CLASS XI: CHAPTER 1 QUESTION BANK
Evolution & Fundamentals of Business | 10 Practice Sets (CBSE 2026-27)
📌 General Instructions for All Sets:
- Maximum Marks: 25 | Time Allowed: 45 Minutes
- Questions 1-5 are objective type carrying 1 mark each (MCQs & Assertion-Reasoning).
- Questions 6-7 are short answer type carrying 3 marks each (30-40 words).
- Questions 8-9 are short answer type carrying 4 marks each (50-80 words).
- Question 10 is a long answer type carrying 6 marks (100-150 words).
- Strictly adhere to the CBSE Competency/Case-Based format.
📄 PRACTICE PAPER - SET 1 (Level: Easy - Fundamental Concepts)
SECTION A (1 Mark Each)
1. Which of the following is a non-economic activity?
[Case-Based] An industry is engaged in extracting coal from the earth.
2. This type of industry is known as:3. In ancient India, which instrument was heavily used in the indigenous banking system for carrying out credit transactions and transferring money?
4. Assertion (A): Profit is considered the reward for bearing risk in business.
Reason (R): No business can operate without some element of risk, and profit is the return an entrepreneur gets for taking that risk.
Reason (R): No business can operate without some element of risk, and profit is the return an entrepreneur gets for taking that risk.
5. Assertion (A): Business risk can be completely eliminated with good planning.
Reason (R): Risk arises due to uncertainties like changes in consumer taste, strikes, and natural calamities, which are beyond the control of the businessman.
Reason (R): Risk arises due to uncertainties like changes in consumer taste, strikes, and natural calamities, which are beyond the control of the businessman.
SECTION B (3 Marks Each)
6. State any three key characteristics of 'Business'.
[Case-Based] 'Alpha Electronics' faced massive losses because a sudden earthquake destroyed their warehouse.
7. Identify the cause of business risk. State any two other causes of business risk.
SECTION C (4 Marks Each)
8. Explain any four 'Auxiliaries to Trade' that help in removing various hindrances in the exchange of goods.
[Case-Based] Mr. X runs a retail shop. Mr. Y is a chartered accountant running his own firm. Mr. Z works as a manager in a bank for a monthly salary.
9. Identify the economic activities performed by Mr. X, Mr. Y, and Mr. Z. Differentiate between Mr. X's and Mr. Y's activities on the basis of 'Capital Investment' and 'Risk'.
SECTION D (6 Marks Each)
[Case-Based] 'Global Enterprises' is involved in multiple activities. In their first division, they breed a special type of high-yield cattle to produce dairy products. In their second division, they take raw cotton and use heavy machinery to weave it into finished clothing. In their third division, they do not produce any goods, but simply provide transportation, banking, and warehousing services to other companies to facilitate smooth trade.
10. By quoting lines from the paragraph, identify and explain the **three different types of industries** (Primary, Secondary, Tertiary) operated by 'Global Enterprises'. Mention the specific sub-groups for the first two divisions.
📄 PRACTICE PAPER - SET 2 (Level: Moderate - Application & Analysis)
SECTION A (1 Mark Each)
1. The industries which provide support services to other industries are known as:
[Case-Based] A businessman buys goods from a manufacturer in bulk and sells them in smaller quantities to local shopkeepers.
2. He is engaged in:[Case-Based] In ancient times, the 'Jagat Seths' played a very prominent role during the Mughal period and the days of the East India Company.
3. They were primarily associated with:4. Assertion (A): Every business must earn a profit.
Reason (R): Profit is essential for survival, growth, and as an indicator of the efficiency of the business.
Reason (R): Profit is essential for survival, growth, and as an indicator of the efficiency of the business.
5. Assertion (A): Commerce includes both Trade and Auxiliaries to Trade.
Reason (R): Commerce provides the necessary link between producers and consumers, embracing all activities that facilitate the exchange of goods.
