NCERT Solutions Class 11 Business Studies Chapter 1: Business, Trade and Commerce

NCERT SOLUTIONS

Chapter 1: Business, Trade and Commerce

Short Answer Type Questions

Q1. List any five major commercial cities of ancient India.

According to the NCERT textbook, the major commercial cities of ancient India were:

• Pataliputra: Major center for export of stones.
• Peshawar: Specialized in the export of horses and import of wool.
• Taxila: A major center on the high road between India and Central Asia.
• Indraprastha: A commercial junction where most routes leading to the east, west, north, and south converged.
• Surat: The emporium of western trade during the Mughal period.

Q2. What is Hundi?

Meaning of Hundi

A Hundi was an indigenous instrument of exchange used in the Indian subcontinent. It was a written order made by a person directing another to pay a certain sum of money to a person named in the document.

• It was based on trust and involved a contract which warranted the payment of money.
• It was capable of being transferred through endorsement.

Indian Context: Similar to modern-day Bills of Exchange or Promissory Notes.

Q3. List the major items of export and import in ancient India.

1. Major Exports

Spices, wheat, sugar, indigo, opium, sesame oil, cotton, parrot, live animals, and animal products (hides, skins, furs, horns, etc.).

2. Major Imports

Horses, sesame, flax, linen, wine, gold, silver, tin, copper, lead, rubies, corals, and glass.

Q4. What is Business Risk? What is its nature?

Meaning

Business risk refers to the possibility of inadequate profits or even losses due to uncertainties or unexpected events.

Nature of Business Risk:

• Arises due to uncertainties: Examples include change in demand, government policy, or natural calamities.
• Essential part of business: No business can totally eliminate risk.
• Depends on nature and size: A large-scale industry like Reliance Industries faces higher risks than a small neighborhood grocery store.
• Profit is the reward: "No risk, no gain" is the basic principle of business.

Long Answer Type Questions

Q1. Explain the characteristics of business.

Main Characteristics of Business:

1. An Economic Activity: Undertaken with the object of earning money or livelihood, not out of love or affection.
2. Production/Procurement of Goods: Every business must either produce or acquire goods from others for sale.
3. Sale or Exchange: Goods must be transferred to others for a price. Personal consumption is not business.
4. Regularity in Dealings: A single transaction (e.g., selling your old phone once) is not business. It must be regular.
5. Profit Earning: The primary objective of any business is to earn profit.
6. Uncertainty of Return: There is always a possibility that the business may not earn the expected profit.
7. Element of Risk: Exposure to loss due to unfavorable events.

Example: Amul procuring milk from farmers and selling processed dairy products regularly to earn profit.

Q2. Compare Business, Profession, and Employment.

T-Form Comparison:

Basis	Business	Profession	Employment
Qualification	No minimum qualification.	Specialized degree required.	As per employer's need.
Reward	Profit	Professional Fee	Salary/Wages
Risk	High Risk	Little Risk	No Risk
Capital	Required (High)	Limited (for office)	No capital needed.

Q3. Describe various types of industries with examples.

Classification of Industries:

• Primary Industry: Concerned with extraction of natural resources and reproduction of living species.
  • Extractive: Farming, Mining.
  • Genetic: Cattle breeding, Poultry farms.
• Secondary Industry: Processing materials to produce goods for final consumption.
  • Manufacturing: Making cloth from cotton (e.g., Raymond).
  • Construction: Building roads, dams (e.g., L&T).
• Tertiary Industry: Providing support services to primary and secondary industries.
  • Examples: Banking, Transport, Insurance, Warehousing.

Q4. Explain the concept and causes of business risk.

Main Causes of Business Risk:

1. Natural Causes: Beyond human control. Examples: Floods, earthquakes, heavy rains.
2. Human Causes: Arise due to human factor. Examples: Dishonesty of employees, strikes, riots, or negligence.
3. Economic Causes: Related to market changes. Examples: Change in demand, price fluctuations, or competition.
4. Physical Causes: Technical factors. Examples: Mechanical failures (like a boiler bursting) or technological obsolescence.

Indian Example: A sudden change in GST rates (Economic Cause) impacting the prices of small businesses in India.