Important Questions for CBSE Class 11 Business Studies Chapter 1 – Business, Trade and Commerce

Important Questions for Class 11 Business Studies Chapter 1 – Business, Trade, and Commerce

The Business Studies curriculum teaches students how to analyse, manage, assess, and respond to changes in the Business world. It gives you a new way to look at and interact with the Business world. Business, Trade and Commerce is the first chapter, and it lays the foundation for Business Studies. This chapter covers concepts such as the contribution of business activities in growth, concepts and objectives of a business, and categories and classification of businesses, and it carries significant weightage in the Business Studies syllabus. Students can easily access all concepts, important questions, and CBSE revision notes along with CBSE sample papers on the Extramarks website.

For Business Studies, students must read through chapters continuously to get good grades. Extramarks recognises the value of solving questions. Therefore, we’ve compiled them from various sources, including the NCERT Textbook, NCERT Exemplar, other reference books, previous exam papers, and so on. Our Business Studies experts have created step-by-step solutions to help students better comprehend the topics. Students can quickly register on the Extramarks website and access Important Questions Class 11 Business Studies Chapter 1.

Apart from Important Questions Class 11 Business Studies Chapter 1, Extramarks houses tons of material like CBSE previous year question papers, CBSE syllabus, CBSE extra questions, formulas, and so much more that the students can access and improve their understanding.

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CBSE Class 11 Business Studies Important Questions
Sr No. Chapters Chapters Name
1 Chapter 1 Business, Trade and Commerce
2 Chapter 2 Forms of Business Organisation
3 Chapter 3 Private, Public and Global Enterprises
4 Chapter 4 Business Services
5 Chapter 5 Emerging Modes of Business
6 Chapter 6 Social Responsibilities of Business and Business Ethics
7 Chapter 7 Formation of a Company
8 Chapter 8 Sources of Business Finance
9 Chapter 9 Small Business
10 Chapter 10 Internal Trade
11 Chapter 11 International Business

Business Studies Class 11 Chapter 1 Important Questions and Answers

The Extramarks team has compiled a thorough list of Important Questions Class 11 Business Studies Chapter 1 from various sources. The questions comprise a wide variety of topics, including the contribution of business activities in growth, concepts and objectives of a business, categories, and classification of businesses and so on. These questions and their solutions help students better comprehend Business, Trade and Commerce. 

Mentioned below are a few Chapters 1 Class 11 Business Studies Important Questions and their Solutions:

Q1. State the meaning of business.

Answer: The term ‘Business’ is derived from the term ‘busy.’ As a result, running business demands being busy. In a more exact sense, business refers to an occupation in which individuals regularly participate in purchasing, manufacturing, and selling products and services to make money. Production or acquisition of commodities for resale, as well as the exchange of goods or the supply of services to meet the needs of others, might all be part of this process.

Q2. State the objectives of business.

Answer: The following are some business objectives:

  • Innovation: Every Business must develop novel ideas and innovations and apply them to stay afloat and develop.
  • Productivity: When the value of the output is compared to the value of the input, productivity is established.
  • Earning Profits: Any business entity open for business must make a decent profit to survive and develop.

Q3. State the different types of economic activities.

Answer: The following are some examples of economic activities:

  • Profession: These tasks need specialised knowledge and abilities, and those participating are professionals.
  • Employment: It is an economic activity in which individuals are paid for their services and are referred to as employees.
  • Business: Business is an economic activity involving the trade of products and services for profit.

Q4. Which form of public sector was brought into existence by a special act of the parliament?

Answer: Statutory corporations are public format enterprises that were brought into existence by a Special Act of the Parliament. The act establishes the company’s functions, powers, rules and regulations, and relationships with other government agencies. As a result, they have government power and a significant level of private-sector operating flexibility.

Q5. Discuss the development of the indigenous banking system in the Indian subcontinent.

Answer: With the use of currency and subsequently with letters of credit, the indigenous banking system played a significant role in lending money and financing local and foreign trade. People began depositing precious metals with persons known as Seths as the banking system grew. Money became a tool for manufacturers to increase their output. Later, papers like Hundi and Chitti were used to conduct financial transactions. In ancient India, intermediaries played an essential role in commerce promotion. They were able to take chances in overseas trade because of the financial stability they provided. During the Mughal era and subsequently, the East India Company era, organisations like Jagat Seth had significant power. The expansion of commercial businesses was helped by the availability of loans and increased credit transactions.

India’s trade balance was excellent, with exports outnumbering imports by a wide margin. Manufacturers, traders, and merchants could obtain financing for expansion and development thanks to this system. Industrial and commercial banks grew into finance trade and commerce, and agriculture banks that gave farmers short- and long-term loans.

Q6. Explain the notion of business risk and any three sources of risks in light of this statement.

Answer: There is no way for a business to succeed without taking risks, as there is always the prospect of low earnings or even losses. In addition, changes in demand, technology, government legislation, and other factors place businesses at risk of profit unpredictability.

Uncertainties or unexpected developments in the business world can result in insufficient earnings or losses. The following are the three sources of company risk:

  • Natural causes: These are caused by natural disasters such as floods, earthquakes, and other natural disasters. These factors are beyond the control of most people, if not all.
  • Human causes: Unexpected occurrences produced by man, such as employee carelessness, power outages, employee or customer dishonesty, and so on, are among these reasons.
  • Economic causes: Economic reasons include changes and variations in the economy, such as uncertainty resulting from changes in technology and manufacturing methods, political upheavals, pricing fluctuations, and tax rates, among others.