Reason (R): Commerce provides the necessary link between producers and consumers, embracing all activities that facilitate the exchange of goods.
SECTION B (3 Marks Each)
6. Explain the term 'Business Risk'. State two of its nature/features.
[Case-Based] During ancient and medieval times in India, various institutions developed to facilitate trade, such as hundis and Chitti.
7. Explain the role of the 'Indigenous Banking System' in the history of Indian trade and commerce.
SECTION C (4 Marks Each)
8. Explain the two broad categories of 'Internal Trade' (Wholesale and Retail).
[Case-Based] 'PureDrops Ltd.' started selling purified water. However, the company ignored the fact that its plastic bottles were causing massive pollution. The government heavily fined the company, and local residents boycotted the product.
9. Identify the broad category of business objective ignored by 'PureDrops Ltd.'. Explain any three specific objectives under this category that every business must fulfill.
SECTION D (6 Marks Each)
[Case-Based] 'Alpha Motors' manufactures high-end sports cars. The CEO, Mr. Arjun, has three distinct goals for the year. First, he wants to ensure the company generates enough revenue to cover all its basic costs so it doesn't have to shut down. Second, he wants to generate a high surplus to provide a good return to the investors who took the risk of funding his company. Third, he wants to increase the number of car models, hire more employees, and open showrooms in 10 new cities to expand his market share.
10. Identify the broad category of business objective highlighted in this case. By quoting lines from the paragraph, identify and explain the **three specific sub-objectives** Mr. Arjun is trying to achieve.
📄 PRACTICE PAPER - SET 3 (Level: Moderate-High - Nuanced Competency)
SECTION A (1 Mark Each)
1. Which type of industry involves breeding plants and animals for their use in further reproduction?
[Case-Based] An Indian company imports advanced electronic chips from Japan, assembles them into laptops, and exports these laptops to Africa.
2. This type of trade is called:3. Which of the following is an example of 'Speculative Risk'?
4. Assertion (A): Warehousing removes the hindrance of time.
Reason (R): Goods are not always consumed immediately upon production. Warehousing holds the goods safely until they are demanded by the consumers.
Reason (R): Goods are not always consumed immediately upon production. Warehousing holds the goods safely until they are demanded by the consumers.
5. Assertion (A): A profession requires specialized knowledge and skills.
Reason (R): Professionals do not have to follow any code of conduct and can operate like independent businessmen.
Reason (R): Professionals do not have to follow any code of conduct and can operate like independent businessmen.
SECTION B (3 Marks Each)
6. Explain the 'Human Causes' of business risk with two examples.
[Case-Based] A person sells his old residential house at a profit of ₹5 Lakhs. He does not own any other property or engage in buying/selling houses regularly.
7. Can this transaction be called a 'business'? Justify your answer by citing the relevant characteristic of business.
SECTION C (4 Marks Each)
8. Commerce provides the link between producers and consumers by removing various hindrances. Explain how it removes the hindrance of (a) Persons, and (b) Finance.
9. Differentiate between 'Extractive Industries' and 'Genetic Industries' with one example of each.
SECTION D (6 Marks Each)
[Case-Based] 'Zeta Corp' is an organization engaged in various activities. Mr. Aakash, the founder, works as the Managing Director, bearing all the financial risks of the company in hopes of earning a surplus. The company has a legal department headed by Ms. Divya, who holds an LLB degree and strictly follows the guidelines of the Bar Council of India. Finally, the company employs 50 factory workers who operate machines daily in exchange for a fixed monthly wage.
10. Identify the **three different types of economic activities** performed by Mr. Aakash, Ms. Divya, and the factory workers. Differentiate between these three activities on the basis of: (a) Mode of establishment, (b) Return/Reward, and (c) Risk.
📄 PRACTICE PAPER - SET 4 (Level: Hard - Analytical Competency)
SECTION A (1 Mark Each)
1. In ancient India, the trade and commerce were highly organized. The organizations formed by merchants to protect their interests were known as:
[Case-Based] A business risk that involves both the possibility of gain as well as the possibility of loss (like investing in shares) is called:
2.
