Business Trade And Commerce - Class 11 Commerce Business Studies - Extra Questions

Trade refers to the buying and selling of goods and services between two or more parties in exchange of some monetary consideration within or beyond the domestic territory of the country. 

Commerce refers to the aids to  trade which includes the exchange of goods and services by using banking, insurance, advertisement, transportation, warehousing etc. facilities in order to complement such exchange and increase its efficiency. 

(a) Extractive Industry 

Black Gold

In Assembly Industry, the various finished products are combined to produce a new finished product. It means that the industry assembles different component parts to make a new product. For example:- Manufacturing of computer, television, watches, automobiles, cars etc.

Portuguese entered first in India for the purpose of trade. Archaeological evidence has shown that the trade and commerce was the base of the economy of ancient India. It was mainly carried out by water and land.

The primary industry includes those activities through which the natural resources are used to provide the raw material for other industries.
The types of Primary industries are:- 
1. Extractive Industry: Extraction of something from natural resources such as minerals from the earth, fish from the water, timber from forests, agriculture etc.
2. Genetic Industry: Rearing and breeding of living organisms that is birds, plants and animals.

Secondary industry includes those where new products are manufactured by using previously produced things.
There are two types of secondary industry manufacturing: 

The business risk can be classified into two major categories:-

1. Insurable risk: - Insurable risk refers to liabilities that can be recovered. The losses which can be made good or losses for which company can get compensation from insurance company are called insurable risks. Generally the natural and physical risks are insurable risks.
2. Non-insurable risk: - Non-insurable risks are those for which there is no insurance coverage. Generally, the economic risk and human risk are non-insurable risks. The businessman cannot get compensation for change in demand or loss due to negligence or carelessness of employees.

Commerce refers to all those activities which are concerned with the transfer of goods and services from the producers to the consumers. It embraces all those activities which are necessary for maintaining the free flow of goods and services. For example, banking, logistics, insurance, etc.

Trade and commerce contribute to the economic development of a country by paying rates, taxes and duties to the government. 
Explanation: The buying and selling of goods in consideration of money or money's worth is called trade.

The emergence of communities and villages took place during the agricultural stage. 

Business risk refers to the possibility of a company to have lower than anticipated profits or inadequate profits or even loss due to uncertainties or unexpected events.

Auxiliaries to trade are those activities which facilities business. Transport, banking, insurance, warehousing, and advertising is regarded as auxiliaries to trade.

Various types of industries are:

An industry is an economic activity where goods are manufactured and raw materials are processed with the help of heavy machineries. An industry may also refer to a group of similar nature of firms which produces same goods or services. Industries can be broadly classified into three: Primary, Secondary and Tertiary.

Business risk refers to the uncertainties that leads to unprecedented profits or losses. For example: there might be a change in demand of a particular product due to change in customer preferences or rise in prices. Business faces two types of risk: Pure and Speculative.

 Manufacturing industries are engaged in producing goods through processing of raw materials and thus creating form utilities. They turn out diverse finished products, that we consume, through the conversion of raw materials or partly finished materials in their manufacturing operations. Manufacturing industries may be further divided into four categories on the basis of method of operation for production. 

Major differences between industry, commerce and trade are as follows:

Basis	Industry	Trade	Commerce
Meaning	It involves manufacturing activities such as extraction, construction and production of goods.	It involves transfer or exchange of products distributed by commerce.	It involves distribution of products produced by industries.
Capital Requirement	Requires huge amount of capital to establish industry.	Requires less capital than industry and commerce.	Requires less amount of capital than industry but larger amount than trade to operate its activities.
Level Of Risk	Riskier than commerce and trade.	Relatively less riskier than industry and commerce.	Less riskier than industry but involves high risk than trade.
Side	Supply side of the product.	Both side (demand and supply) of the product.	Demand side of the product.
Creation Of Utility	It creates form utility.	It creates processing utility.	It creates time utility and place utility.
Place Of Operation	It is operated in workshop or factory.	It is operated in the market.	It is operated from production center to distribution center.

