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Grade – FYJC Commerce 2024

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Course – Organisation of Commerce (OCM)
Chapter 1 – Intro. of Commerce & Business.

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 Chapter 1: Introduction to Commerce and Business

1.1 Introduction
Human activities are classified into two main types:
• Economic Activities: Involve production, distribution, and consumption
of goods and services for monetary gain.
• Non-Economic Activities: Performed for personal, social, or cultural
satisfaction without expecting financial rewards.

1.2 Non-Economic Activities

Definition: Activities performed to fulfill personal, social, religious, or cultural
needs without expecting monetary compensation.
Examples:
• Reading Books: Done for personal enjoyment and intellectual growth.
• Volunteering: Helping others or contributing to a cause without financial
gain.
• Home Cooking: Preparing meals for family, not intended for sale or
profit.
1.3 Economic Activities
Definition: Activities involving the production, distribution, and consumption
of goods and services for monetary benefits.

1.3.1 Business
Definition: Organized efforts to produce and sell goods or services to earn a
profit.
Characteristics/Features of Business:
1. An Economic Activity:
o Purpose: The primary aim is to generate income or profit.
o Motivation: Driven by financial goals rather than personal
satisfaction or emotional fulfillment.
2. Two Parties:
o Seller: Provides goods or services.
o Buyer: Purchases goods or services.
o Exchange: Transactions occur through monetary payment or
barter.
3. Profit Motive:
o Objective: Aim to maximize profits through efficient operations.
o Profit Generation: Achieved by increasing sales volume or
reducing costs.
o Sustainability: Profit is essential for long-term survival and
growth.
4. Production of Goods and Services:
o Production: Involves creating goods either through manufacturing
or acquiring from suppliers.
o Types: Goods can be consumer goods (directly used) or capital
goods (used to produce other goods).
5. Exchange of Goods and Services:
o Monetary Exchange: Transactions are conducted using money
(e.g., buying a notebook for cash).
o Barter System: Exchange of goods and services without money
(e.g., exchanging wheat for rice).

6. Dealings in Goods and Services:

o Goods: Tangible products like tea, milk, or machinery.
o Services: Intangible products such as banking, insurance, and
transportation.
o Importance: Essential for fulfilling various consumer needs and
supporting business operations.
7. Continuity in Dealings:
o Regular Transactions: Business involves ongoing operations
rather than isolated sales.
o Example: A car dealer regularly buys and sells cars, whereas
selling a personal vehicle once is not considered business.
8. Uncertain Returns:
o Risk of Loss: Profits are not guaranteed and can fluctuate.
o Profit Variability: Depends on market conditions, competition,
and business decisions.
9. Element of Risk:
o Types of Risks: Includes financial loss, market changes, natural
disasters, and operational hazards.
o Risk Management: Businesses try to minimize risks through
planning, insurance, and diversification.
10.Customer Satisfaction:
o Objective: Providing quality products and services to meet
customer needs.
 o Customer Retention: Focus on maintaining and enhancing
customer relationships for repeat business.

1.3.2 Profession
Definition: Economic activity involving specialized knowledge and skills to
provide services in exchange for payment.
Features:
1. Aim:
o Service and Income: Provide professional services to solve client
problems and earn fees.
2. Qualification:
o Education and Training: Requires formal education and
specialized training (e.g., medical degree for doctors).
o Certification: Often needs certification or licensing (e.g.,
Chartered Accountant).
3. Financial Returns:
o Income Structure: Professionals earn fees or salaries based on
their services.
o Variability: Income can vary based on experience, reputation, and
type of practice (e.g., private vs. employed).
4. Capital:
o Independent Practice: May require significant investment for
setting up practice (e.g., medical equipment).
o Employment: Salaried professionals do not need personal capital.
5. Registration and Membership:
o Regulatory Bodies: Must register with professional bodies (e.g.,
Bar Council for lawyers, ICAI for accountants).
o Code of Conduct: Adhere to ethical standards and professional
guidelines set by these bodies.
 6. Non-Transferability:
o Personal Skills: Professional skills and licenses are not
transferable to others without proper qualifications.
o Example: A doctor’s practice cannot be transferred to an
unqualified person.
7. Nature of Work:
o Expert Services: Providing specialized knowledge and advice
(e.g., legal counsel, medical treatment).
o Client Interaction: Work involves direct interaction with clients to
deliver professional services.