3. Which of the following is NOT an auxiliary to trade?
4. Assertion (A): Employment requires massive capital investment.
Reason (R): An employee has to set up his own office and bear the risk of loss to earn his monthly salary.
Reason (R): An employee has to set up his own office and bear the risk of loss to earn his monthly salary.
5. Assertion (A): Transportation removes the hindrance of place.
Reason (R): Goods are produced at specific locations but demanded all over the world; transport physically moves goods from producers to consumers.
Reason (R): Goods are produced at specific locations but demanded all over the world; transport physically moves goods from producers to consumers.
SECTION B (3 Marks Each)
6. Briefly describe the role of 'Merchant Corporations' (Guilds) in ancient India.
[Case-Based] A factory manager realizes that his competitors have launched a much better product at a lower price. This external factor threatens his company's survival.
7. Identify the specific cause of business risk. Give one more example of this type of cause.
SECTION C (4 Marks Each)
8. Explain the term 'Manufacturing Industries'. Briefly explain 'Analytical Industry' and 'Synthetical Industry' with examples.
[Case-Based] 'Elite Furniture' manufactures high-quality wooden tables. The raw materials (wood) are found in deep forests, but the buyers are in urban cities. Also, the business faces a massive threat of fire in its factory. Furthermore, buyers are unaware of their new ergonomic table designs.
9. Identify and explain the **three Auxiliaries to Trade** that 'Elite Furniture' must use to solve these three specific problems.
SECTION D (6 Marks Each)
[Case-Based] 'Global Textiles' suffered a terrible year. First, a massive cyclone flooded their primary warehouse, destroying millions worth of cotton. Second, their chief accountant committed massive fraud and ran away with company funds. Third, the government suddenly increased the export duty on textiles by 20%, making their goods uncompetitive in the global market. Fourth, one of their old spinning machines exploded due to a mechanical failure, halting production for a week.
10. By quoting lines from the paragraph, identify and explain the **four different causes of business risk** (Natural, Human, Economic, Physical) suffered by 'Global Textiles'.
📄 PRACTICE PAPER - SET 5 (Level: Advanced - Evaluation Competency)
SECTION A (1 Mark Each)
[Case-Based] A television manufacturing company purchases picture tubes, motherboards, and plastic casings from different suppliers and puts them together to create the final TV.
1. This is an example of which type of manufacturing industry?2. In ancient India, which of the following was a major trade centre famous for exporting textiles and spices?
3. Assertion (A): Wholesale trade acts as a link between the manufacturer and the retailer.
Reason (R): Wholesalers buy in small quantities from the manufacturer and sell in large bulk quantities to retailers.
Reason (R): Wholesalers buy in small quantities from the manufacturer and sell in large bulk quantities to retailers.
4. Assertion (A): Degree of risk depends mainly upon the nature and size of the business.
Reason (R): A large-scale business operating in the highly dynamic fashion industry faces much higher risk than a small local grocery store.
Reason (R): A large-scale business operating in the highly dynamic fashion industry faces much higher risk than a small local grocery store.
5. Which of the following removes the hindrance of information?
SECTION B (3 Marks Each)
6. Differentiate between 'Primary Industry' and 'Secondary Industry'.
[Case-Based] In the 1st century AD, the Indian sub-continent was widely recognized as 'Swarna Bhoomi' and 'Swarna Dweep'.
7. Why was India given these titles? Briefly describe India's position in the world economy during ancient times.
SECTION C (4 Marks Each)
8. "Profit is not the sole objective of a business." Explain any four multiple objectives of a business.
9. Explain 'Construction Industries'. Why are engineering and architectural skills highly required in these industries? Give two examples.