•  It is generally believed that profit earning is the primary objective of business. However, as per modern thinking, business needs to have several objectives. Consistent and sustainable profit can be earned only if the business performs useful services to society. Business requires multiple objectives since it has to balance a number of needs and goals related to various aspects of society. Following only one objective cannot lead business towards excellence. Objectives are needed in every area where performance and results affect the survival and prosperity of business. Five of the objectives of business are described below (i) Profit Maximization Profit is defined as excess of revenue over cost. Profitability refers to profit in relation to capital investment. Although, earning profit cannot be the only objective of business, its importance cannot be ignored. Every business makes an attempt to reap maximum profit as possible in the given market conditions. Profit may be regarded as an essential objective of business for various reasons (a)It is a source of income for business persons. (b) It can be a source of finance for meeting expansion requirements of business. (c) It indicates the efficient working of business. (d) It can be taken as society's approval of the utility of business. (e) It builds up the reputation of a business enterprise. (ii) Market Standing Market standing refers to the position of an enterprise in relation to its competitors. A business enterprise must aim at standing on stronger footing in terms of offering competitive products to its customers and provide customer satisfaction. (iii) Innovation Innovation is the introduction of new ideas or methods. There are two kinds of innovation in every business (a) Product Innovation In product innovation a new product or service or an improved version of existing product is developed (b) Process Innovation This involves innovation in the methods, skills and activities needed to produce or supply products. Product demand starts declining after a span of time. At this stage, the business must introduce a new innovation to create fresh demand for the existing product by introducing new features in it or bring out a new product to sustain in the market. (iv) Productivity Productivity is calculated by comparing the value of outputs with the value of inputs. It is used as a measure of efficiency. Higher productivity leads to reduction in costs as the same amount of output is produced with lesser amount of inputs. This ensures survival and growth of the enterprise. (v) Social Responsibility Every business operates within a society. It uses the resources of the society and depends on the society for its functioning. This creates an obligation on the part of business to look after the welfare of society. So, all the activities of the business should be such that they will not harm, rather they will protect and contribute to the interests of the society. The activities of business towards the welfare of the society earn goodwill and reputation for the business in the eyes of consumers as well as government.
  

Taxila is the correct answer.The northern roadway route is believed to have stretched originally from Bengal to Taxila. There were also trade routes in the south spreading east and west. 

Textiles were the principal export from Pulicat to Southeast Asia.

the work of planting tress comes under social  objectives as due to industries and factories there has been a lot of deforestation which has been fulfilled by aforestation.

(a) Anusha is running a bakery which is an economic activity and Manjusha is cooking food at home, which is a non-economic activity.The difference between economic and non-economic activities can be drawn clearly on the following grounds:

·        An activity related to buying and selling of goods and services for economic gain is known as economic activity. An activity performed with empathy or moral values without any regard to monetary gain is known as non-economic activity.

·        Economic activities are performed for creating livelihood such as doing business. On the other hand, non-economic activities are performed for social welfare or psychological reasons.

·        Economic activities are measured in monetary terms, whereas non-economic activities are not measured in non-monetary terms.

·        Economic activities give more importance to money. As against this, non-economic activities have an idealistic approach wherein more importance is given to human values instead of money.

·        Economic activities are very important for the economy as they add value to the country’s gross domestic product (GDP) as well as improve Balance Of Payments through International trade. As opposed to non-economic activities, which have no influence over country’s national income but gives importance to the well-being of the human kind.

(b) Poultry farming is a genetic industry and Mining is an extraction industry.

Difference between them are:

Genetic industries deal with plants and animals for their use in further reproduction.

Extraction industries extracts or draws out products from natural resources.

The type of industry are poultry firms and dealing with saplings of plants are Genetic industries.  These industries remain engaged in breeding plants and animals for their use in further reproduction. For the breeding of plants, the seeds and nursery companies are typical examples of genetic industries. In addition, activities of cattle breeding farms, poultry farms, and fish hatchery come under the class of genetic industries.

The company is implementing the following value of social responsibility by reducing the consumption of electricity and by creating the labour intensive technique of production to increase the employment.

Values which are followed by the company are:

Maritime route is the correct answer,

Spice route is the correct answer.

Indigenous Banking is the correct answer.

 Metallic  is the correct answer.

The correct answer is Jagat Seths

Intermediaries is the correct answer.

Correct answer is favourable balance of trade.

Industries can be categorized into three types:
1.)  Primary industries:- These include all those activities which are concerned with the extraction and production of natural resources and reproduction and development.
2.) Secondary Industries: - Such industries are mainly involved with manufacturing goods from raw materials.

Bhats handled trade in Rajasthan and Gujarat.

Punjabi and Multani merchants handled the business in the northern region.

The objectives of business can be described in the following manner: 

1) Innovation- Innovation is the introduction of new ideas or methods in the way something is done or made. Generation of new ideas gives way to businesses.