1.3.3 Employment
Definition: Economic activity where individuals work for others under a
contractual agreement in exchange for wages or salary.
Features:
1. Aim:
o Income Generation: Employees work to earn a livelihood and
meet personal needs.
2. Qualifications:
o Job Requirements: Varies from skilled to unskilled positions (e.g.,
nurse requires specific qualifications, office boy does not).
o Training: Specific training or education may be required based on
job role.
3. Monetary Returns:
o Wages and Salaries: Employees receive regular payments (e.g.,
weekly wages, monthly salaries).
o Benefits: Additional perks like bonuses, health insurance, and
retirement plans may be provided.
 4. Capital:
o No Investment: Employees do not need to invest capital; the
employer provides the necessary resources and infrastructure.
5. Registration:
o Employment Contract: Employees follow the terms and
conditions outlined in their employment contract.
o Regulations: Must comply with labor laws and company policies.
6. Non-Transferability:
o Employment Position: Jobs cannot be transferred to others; each
position is unique to the employee.
7. Nature of Work:
o Assigned Tasks: Employees perform specific tasks as assigned by
their employer.
o Work Role: Defined by job description and responsibilities.

1.4 Business Objectives

Economic Objectives:
• Earning Profit: Essential for business survival and growth.
• Searching New Customers: Expanding customer base and market reach.
• Innovations: Investing in R&D to enhance products and processes.
• Best Possible Use of Resources: Efficient use of resources to maximize
profit.
Social Objectives:
• Supplying Quality Products: Ensuring products meet safety and quality
standards.
• Avoiding Unfair Trade Practices: Conducting business ethically and
avoiding practices like black marketing.
• Employment Generation: Creating job opportunities for various skill
levels.
 • Welfare of Employees: Providing fair wages, good working conditions,
and employee benefits.
• Help to Solve Social Problems: Addressing issues such as pollution and
urban congestion.
• Contributing to Society: Engaging in philanthropic activities and
supporting community welfare.

1.5 Role of Profit in Business

Profit is the surplus of revenue over costs and serves several roles:
• Returns to Investors: Provides returns on investment and attracts capital.
• Research and Development (R&D): Funds innovation and
technological improvements.
• Growth and Expansion: Facilitates business expansion and
diversification.
• Increases Efficiency: Enhances operational efficiency and employee
motivation.
• Means of Livelihood: Supports the standard of living for business
owners.
• Reward for Risks: Compensates for business risks and uncertainties.
• Survival: Ensures business continuity and competitiveness.
1.6 Classification of Business Activities
i) Industry: Economic activities related to production and processing of goods.
• Primary Industry: Extraction of natural resources (e.g., agriculture,
mining).
• Secondary Industry: Manufacturing and construction (e.g., textiles,
buildings).
• Tertiary Industry: Services supporting other industries (e.g., transport,
banking).
ii) Commerce: Concerned with the distribution of goods and services.
• Trade:
o Home Trade/Internal Trade: Buying and selling within a country
(e.g., wholesale, retail).
o Foreign Trade/External Trade: Buying and selling across
countries (e.g., import, export).
• Auxiliaries to Trade:
o Transport: Facilitates movement of goods.
o Warehousing: Storage of goods until needed.
o Insurance: Protection against risks and losses.
o Banking: Provides financial services and funding.
o Advertising: Promotes goods and services.
o Mercantile Agents: Intermediaries in trade.
o Communication: Facilitates information exchange.
Important - Distinguish Between

1. Industry and Commerce

Sr. Point of
Industry Commerce
No. Difference
Engaged in the production of Engaged in the distribution of goods
1 Meaning
goods and services. and services.
Located in factories and
2 Location Conducted in markets and offices.
workshops.
Creates place, time, and possession
Creates form utility
utility (making goods available to
3 Utility (transforming raw materials
consumers, at the right time, and in
into finished goods).
the right place).
Utilizes machines and Requires more manpower than
4 Resources
manpower. machinery.
Requires huge capital
5 Capital Requires comparatively less capital.
investment to start.
Industrial activities are
Commercial activities cannot
meaningless without
6 Interdependence commence without the production of
commerce to distribute the
goods and services by industries.
produced goods.
7 Conducted by Producers and manufacturers. Traders, mercantile agents, etc.
Primary importance in the Secondary importance as it supports
8 Status
economic cycle. the distribution of goods.
Classified into Primary,
Classified into Trade and Auxiliaries
9 Classification Secondary, and Tertiary
to Trade.
industries.
Represents both demand and supply
Represents the supply side of
10 Market Force sides of the market (distribution and
the market (production).
sale).