SECTION D (6 Marks Each)
[Case-Based] 'Alpha Enterprises' operates an enormous supply chain. They have a massive fleet of trucks that move their goods across the country, solving the geographical distance problem. Because their goods are produced in the summer but demanded in the winter, they own massive cold-storage facilities. To protect themselves from the massive financial losses of fire or theft, they pay a premium to a specialized agency. Finally, they use mass media campaigns on television to ensure customers know the features of their new products.
10. By quoting lines from the paragraph, identify the **four specific Auxiliaries to Trade** used by 'Alpha Enterprises'. Also, explicitly state the **specific hindrance** removed by each auxiliary.
📄 PRACTICE PAPER - SET 6 (Level: Expert - Complex Case Studies)
SECTION A (1 Mark Each)
[Case-Based] An industry involves successive stages of manufacturing, where raw sugarcane is converted into sugar.
1. This is an example of:2. A 'Hundi' drawn to order, which was payable to a specific person and carried no liability for the presenter, was historically known as:
3. Assertion (A): Business involves dealing in goods and services on a regular basis.
Reason (R): A single, isolated transaction of buying and selling, even if it yields profit, does not constitute a business.
Reason (R): A single, isolated transaction of buying and selling, even if it yields profit, does not constitute a business.
4. Assertion (A): Economic activities are undertaken out of love, sympathy, or affection.
Reason (R): Non-economic activities are undertaken to earn money and create wealth.
Reason (R): Non-economic activities are undertaken to earn money and create wealth.
5. Which of the following is a social objective of business?
SECTION B (3 Marks Each)
6. Define 'Commerce'. How does it differ from 'Industry'?
[Case-Based] A factory produces highly harmful chemical waste and dumps it directly into a nearby river, causing diseases among the local villagers.
7. Which broad objective of business is violated here? Why is it dangerous for the firm to ignore this objective in the long run?
SECTION C (4 Marks Each)
8. Briefly explain the 'Economic Causes' and 'Physical Causes' of business risk with examples.
[Case-Based] Mr. Sharma sells goods within the boundaries of his state. Mr. Patel imports raw materials from Germany, manufactures sports bikes, and sells them directly to dealers in Sri Lanka.
9. Identify and differentiate between the two broad types of trade performed by Mr. Sharma and Mr. Patel.
SECTION D (6 Marks Each)
[Case-Based] 'Bright Star Ltd.' is launching a new business. The founder tells his partners: "We cannot run a business without facing the possibility of inadequate profits or even losses due to uncertainties. It is an inherent part of our journey. Remember, the larger we grow, the more we will be exposed to this factor. However, we must not fear it, because the return we get for bearing this burden is the profit itself."
10. Identify the core concept being discussed by the founder. By quoting lines from the paragraph, identify and explain the **four features/nature** of this concept.
📄 PRACTICE PAPER - SET 7 (Level: Expert - Integrated Concepts)
SECTION A (1 Mark Each)
[Case-Based] An oil refinery takes crude oil and separates it into different products like petrol, diesel, and kerosene.
1. This industry is classified as:2. In the history of Indian trade, communities like the 'Chettiars' were prominent trading groups located primarily in:
3. Assertion (A): Profession requires a strict code of conduct.
Reason (R): Professionals like doctors and lawyers are bound by the ethical guidelines laid down by their respective professional bodies (like the Medical Council or Bar Council).
Reason (R): Professionals like doctors and lawyers are bound by the ethical guidelines laid down by their respective professional bodies (like the Medical Council or Bar Council).
4. Assertion (A): Pure risk involves only the possibility of loss or no loss.
Reason (R): Events like fire or theft can only cause harm; there is no scenario where a fire in a factory yields a profit.
Reason (R): Events like fire or theft can only cause harm; there is no scenario where a fire in a factory yields a profit.
5. Which of the following removes the hindrance of finance?
SECTION B (3 Marks Each)
6. Name any three major items of Export and three major items of Import in ancient India.
[Case-Based] A woman cooks meals at an orphanage for free as a charity. Later in the evening, she runs a small fast-food stall where she sells burgers for profit.