2) Productivity- Productivity is ascertained by comparing the value of output with the value of inputs. It is used as a measure of efficiency. In order to ensure continued survival and progress, every enterprise must aim at greater productivity through the best use of available resources.

3) Profits- The purpose of any business is to earn a profit. The increase in the percentage of profits indicates the positive growth of a business.

The term business risk refers to the possibility of inadequate profits or even losses due to uncertainties. For example:- changes in tastes and preferences of consumers, strikes, increased competition, change in Government policy, etc. Business risks are of two types-

Chatt is the correct answer.

Hundi is an instrument of exchange, which was prominent in the subcontinent in ancient times. It involves a contract which:-

1. warrants the payment of money, the promise or order which is unconditional, and
2.  capable of change through transfer by valid negotiation.
   

In different parts of the country, different communities dominated trade. 

Industry is the business activity that converts raw material into useful products. Industry includes activities related to production and processing as well as rearing and reproduction of animals. The purpose of the industry is to create utility by converting raw material into useful forms of finished products.

The Secondary Industry makes use of products which are extracted and produced by primary Industry as their raw materials and produce finished products. For example, mining of iron ore is done in primary industry but steel manufacturing is done in secondary industry. 
The oil refineries and sugar mills are covered under the manufacturing industries.

Tertiary Industry is concerned with providing services which facilitate a smooth flow of goods and services. This industry helps in the activities of the primary and secondary industry. In other words, this industry provides services which support the activities of primary and secondary industry, that is why it is also known as service industry. The various types of services provided by tertiary industry are:- 

1. Transport:- It facilitates movement of goods from one place to another.
2. Banking:- Provides credit facility to industries and trading firms.
3. Insurance:- Provides coverage from various types of risks.
4. Warehousing:- Provides storage place for goods produced by primary and secondary industry.
5. Advertising:- Provides information to consumers.

A financial intermediary is, typically, an institution that facilitates the channeling of funds between lenders and borrowers. It is an entity that acts as the middleman between two parties in a financial transaction. A few financial intermediaries are - commercial banks, investment banks, mutual funds, pension funds, etc.

Human risk causes are related to a chance of loss due to human beings or employees of the organization. In the above case, Vishakha's dishonesty brought heavy losses for the business as she leaked a business secret to a competitor and may have commit fraud too.

The type of trade represented here is Entrepot which refers to imports of goods not for consumption in home country but for exporting them to another country. It means importing (buying) goods from one country for the purpose of exporting (selling) them to another country.

The following were the leading trade centres in ancient India:-

1. Patliputra:- Patliputra is known as Patna today. It was not only a commercial town but also a major centre for the export of stones.
2. Peshawar:- It was an important export centre for wool and for the import of horses. It had huge commercial transactions between India, China and Rome.
3. Taxila:- It was a major centre of the land route between India and Central Asia. It was also a city of financial and commercial banks. It was a place of Buddhist centre of learning. The famous Taxila university flourished here.
4. Indraprastha:- It was a commercial junction on Royal Road where most routes leading to east, west, south and north converged.
5. Mathura:- It was an emporium of trade. Many routes from south India touched Mathura and Broach.

The economic objectives of a business are-
1. Earning profit:- Profit means the excess of income over the expenditure. The main purpose of business is to earn profit. A business cannot survive without making a profit.
2. Market standing: A business can grow only when it is able to capture a big share in the market. It is possible only when the business provides goods and services to satisfy the needs and wants of the customer.
3. Innovation: Innovation means making new products or adding new features of the old products for making them more useful. A business can be successful only when it creates new designs, better machines, improved techniques, new varieties, etc. that provides competitive advantage.
4.Optimum utilization of resources: It refers to the best use of men, material, money, and machinery employed in the business. The resources of the business are scarce so these must be utilized in the best possible manner so the business can get maximum benefit.

The business objective means the purpose for which a business is established and carried on. Businessmen always have multiple objectives. They are classified into two broad categories, viz,

The following are the types of hundis:- 

1. Dhani Jog - Darshani - It is payable to any person. There is no liability on the person receiving the payment.
2. Sah Jog - Darshani - Payable to a specific person only. The person receiving payment incurs liability.
3. Firman Jog - Darshani - Hundi made payable to order.
4. Dekhan Har - Darshani - Payable to the presenter or bearer.
5. Dhani Jog - Muddati - Payable over a fixed period to any person. No liability on a person who receives it.
6. Firman Jog - Muddati - Hundi payable on order following a fixed term.
7. Jokhmi - Muddati - Drawn against dispatched goods. If goods lost in transit, the holder bears the cost and drawee carries no liability.