2. Business, Profession, and Employment

Sr. Point of
Business Profession Employment
No. Difference
Goods and services
Expert services are One person works under
1 Meaning are produced and
rendered. another person.
distributed.
Reward / Fees are charged for Wages or salary is
2 Profit is earned.
Return services rendered. received.
Limited capital
Capital Depends on size and investment required, No capital investment
3
Investment nature of business. especially for self- necessary.
employed professionals.
Sr. Point of
Business Profession Employment
No. Difference
Provides goods and
Nature of Renders personalized Performs work as per the
4 services to the
Work expert services. service contract.
public.
Requires expert
No minimum Prescribed by the
knowledge and formal
5 Qualification qualification employer based on the
training in a specific
prescribed. job requirements.
field.
Employees do not have
Businessmen are free Professionals make
Decision decision-making
6 to make their own expert decisions related
Making authority; decisions are
decisions. to their field.
made by the employer.
Profit is uncertain Fees can be irregular
Fixed and regular pay
7 Risk and irregular; hence, and uncertain, but
with no risk involved.
high risk is present. generally lower risk.
Doctors, Chartered
Builders, Grocers, Clerks, Teachers,
8 Examples Accountants, Lawyers,
Supermarkets, etc. Officers, etc.
etc.

3. Business and Commerce

Sr. Point of
Business Commerce
No. Difference
An economic activity that deals with A part of business specifically
1 Meaning both the production and distribution concerned with the distribution
of goods and services. of goods and services.
Broader concept encompassing all Narrower concept focusing
2 Concept aspects of business, including solely on distribution and trade
commerce. aspects of business.
Requires both technical and Requires primarily marketing
3 Skill marketing skills for effective skills for facilitating the
operation. distribution of goods.
Classified into Industry and Classified as Trade and
4 Classification
Commerce. Auxiliaries to Trade.
 Exercise Solutions (Proper Formatted)
Chapter 1 – Intro to Commerce & Business

Q.1 A) Select the correct option and rewrite the sentence.

1. A Lawyer is ........

o a) a Professional person

o Answer: A Lawyer is a Professional person.

2. Raw material is converted into finished product by .......... industry.

o a) genetic

o b) extractive

o c) manufacturing

o Answer: Raw material is converted into finished product by

manufacturing industry.

3. Actual buying and selling of goods is known as ..........

o a) profession

o b) trade

o c) industry

o Answer: Actual buying and selling of goods is known as trade.

4. National level code of conduct is prepared for ...............

o a) professionals

o b) businessmen

o c) employees

o Answer: National level code of conduct is prepared for

professionals.

5. Construction of dams is an activity done under ............ industry.

o a) primary

o b) secondary

o c) tertiary

o Answer: Construction of dams is an activity done under

secondary industry.

6. The problem of distance is solved by ..........

o a) bank

o b) transport

o c) warehousing

o Answer: The problem of distance is solved by transport.

7. Commerce is a branch of ............

o a) business

o b) industry

o c) trade

o Answer: Commerce is a branch of business.

8. Monetary Returns in business is called.........

o a) fees

o b) salary

o c) profit

o Answer: Monetary Returns in business is called profit.

9. A business unit depends upon ............for selling its output.

o a) industry

o b) society

o c) employees

o Answer: A business unit depends upon society for selling its

output.

10.Warehousing creates.......... utility in goods.

o a) place

o b) time

o c) form

o Answer: Warehousing creates time utility in goods.

Q.1 B) Match the pairs.

Group ‘A’ Group ‘B’

A) Helping disabled person 1) Social objective

B) Genetic Industry 3) Sericulture

C) Local currency 5) Internal Trade

D) Solve social problems 4) Non-economic activity

2) Foreign Trade

6) Mining

7) Profit

8) Economic activity

Answers:

• A) Helping disabled person – 1) Social objective

• B) Genetic Industry – 3) Sericulture

• C) Local currency – 5) Internal Trade

• D) Solve social problems – 4) Non-economic activity

Q.1 C) Give one word / phrase / term for the following sentences.
1. A regular activity concerned with production and distribution of
goods and services for profits.

o Answer: Business

2. Human activities that are conducted for earning money.

o Answer: Economic Activities

3. Buying and selling of goods against money or money’s worth.

o Answer: Trade

4. Activities that remove all the difficulties in trade.

o Answer: Auxiliaries to Trade

5. The type of industries that create immovable wealth.

o Answer: Primary Industries

6. Name the business activity which is concerned with production of

goods and services.

o Answer: Industry

7. Name the business activity which is concerned with distribution of

goods and services.

o Answer: Commerce

8. The activity which provides mobility to men and material.

o Answer: Transport

9. An aid to trade which creates time utility.

o Answer: Warehousing
 10.An occupation by which a person agrees to provide expert services
for a fee.

o Answer: Profession

Q.1 D) State True or False.

