1.

What do you mean by economic activities?

Ans. Economic activities can be defined as the processes through which people generate profit and earn wealth. They are basically involved in production and distribution of products to satisfy human needs. For example: A shopkeeper selling goods in his shop is a perfect illustration of an economic activity. Thus, economic activities are referred as the production and distribution of products to earn wealth by satisfying human needs.

2.

What are the main differences between economic and non-economic activities?

Ans. Differences between economic and non-economic activities are:

3.

Define business. How does it differ from a profession of employment.

Ans. Business simply can be referred as the activity of making money by producing or buying and selling goods or by providing services. These activities include only the economic activities and excludes the non-economic activities. Thus, a business is a economic hub where buying, selling and distribution of goods/ services takes place to generate profit. However, the profit generation process should be law abiding and ethical. Business is the act of buying, selling and distribution of goods and services with the motive of earning profit with a minimum educational background. Whereas profession is a job that needs high level of education training and renders specialized services for a certain fee. Whereas employment is the condition of having a paid job by abiding to the need of the concerned employer.

4.

What do you understand by 'business'? Explain its characteristics.

Ans. The term 'business' can simply be understood as the state of being busy. In economic terms, it is the act of buying, selling and distributing goods with the motive of income generation. It is an economic system in which goods and services are exhanged for money, as per their value.                                                                  According to Lewis Henry, business is defined as, "Human activity directed towards producing or acquiring wealth through buying and selling goods."

Characterstics:-

a. Production and distribution of goods and services: All business activities are concerned with the production and distribution of goods and services for a certain value. It excludes production of goods and services for self-consumption.

b. Human activity: A business cannot exist without humans. They are the ones who perform all the functions of business. They include owners, customers, distributors, etc.

c. Economic activity: A business is always an economic activity. It is established by individuals or groups to serve the needs of society. It is concerned with profit generation.

d. Exchange of goods and services: A business is primarily concerned with exchange of goods and services for money or money's worth.

e. Continuity: The exchange of goods and services should be continous in nature. One time transactions cannot be termed as a business. The activites performed should be regular and routine in nature.

f. Satisfying customer: The objective of business is to earn profit by rendering proper services to the consumers. Without satisfied customers, a business cannot exist.

g. Risk and uncertainty: A business is comprised of risk and uncertainty. Risk directs us to the fact that loss may occur and risk always rises from the uncertainty of future. Moreover, the modern world is everchanging due to which risk and uncertainty  are always in the business.

h. Creation of utility: Business produce/ sell or distribute products which serve a purpose to the customers. These products are transported to the places where they are demanded and are also stored for future demands. Thus, creating place and time utility.

i. Profit: A business is established to earn profit. The survival of business depends upon the profit it generates. Without profit a business cannot exist.

j. Organisation: Business is a system. It cannot exist. Without any structure and an enterpreneur. Presence of simple, easy and modern type of organizational structure is always essential.

k. System: A business is a system of interrelated activities:- Inputs process and outputs. Inputs are raw material which pass through processes like machinery and tools to produce outputs in the form of products and thereby profit.

5.

"Profit maximization is the ultimate goal of business." Discuss

Ans. A business is established with the prime objective of earning profit. The business should be able to earn reasonable profit as the survival of a business depends upon its ability to earn profits. In other terms, the life of a business depends upon the profit it generates. Without profit a business will cease to exist. Every business in the economic world are carried out with a expectation of earning some return on the investment.

On the basis of the returns, expenses of the organizations are met and if profit is not present a business cannot sustain itself. Thus, a business is constantly looking to maximize its profit. No business can survive if it endures losses for some years. Profit is pivotal in ensuring the survival, growth and prestige of a business. Hence, "Profit maximization is the ultimate goal of business."

6.

What do you understand by industry? Discuss various types of industry.

Ans. An industry can be defined as a business indulged in production of similar goods by utilizing different resources. Industry is a systematic process of extraction. Production, conversion and fabrication of products with the aid of human and mechanical power. The products thus produced maybe used for consumption or processing or further production.

Types of industry:                                                                                                                                              Industry are broadly classified into 2:

Primary Industry:                                                                                                                                                                                  The industries involved in extracting natural resources and reproducing plants and organisms are known as primary industry. The products of primary industry is essential to the secondary industry. Primary industry are of 2 types:

a. Extractive Industries: They are involved in extracting natural resources from the nature with the help of human skills. For example, coal mining is an extractive industry where coal is mined from earth.

b. Genetic Industries: They are involved in reproducing certain types of plants and animals for generating profit. A perfect example of genetic industry is poultry farming where chickens are raised for meat and then wealth.

Secondary Industry:                                                                                                                                  The industries involved in coverting raw materials or semi-finished goods into finished goods are known as Secondary Industries. They are dependent upon the products of primary industries. Secondary industries are broadly categorised as: Manufacturing and Construction Industries.

a. Manufacturing Industries: These industries convert raw materials or semi-finished goods into finished products. They give a complete new look to raw materials or semi-finished goods by guiding them through certain procedures. Manufacturing Industries can be Analytical Industries, Synthetic Industries, Processing Industries, Assembling Industries and Continuous Industries.

b. Construction Industries: As the name applies, these industries are primarily involved in construction works. They construct roads, bridges, buildings and etc.

7.

What is a Commerce? Distinguish between Trade and Commerce.

Ans. Commerce can be defined as an exchange of goods and services including the activities which assist the exchange. Commerce is concerned with the interchange of products either in the form of raw materials, or semi-finished goods or financial goods. It covers not only the buying and selling of goods, but also many services which must be provided to finance, insure, store and transport of goods in the course of the exchanges. It is an act of transfering ownership from producers to the consumers.

8.

Discuss the components of commerce.