Human causes of business risk are related to a chance of loss due to human beings or employees of the organisation. This includes:

In ancient India, the exports majorly consisted of spices, wheat, indigo, opium, sugar, sesame, live animal oil, cotton, and animal products such as hides, skin, furs, horns, tortoise, shells, pearls, sapphires, crystal, granite, turquoise and copper, etc. On the other hand, the imports mainly included animal products, Chinese silk, horses, flax, linen, gold, silver, tin copper, lead, rubies, coral, glass amber, etc.

1) Primary Industry: The primary industry includes those activities that involves extraction of natural resources that are used to provide the raw material for other industries. Example: Mining, Fishing, Dairy, Agriculture. 
2) Secondary industry: In this industry, new products are manufactured by using the previously produced things, for example, producing cotton is a primary industry and manufacturing cloth out of cotton is a secondary industry.
3) Tertiary or service industry: It includes those services which help businesses to operate smoothly, for example, transport, bank, insurance, storage, and advertising.

Commerce includes two types of activities:-

1. Trade:- Trade is an integral part of commerce. It refers to buying and selling of goods and services of goods and services. The trade segment of commerce brings together the manufacturer and the consumer. Traders act as a link between the manufacturer and the consumer. In the absence of traders, the manufacturer will have to search for consumers and the consumer will have to search for manufacturers.
2. Auxiliaries to trade:- The activities which help in a smooth flow of trade are known as Aids to Trade. These activities make buying and selling goods easier. These activities are known as services and together constitute the service sector or tertiary sector of commerce. These help in removing various hindrances of trade that arise in the production and distribution of goods.

The nature of business risks is defined as follows:

Speculative risks arise due to changes in market conditions including fluctuations in demand and supply, changes in prices or changes in fashion and tastes of customers. It involves both the possibility of gain and loss. Sports betting, wager, investing in stocks, etc are a few examples of speculative risk.

The activities which help in a smooth flow of trade are known as Auxiliaries to Trade. These activities make buying and selling goods easier. These activities are known as services and together constitute the service sector or tertiary sector of commerce. These help in removing various hindrances of trade that arise in the production and distribution of goods. The common auxiliaries are:- 

1. Transport and Communication:- Transport refers to the movement of goods from one place to another. The production of goods takes place in one place whereas these are demanded in different parts of the country.
2. Banking and Finance:- Banks and financial institutions provide credit facilities, loans, etc. to provide finance for the smooth flow of business activities. Banks help businessmen to overcome the problem of funds.
3. Insurance:- Businessmen have to bear various types of risks. Insurance protects from some kinds of risk such as the risk of loss due to fire, theft, accident, etc.
4. Warehousing:- Usually there is a time gap between the production and consumption of goods. Goods are not consumed immediately when these are produced. Special arrangement has to be made to store the goods to prevent the loss and to keep them fresh. Warehousing helps businessmen to overcome the problem of storage.
5.  Advertising:- Practically a manufacturer and trader can't contact each customer. Advertisement helps to overcome this problem. Goods are advertised to inform consumers about their uses, quality, and prices. 

Following are the causes of Business Risk:
1. Natural causes:- Human beings have little control over natural calamities like floods, earthquakes, famine, etc. They result in heavy loss of life, property, and income of the business.
2. Human causes: Human causes include unexpected events like dishonesty, carelessness or negligence of employees, strikes, riots, management inefficiency, etc.
3. Economic causes: They are related to a chance of loss due to change in market condition, for example, fluctuation in demand and prices, competition change in technology, etc.
4. Physical causes:- Mechanical defects or failures may also lead to losses, for example, breakdown of machines causes delay in production, etc.

The iron and steel industry is the basic industry since all the other industries depend on it.

Iron and steel industry is called the basic industry due to following reasons:

1. All industries whether heavy, medium or light depend on it for the machinery. Thus, it provides base to the other industries.
2. Steel is required for manufacturing variety of engineering, construction and defense goods. Various ship building industries, aircrafts, transport equipments etc. require steel which is a finished product of the iron and steel industry.
3. Day to day consumer goods like containers, safety pins etc. are made up of steel.
   

Malabar coast is the correct answer.

Intermediaries reduce risk.