earn profits which is their means of livelihood. By earning sufficient profits they can live a decent standard life through the satisfaction of various wants.

6) Reward for Risks

Profit is considered as a reward for assuming several business risks. Profits also serve as a protection against those risks which cannot be insured e.g. fall in demand, adverse government policy, etc.

7) Survival

It helps the business to continue to exist in the market. If the business does not make enough profit, it will not survive in the growing competitive environment. Profit means survival in a competitive environment.

11th OCM Textbook Solutions

Chapter Name Solution Link
1) Introduction of Commerce and BusinessClick Here
2) TradeClick Here
3) Small Scale Industry and BusinessClick Here
4) Forms of Business Organisation – IClick Here
5) Forms of Business Organisation – IIClick Here
6) Institutes Supporting BusinessClick Here
7) Business EnvironmentClick Here
8) Introduction to ManagementClick Here

Check out other posts related to 11th Commerce

Textbook Solutions of 12th Commerce (All Subjects)Click Here
Free pdf of 12th Commerce Textbooks Click Here
12th Commerce IT MCQ Preparation (Online Test)Click Here
12th Commerce Paper Pattern and Chapter Wise Marks DistributionClick Here
Sample Paper of 12th Commerce for PracticeClick Here
Solved Sample papers of 12th Commerce to improve Paper PresentationClick Here
Old Question Papers of 12th Commerce with solution (All Subjects)Click Here



4 thoughts on “11th OCM Chapter 1 Exercise (Introduction of Commerce and Business) Maharashtra Board – Free Resource”

Leave a Comment