Characteristics of Business Activities – Long Answer Questions
Medium Level (Application & Explanation)
Q1. Why is business called an “economic activity”? Explain with suitable examples.
Business is an economic activity because it is done to earn money.
It is not based on emotions or charity.
A shopkeeper selling fruits earns income. That is business.
Cooking at home for family is not business. It is for personal use.
Running a food truck and selling meals is a business activity.
The main aim is to earn profit and support livelihood.
Q2. Explain the difference between “production” and “procurement” of goods and services with examples.
Production means making goods or services.
A bakery produces cakes and bread.
Procurement means buying goods or services to sell.
A grocery store procures fruits from farmers.
Both lead to sale to customers.
Whether produced or procured, the goal is profit through regular sales.
Q3. Why is “sale or exchange” necessary to call an activity a business? Give reasons and examples.
Business needs sale or exchange for money or value.
Cooking for family has no sale, so it is not business.
Selling meals from a stall is business.
A service like banking exchanges services for fees.
Without exchange, there is no revenue.
Sale turns goods and services into income for the business.
Q4. What is meant by “regular dealings” in business? Why is a one-time sale not enough?
Regular dealings mean sales happen again and again.
A one-time sale is not a business.
Selling your old bicycle once is not business.
Opening a bike shop and selling regularly is business.
Regular sales build customers, cash flow, and trust.
It helps in planning stock, costs, and profits.
Q5. Explain the importance of “profit earning” in business. Why is profit essential for survival?
Profit is the main goal of a business.
It pays for expenses, salaries, and growth.
Profit helps a business survive tough times.
Without profit, a business cannot continue for long.
Profit allows reinvestment in better goods and services.
It rewards the risk taken by the owner.
High Complexity (Analysis & Scenario-Based)
Q6. Neha cooks at home for her family. Later, she starts a tiffin service three days a week for fees. Is this a business? Explain using key characteristics.
Cooking at home is not business. There is no sale.
A tiffin service takes fees, so it has sale or exchange.
It happens regularly on fixed days. That shows regular dealings.
The aim is to earn profit, not just to help.
It is an economic activity because it gives income.
So, Neha’s tiffin service is a business.
Q7. Arjun runs a clothing store. During a festival, sales rise. After that, sales fall due to warm weather and unsold winterwear. Analyze “uncertainty of return” and “risk.” Suggest two steps to manage them.
Business has uncertainty of return. Profits are not guaranteed.
Arjun earned more in festivals, then less later.
He faces risk due to weather and demand changes.
Excess stock of winterwear can cause loss.
He can manage risk by stock planning and discounts.
He can also use diversification and pre-orders to reduce loss.
Q8. Compare Rohan (shop owner), Dr. Meera (licensed doctor), and Karan (bank employee) using the differences between business, profession, and employment.
Rohan runs a business. He sells goods and aims for profit.
Dr. Meera follows a profession. She has qualifications and earns fees.
Karan is in employment. He works for a salary under rules.
Business needs capital and has higher risk.
Profession follows a code of conduct and has limited risk.
Employment has low risk, fixed pay, and no need for capital.
Q9. A grocery store bakes bread in-house and also buys fruits from farmers. Trace the flow from production/procurement to sale, and identify risk points.
Baking bread is production. Buying fruits is procurement.
Both are kept ready for sale to customers.
Sales bring revenue and possible profit.
Risks include spoilage, low demand, or price changes.
There is also risk of competition and wastage.
Good inventory control and pricing reduce these risks.
Q10. Mr. Ali wants to move abroad. He owns a shop, his friend is a lawyer, and his cousin is a bank employee. Explain who can transfer their interest and how “code of conduct” and “returns” differ for each.
A shop is a business. Mr. Ali can sell or transfer it.
A lawyer is in a profession. It cannot be easily transferred.
A bank job is employment. It cannot be transferred.
Business returns are profits. They are uncertain and risky.
Professional returns are fees. They follow a code of conduct.
Employment gives salary. It follows company rules with low risk.