1. Business is an economic activity.

o Answer: True

2. Every profession is practiced for earning money.

o Answer: True

3. Primary industries are concerned with nature.

o Answer: True

4. Trade includes commerce.

o Answer: True

5. Warehousing removes difficulty of time.

o Answer: True

6. Trade includes buying and selling of goods and services.

o Answer: True

7. Profit leads to increase in overall efficiency of the organization.

o Answer: True

8. Plant nursery is an example of extractive industry.

o Answer: False (Plant nursery is an example of Genetic Industry)

9. Industry creates form utility.

o Answer: True
 10.Retailer is the link between manufacturer and wholesalers.

o Answer: False (Retailer is the link between wholesaler and

ultimate consumers)

Q.1 E) Find the odd one.

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

o Answer: Agricultural Industry (It is a type of Primary Industry,

while others are types of Secondary Industries)

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

o Answer: Wholesale Trade (It is a type of trade, while others are

types of Foreign Trade)

3. Banking, Insurance, Transport, Manufacturing.

o Answer: Manufacturing (It is an industry, while others are

auxiliaries to trade)

4. Tea, Milk, Coffee, Machinery.

o Answer: Machinery (It is not a consumable good, unlike the

others)
Q.1 F) Complete the sentences.
1. Economic activities are those activities which are conducted to
............ .

o Answer: earn money

2. ............ includes marketing of goods and services.

o Answer: Commerce

3. Business is an ............ activity.

o Answer: economic

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

o Answer: business

5. Professionals charge ............ in exchange of expert services.

o Answer: fees

6. ............ is the person who offers the work.

o Answer: Employer

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

o Answer: Profit

8. Industry creates ............ utility.

o Answer: form

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

o Answer: wholesale

10............. is the link between wholesaler and customer.

o Answer: Retailer
Q.1 G) Complete the following table.

A B

Trade between different countries External Trade

Purchases of goods and services from another country Import Trade

Selling of goods and services to foreign customers Export Trade

Link between producer and retailer Wholesaler

Q.1 H) Answer in one sentence.

1. What is an Economic Activity?

o Answer: An economic activity is any activity performed with the

intention of earning money.

2. What is Non-economic Activity?

o Answer: Non-economic activity is an activity performed for

personal satisfaction or social welfare, not for financial gain.

3. What do you mean by Wholesale Trade?

o Answer: Wholesale trade refers to the buying and selling of goods

in bulk, typically to retailers rather than directly to consumers.

4. What is the meaning of Retail Trade?

o Answer: Retail trade is the sale of goods and services directly to

consumers for personal use.

5. What do you mean by Import Trade?

o Answer: Import trade is the purchase of goods and services from

other countries.
6. What is the meaning of Export Trade?

o Answer: Export trade is the sale of goods and services to other

countries.

7. What is an Entrepot Trade?

o Answer: Entrepot trade is a form of trade where goods are

imported into a country for the purpose of re-exporting them to
other countries.

8. What is meant by Auxiliaries to Trade?

o Answer: Auxiliaries to trade are services and activities that support

and facilitate the trading process, such as banking, insurance, and
transport.

9. What is Trade?

o Answer: Trade is the buying and selling of goods and services.

10.What do you mean by Commerce?

o Answer: Commerce encompasses all activities related to the

exchange of goods and services, including trade and auxiliary
services.

11.What is Primary Industry?

o Answer: Primary industry involves extracting or harvesting natural

resources, such as agriculture, mining, and forestry.

12.What is Secondary Industry?

o Answer: Secondary industry involves manufacturing and

processing raw materials into finished goods.

13.What do you mean by Genetic Industry?

o Answer: Genetic industry is involved in the production and

breeding of plants and animals, such as sericulture and dairy
farming.
Q.2 Explain the following terms/concepts.
1. Business:

o Answer: Business refers to the economic activity of producing and

distributing goods and services to earn a profit. It encompasses
various forms of trade, industry, and commerce.

2. Profession:

o Answer: A profession is a specialized occupation requiring expert

knowledge and training, where individuals offer specialized
services in exchange for fees.