Ans. The main components of commerce are:  trade and aids to trade.

Trade: Trade is tha main component of commerce. It involves buying, selling and transferring of products. Within a country or outside a country. Trade can be categorised as:

A) Internal Trade: The buying, selling and exchanging of products within the boundaries of a country is known as Internal or Domestic trade. Domestic trade takes place between the traders of a country. Internal trade is classifies as:

i. Wholesale Trade: In this trade, products are sold, bought and exchanged in bulk. The wholesaler buys products directly from the producer in large amounts and sells them to the retailers in smaller amounts.

ii.Detail Trade: A retail trade is such type of trade where a retailer buys in bulk from wholesalers and sells them to the consumers in small quantities.

B) International Trade: International Trade is also known as Foreign Trade. It is the buying and selling of products between traders of two or more countries. Wholesale trade is conducted in International Trade through foreign exchange and international means of transport. International Trade is divided into 3 as:-

i. Import Trade: Import trade is involved in purchasing goods from foreign countries for consumption in domestic market.

ii. Export Trade: Export Trade is involved in selling domestic products to foreign countries.

iii. Entrepot Trade: Entrepot Trade is the mix of both export and import trade. It is involved in purchasing a product from one country and selling it to the consumers of another country. Example: Nepal imports cars from China and exports them to India.

Aids to trade: They consists of services that assist trade. They can be:-

a. Banking: Banks provides services such as accepting deposits and granting loans. They provide a safe and secure method for making trade payments.

b. Transportation: Various means of transportation like trucks, vans and planes are used for carrying goods from the producers to the consumers.

c. Distribution: Middlemen like wholesalers, retailers and facilitate the distribution of goods to the consumers as producers seldom sell directly to the consumers. Thus, making the middlemen an auxillary service.

d. Packaging: Packaging is done in order to ensure the safety of security of the products. It is vital that the goods remain same and intact when it finally reaches the consumers.

e. Warehousing: Warehousing ensures that products are stored safely to meet future demands.

f. Insurance: Insurance provides financial protection to trade and industry against any harm incurred during their production, storing and transportation.

9.

Classify and explain various types of trading activity:

Ans. The various types of trading activity are:

a. Warehousing: There is generally a time lag between the production and consumption of goods. This problem can be solved by storing the goods in warehouse. Storage creates time utility and removes the hindrance of time in trade. It performs the useful function of holding the goods for the period they move from one point to another. Thus, ware housing discharges the function of storing the goods both for manufacturers and traders for such time till they decide to move the goods from one point to another.

b.Advertising: Advertising performs the function of bridging the information gap about the availability and uses of goods between traders and consumers. In the absence of advertising, goods would not have been sold to a widely scattered market and customers would not have come to know about many of the new products because of the paucity of time, physical-spatial distance, etc.

c. Storing: immediately after the goods are produced they are to be stored. Storing is an important trading activity as products are to be kept in the right condition before being dispatched to the buyers. Storing not only implies to finished goods nut also to raw materials and semi-finished goods too. Proper storage aids in smooth production.

10.

Discuss the various objectives of business.

Ans the various objectives of business can be as follows:

a. Profitability: Maintaining profitability means making sure that revenue stays ahead of the costs of doing business, according to James Stephenson, writing for the "Entrepreneur" website. Focus on controlling costs in both production and operations while maintaining the profit margin on products sold.

b. Productivity: Employee training, equipment maintenance and new equipment purchases all go into company productivity. Your objective should be to provide all of the resources your employees need to remain as productive as possible.

c. Customer Service: Good customer service helps you retain clients and generate repeat revenue. Keeping your customers happy should be a primary objective of your organization.

d. Employee Retention: Employee turnover costs you money in lost productivity and the costs associated with recruiting, which include employment advertising and paying placement agencies. Maintaining a productive and positive employee environment improves retention, according to the Dun and Bradstreet website.

e. Core Values: Your company mission statement is a description of the core values of your company, according to the Dun and Bradstreet website. It is a summary of the beliefs your company holds in regard to customer interaction, responsibility to the community and employee satisfaction. The company's core values become the objectives necessary to create a positive corporate culture.

f. Growth: Growth is planned based on historical data and future projections. Growth requires the careful use of company resources such as finances and personnel.

g. Maintain Financing: Even a company with good cash flow needs financing contacts in the event that capital is needed to expand the organization. Maintaining your ability to finance operations means that you can prepare for long-term projects and address short-term needs such as payroll and accounts payable.

h. Change Management: Change management is the process of preparing your organization for growth and creating processes that effectively deal with a developing marketplace. The objective of change management is to create a dynamic organization that is prepared to meet the challenges of your industry.

i. Marketing: Marketing is more than creating advertising and getting customer input on product changes. It is understanding consumer buying trends, being able to anticipate product distribution needs and developing business partnerships that help your organization to improve market share.

h. Competitive Analysis: A comprehensive analysis of the activities of the competition should be an ongoing business objective for your organization. Understanding where your products rank in the marketplace helps you to better determine how to improve your standing among consumers and improve your revenue.

11.

Whether business is essential to the society or society is essential to business? Discuss.

Ans. Both the society and business are essential to each other. Without society a business cannot exist and viseversa. A society thrives on what business provides and business thrives on what society provides.

A business enterprise is now considered not only as an economic institution but also as a social institution and a living member of society. It has both economic function and social function. However, no business, particularly big business, can ignore its social responsibility as a member of society. What is good for the society and country must be good for the corporation. Managers are obliged to protect and and to serve the public interest, not as a byproduct of managerial activity, but as an integral part of their managerial function. Hence the business enterprise is called upon to integrate the vital economic and social objectives and fulfill its twin mission in the environment in order to enjoy stable and continuous life.