7. Identify and differentiate between the two types of human activities performed by the woman.
SECTION C (4 Marks Each)
8. Explain the three types of 'External Trade'.
[Case-Based] "The path of trade and commerce is full of hurdles, from finding the buyers to protecting the goods."
9. How do 'Advertising' and 'Insurance' act as auxiliaries to trade to overcome these specific hurdles?
SECTION D (6 Marks Each)
[Case-Based] Mr. Amit decided to start a business. First, he bought a large piece of land and extracted iron ore from it. Second, he sent this ore to his own factory, where heavy machinery melted and converted it into steel bars. Third, he realized he could not sell all the steel in his local city, so he started selling it in massive bulk quantities to various dealers across the country who further sold it to construction companies.
10. Based on the classification of business activities, identify and explain the **exact type of industry** Mr. Amit operated in the first step, the **exact type of industry** in the second step, and the **exact type of trade** he performed in the third step.
📄 PRACTICE PAPER - SET 8 (Level: Advanced Board Mock 1)
SECTION A (1 Mark Each)
1. Which of the following statements about Hundis in ancient India is correct?
[Case-Based] Two distinct chemicals are combined to form a completely new product: liquid soap.
2. This is an example of:3. Assertion (A): An employee does not bear any financial risk.
Reason (R): In employment, the person gets a fixed regular salary for the work performed, irrespective of whether the company makes a massive profit or a loss.
Reason (R): In employment, the person gets a fixed regular salary for the work performed, irrespective of whether the company makes a massive profit or a loss.
4. Assertion (A): Creating utilities is a fundamental characteristic of business.
Reason (R): Business creates form utility by converting raw materials into finished goods, and place utility by transporting them.
Reason (R): Business creates form utility by converting raw materials into finished goods, and place utility by transporting them.
5. The reward for a professional is called:
SECTION B (3 Marks Each)
6. Explain the term 'Entrepot Trade' with a suitable example.
[Case-Based] A businessman invested his entire capital in producing 10,000 winter jackets. However, the winter was extremely mild that year, and the demand crashed.
7. Identify the specific cause of the business risk. Is this a pure risk or speculative risk? Explain.
SECTION C (4 Marks Each)
8. Differentiate between 'Business', 'Profession', and 'Employment' on the basis of: (a) Qualification, (b) Reward, (c) Risk, and (d) Code of Conduct.
9. "Profit is not just a reward, but a necessity." Justify this statement by explaining any four points highlighting the role of profit in business.
SECTION D (6 Marks Each)
[Case-Based] Long before modern banks existed, India had a flourishing trade network. Merchants relied heavily on traditional financial instruments called 'Hundis' to transfer money safely over long distances without carrying physical gold. Powerful intermediary groups like Jagat Seths acted as bankers and financiers for kings and traders. The trade was so massive that merchant guilds (corporations) were formed to protect traders and even frame rules for commerce. They traded from major ancient centers like Taxila and Surat, establishing the Indian sub-continent as the 'Swarna Bhoomi' (Land of Gold) due to the massive influx of gold in exchange for Indian spices and textiles.
10. Based on your historical understanding from the case above, answer the following: (a) What was a 'Hundi'?
(b) What was the role of 'Merchant Corporations'?
(c) Why did the world refer to ancient India as 'Swarna Bhoomi'?
📄 PRACTICE PAPER - SET 9 (Level: Advanced Board Mock 2)
SECTION A (1 Mark Each)
1. Which of the following is NOT an economic activity?
[Case-Based] A company engages in planting, nurturing, and growing saplings in a nursery to sell them for agricultural use.
2. This is a:3. Assertion (A): Internal trade involves crossing national borders.
Reason (R): Internal trade is restricted to the geographical boundaries of a single country and involves wholesale and retail trade.
Reason (R): Internal trade is restricted to the geographical boundaries of a single country and involves wholesale and retail trade.
4. Assertion (A): Innovation is a critical objective of business.
Reason (R): In a dynamic market, a business that does not constantly improve its products or processes will quickly become obsolete and die.