3. Employment:

o Answer: Employment is the condition of working for someone

else in exchange for wages or salary. It involves following the
directions and policies of an employer.

4. Home Trade:

o Answer: Home trade refers to the buying and selling of goods and
services within a country, also known as internal trade.

5. Foreign Trade:

o Answer: Foreign trade is the exchange of goods and services

between countries, also known as international trade.

6. Economic Activity:

o Answer: Economic activity involves actions that are undertaken to

earn money, including production, distribution, and consumption of
goods and services.

7. Non-economic Activity:

o Answer: Non-economic activity is carried out for personal

satisfaction, social welfare, or community service, not for financial
gain.
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:

o i) Wholesaler: Rupesh Oil Depot

o ii) Retailer: Balaji Groceries

o 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. Identify:

o i) Importer: M/s. Frank Corporation (importing goods from Mr.

Jack)

o ii) Manufacturer: Mr. Pranav (tin manufacturer)

o iii) Exporter: Mr. Jack (selling goods to North America)

Q.4 Distinguish between.

1. Industry and Commerce

Point of
Industry Commerce
Difference

Engaged in production of Engaged in distribution of

Meaning
goods and services goods and services

Location Factories and workshops Markets and offices

Creates place, time, and

Utility Creates form utility
possession utility
Point of
Industry Commerce
Difference

Resources Uses machines and manpower Requires more manpower

Comparatively less capital

Capital Huge capital is required
required

Industrial activities are

Commercial activities cannot
Interdependence meaningless without
start without production
commerce

Conducted By Producers and manufacturers Traders, mercantile agents

Status Primary importance Secondary importance

Classification Primary, Secondary, Tertiary Trade and Auxiliaries to Trade

Represents supply side of Represents demand and

Market Force
market supply side of market
 2. Business and Commerce

Point of
Business Commerce
Difference

Deals with production and Part of business concerned with

Meaning distribution of goods and distribution of goods and
services services

Broader concept including Narrow concept as it is part of

Concept
commerce business

Requires technical and

Skill Requires only marketing skill
marketing skill

Classified into Industry and Classified as trade and

Classification
Commerce auxiliaries to trade

3. Business and Profession

Point of
Business Profession
Difference

Produces and distributes

Meaning Provides expert services
goods and services

Reward/Return Earns profit Charges fees

Capital Depends on size and nature of Limited, except self-employed

Investment business professionals

Provides personalized expert

Nature of Work Provides goods and services
services
Point of
Business Profession
Difference

Expert knowledge and training

Qualification No minimum qualification
needed

Expert decisions in their

Decision Making Free to take decisions
profession

High risk due to uncertain

Risk Generally regular fees
profit

Examples Builders, Grocers Doctor, CA, Lawyer

4. Employment and Profession

Point of
Employment Profession
Difference

Works under someone

Meaning Provides expert services
else

Receives wages or
Reward/Return Charges fees
salary

Capital Investment No capital required Limited capital investment

Nature of Work Follows service contract Provides personalized services

Expert knowledge and training

Qualification Prescribed by employer
needed

Decision Making No decision power Expert decisions

Point of
Employment Profession
Difference

Risk Fixed and regular pay Generally regular fees

Examples Clerk, Teacher Doctor, CA

Q.5 Answer in brief.

1. State any four features of profession:

o Answer:

▪ Requires specialized knowledge and training.

▪ Provides personalized services.

▪ Operates under a code of conduct.

▪ Rewards are in the form of fees.

2. State any two types of industries:

o Answer:

▪ Primary Industry

▪ Secondary Industry

3. Give two types of Foreign Trade:

o Answer:

▪ Import Trade

▪ Export Trade
4. State any four Auxiliaries to Trade:

o Answer:

▪ Banking

▪ Insurance

▪ Transport

▪ Warehousing

5. State any four features of employment:

o Answer:

▪ Works under an employer.

▪ Receives a fixed wage or salary.

▪ Has prescribed qualifications.

▪ No risk associated with pay.

6. Write any four objectives of business:

o Answer:

▪ Earning Profit

▪ Providing Employment

▪ Satisfying Consumer Needs

▪ Improving Standard of Living

7. State any four features of business:

o Answer:

▪ Involves production and distribution of goods and services.

▪ Aims to earn profit.

▪ Requires capital investment.

 ▪ Involves risk and uncertainty.

8. State any two types of primary industry:

o Answer:

▪ Agriculture

▪ Mining

Q.6 Justify the following statements.

1. Retailer is in direct contact with ultimate consumers.

o Answer: True. Retailers sell goods directly to the end customers,

making them the final link in the distribution chain.

2. Commerce is a wider term than Trade.

o Answer: True. Commerce includes all activities related to the

exchange of goods and services, including trade and auxiliary
services.

3. Risk is inevitable in business activities.

o Answer: True. Business involves uncertainties and risks such as

market fluctuations and operational challenges.

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

o Answer: True. Entrepot trade involves importing goods for the

purpose of re-exporting them to other countries.

5. Transport creates place utility.

o Answer: True. Transport helps in moving goods from one location

to another, thereby creating place utility.

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

o Answer: True. Industries produce goods that commerce later

distributes to consumers.
 7. Available resources should be used to its maximum.

o Answer: True. Efficient use of resources maximizes productivity

and profitability.

8. Wholesaler is a link between retailer and manufacturer.

o Answer: True. Wholesalers buy in bulk from manufacturers and

sell in smaller quantities to retailers.

9. Business is a part of economic activities.

o Answer: True. Business activities are conducted to earn money

and contribute to the economy.

10.Changing fashions is one of the important causes of business risk.

o Answer: True. Changing consumer preferences and fashion trends

can lead to uncertainty and risk in business.

Q.7 Attempt the following.

1. What do you mean by commerce?

o Answer: Commerce refers to all activities involved in the buying

and selling of goods and services, including trade and auxiliary
services like banking and insurance.

2. What is the meaning of export trade?

o Answer: Export trade is the sale of goods and services produced in

one country to buyers in another country.

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

o Answer: Auxiliaries to trade provide essential support services

such as banking, insurance, transport, and warehousing, which
facilitate smooth trading operations.
4. What are the different types of secondary industries?

o Answer: The different types of secondary industries include:

▪ Manufacturing Industry

▪ Construction Industry

5. State the types of human activities.

o Answer: The types of human activities are:

▪ Economic Activities

▪ Non-Economic Activities

6. Describe the scope of internal trade.

o Answer: Internal trade, also known as home trade, includes all

activities related to buying and selling goods and services within a
country. It encompasses wholesale and retail trade.

7. How does banking and insurance help trading?

o Answer: Banking provides financial services such as loans and

credit, essential for business operations, while insurance protects
against financial losses due to risks and uncertainties in trading.
Q.8 Answer the following.
1. Give comparative analysis of business, profession, and employment.

Point of
Business Profession Employment
Difference

Activity involving
production and Specialized occupation Working under an
Definition distribution of offering expert employer for
goods/services for services for fees wages or salary
profit

Return Profit Fees Wages/Salary

Requires capital Minimal capital No capital

Investment
investment required required

Involves risk and Fixed salary, low

Risk Low risk; regular fees
uncertainty risk

Requires specialized Defined by job

Qualification Varies by industry
education/training requirements

Decision Owner makes Professional makes Employer makes

Making decisions decisions decisions

Retail stores,
Examples Doctors, lawyers Teachers, clerks
manufacturing units
2. Define Business & Explain its features.

o Definition: Business is an economic activity that involves the

production, distribution, and sale of goods and services with the
aim of earning profit.

o Features:

▪ Profit Motive: The primary goal is to earn profit.

▪ Risk and Uncertainty: Involves financial and operational

risks.

▪ Capital Investment: Requires investment of money and

resources.

▪ Production and Distribution: Involves creating and

distributing goods/services.

▪ Customer Focus: Aims to satisfy consumer needs.

3. Describe various objectives of a business.

o Objectives of a Business:

▪ Earning Profit: To generate financial returns for the

owners.

▪ Providing Employment: To create job opportunities.

▪ Satisfying Consumer Needs: To meet the needs and

preferences of customers.

▪ Contributing to Economic Development: To support

economic growth and development.

▪ Innovating and Improving: To introduce new products and

improve existing ones.
 4. Explain the importance of profit in business.

o Answer: Profit is crucial for business as it:

▪ Sustains Operations: Ensures the business can continue to

operate and grow.

▪ Provides Incentive: Motivates owners and employees by

rewarding their efforts.

▪ Facilitates Investment: Allows reinvestment in the business

for expansion and development.

▪ Measures Success: Indicates the effectiveness of business

strategies and operations.

▪ Attracts Investors: Encourages investment by

demonstrating potential returns.

……………………………………………………………………………………

HOPE THIS HELPS! All the best. Doing

this much in exams will suffice

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