Reason (R): In a dynamic market, a business that does not constantly improve its products or processes will quickly become obsolete and die.
5. Which of the following creates 'Time Utility'?
SECTION B (3 Marks Each)
6. State any three main characteristics of 'Employment'.
[Case-Based] A company has grown significantly and is making huge profits. However, it pays its workers below minimum wage and does not provide a safe working environment.
7. Which broad objective is the company ignoring? Explain any two specific objectives under this category that it should follow.
SECTION C (4 Marks Each)
8. Explain the term 'Trade'. Differentiate between Wholesale trade and Retail trade.
9. What are 'Tertiary Industries'? How do they differ from Primary and Secondary industries? Give two examples.
SECTION D (6 Marks Each)
[Case-Based] 'Zeta Automotives' is a massive car manufacturer. The company is facing multiple risks. The CEO states: "We are heavily dependent on our chief designer, and if he leaves or makes a human error, our next launch will fail. Secondly, the government is planning to increase the GST on luxury cars, which will destroy our profit margins. Thirdly, one of our old, poorly maintained hydraulic presses could physically break down at any moment, halting the entire assembly line. Finally, there is a prediction that a severe flood might hit our coastal factory next month, causing uncontrollable devastation."
10. By quoting lines from the text, identify and explain the **four different causes of business risk** (Human, Economic, Physical, Natural) recognized by the CEO.
📄 PRACTICE PAPER - SET 10 (Level: Ultimate Board Challenger)
SECTION A (1 Mark Each)
1. The hindrance of 'Risk' is removed by:
[Case-Based] A person repeatedly buys and sells second-hand cars from his garage. He makes a profit on some and a loss on others.
2. This activity proves that business involves:3. Assertion (A): Speculative risks contain the possibility of both profit and loss.
Reason (R): Fluctuations in market demand and supply or changes in fashion can either result in a huge windfall profit or a massive loss.
Reason (R): Fluctuations in market demand and supply or changes in fashion can either result in a huge windfall profit or a massive loss.
4. Assertion (A): A profession requires capital investment depending on the nature of the practice.
Reason (R): A doctor opening his own private clinic requires capital, but it is generally much less than what is required to set up a manufacturing business.
Reason (R): A doctor opening his own private clinic requires capital, but it is generally much less than what is required to set up a manufacturing business.
5. Which type of industry is engaged in the construction of buildings, dams, and bridges?
SECTION B (3 Marks Each)
6. Explain the term 'Indigenous Banking System'. Mention any two functions they performed in ancient India.
[Case-Based] An entrepreneur launched a new software. He focused entirely on making maximum profits in the first six months and completely ignored customer complaints. After 8 months, the company shut down.
7. Which objective did the entrepreneur ignore? Explain why this objective is crucial.
SECTION C (4 Marks Each)
8. Explain the four features/nature of 'Business Risk'.
9. Differentiate between 'Industry', 'Commerce', and 'Trade'.
SECTION D (6 Marks Each)
[Case-Based] The journey of an apple from a farm in Kashmir to a dining table in Kanyakumari is full of hindrances. First, the farmer doesn't know who wants to buy apples in South India (Hindrance of Persons). Second, the apples cannot instantly teleport 3000 km (Hindrance of Place). Third, apples are harvested in autumn but demanded all year round, so they might spoil (Hindrance of Time). Fourth, during the long journey, the truck might meet with an accident or the apples might get stolen (Hindrance of Risk). Fifth, the farmer needs cash to pay for seeds and laborers long before the final customer pays for the apple (Hindrance of Finance). Finally, the buyers in Kanyakumari don't know the health benefits of this specific Kashmiri apple brand (Hindrance of Information).
10. "Commerce" provides the complete solution to this journey. By quoting the specific hindrances from the case, identify and explain the **six exact Auxiliaries to Trade (Commerce)** that solve each of these six problems.
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