Q7. Explain two business activities which auxiliaries to trade are.

Answer: The following are two examples of trade-related business activities:

  • Transport and Communication: Most things are made in specific regions. Tea is grown predominantly in Assam; cotton is grown mainly in Gujarat and Maharashtra; jute is grown primarily in West Bengal and Odisha; sugar is mainly grown in Uttar Pradesh, Bihar, and Maharashtra, and so on. On the other hand, these things are necessary for consumption in diverse parts of the country. The geographical barrier is broken down by transportation, whether by road, rail, or coastal ships. Raw materials are transported to manufacturing facilities, while finished commodities are transported from producers to consumers. Communication infrastructure is necessary in addition to transportation so that producers, traders, and consumers may communicate information. As a result, postal and phone services might be thought of as ancillary to economic activities.
  • Banking and Finance: Financial resources are required to carry out business activities, including the acquisition of assets, the purchase of raw materials, and other expenses. A bank can provide the finances needed for a business. Consequently, banking helps firms overcome their financial difficulties. Commercial banks lend money through overdraft and cash credit facilities, loans, and advances. On behalf of traders, banks manage check collecting, payment transfer to other locations, and bill discounting. In international trade, commercial banks help exporters in collecting money from importers. Commercial banks also help entrepreneurs raise funding from the public.

Q8. “Profit is not an objective, but a requirement of business”. Do you agree with this argument? Give justifications for your answers.

Answer: Profit is, without a doubt, a necessary component of every business. The following are the reasons: 

  • Growth: Profits are required for corporate development, diversification, and expansion. Such growth tactics cannot be implemented by a company with little or little profit.
  • Long-term survival: Only through making profit can a company thrive in the market in the long run. This is because the company requires money in all operations and domains. Finance is needed for everything from day-to-day spending to corporate development. As a result, if a company does not make a profit, it will be unable to pay its bills, develop, or survive in the market, eventually leading to its closure.
  • Fulfill social objectives: The company’s other aims can only be met if it makes a substantial profit. If a company does not make enough money, it will not be able to meet social demands or contribute to society.
  • Efficient performance: Profits serve as a motivator for both the owners and the staff. Greater earnings increase employee efficiency and productivity, resulting in higher quality performance.
  • Reputation: Good profit margins allow the company to pay its costs on time, such as salaries, wages, dividends, and rentals. As a result, all stakeholders and stockholders are happy and satisfied with the company, resulting in a strong reputation and goodwill in the market.
  • The reward for taking risks: A business takes many chances to keep operations running, and earnings are the payoff for taking those risks.
  • Innovation: Nature’s law of change is unavoidable. As a result, to keep up with the changing and demanding environment, an organisation must continually evolve and invent. However, innovation necessitates highly trained personnel, extensive research, and cutting-edge technology, all of which are only achievable if the company is profitable.

Q9. Define Business. Describe its essential characteristics.

Answer: ‘Business’ is derived from the term ‘busy.’ As a result, running a business necessitates a high activity level. In a more exact sense, the industry refers to an occupation where individuals regularly participate in activities related to acquiring, manufacturing, and selling products and services to make money. Production or acquisition of commodities for resale, as well as the exchange of goods or the supply of services to suit the needs of others, might all be part of the activity.

  • Production or procurement of goods and services: Before commodities may be sold to the public, businesses must either manufacture or purchase them. As a result, every business enterprise makes or acquires things from producers to resell to consumers or users. Consumable products, such as sugar, ghee, pens, notebooks, and so on, are examples of goods, as are capital goods, such as equipment, furniture, and so on. Services supplied to customers, corporations, and organisations include transportation, banking, energy, and other services.
  • Exchange or sale of goods and services: Whether directly or indirectly, business involves transferring or exchanging goods and services for a monetary value. If something is made for personal consumption rather than for sale, it cannot be considered a commercial activity. For example, cooking meals at home for the family is not a business but cooking meals at a restaurant and selling them to others is. As a result, the sale or exchange of products or services between the seller and the consumer is one of the most significant elements of a business.
  • Dealing with goods and services regularly: Trading commodities or services regularly is a necessary aspect of running a business. As a result, a single sale or purchase does not qualify as a business transaction. For example, if a person sells their household radio set for a profit, it is not considered a business activity. However, radio of sale sets regularly, whether in a store or from one’s house, is regarded as a commercial activity.
  • Earning profit: Profit generation is one of a company’s primary objectives. No business can survive for long without making a profit. As a result, companies try to maximise profits through increased sales volume or cost reduction.
  • Returns uncertain: Uncertainty of return refers to a lack of understanding about the quantity of money that a business will create over a specific time. To generate a profit, every business spends money on its operations. Therefore, it is impossible to estimate the amount of money that will be made. Furthermore, despite the company’s best efforts, there is always the possibility of losses.
  • Element of risk: Risk is the degree of uncertainty associated with a loss of exposure. A bad or unfavourable event triggers it. Risk considerations include changes in customer taste and fashion, manufacturing processes, workplace strikes or lockouts, increased market rivalry, fire, theft, accidents, natural disasters, and so on. Risks are often seen as an inherent component of doing business.

Q10. The insurance sector is referred to as the tertiary industry. Explain.

Answer: Insurance serves both the primary and secondary sectors as a support service.

The tertiary industry is the part of the economy that provides services to clients, and it includes a wide range of enterprises, including schools, financial institutions, and restaurants. The tertiary sector, or service industry/sector, is another name.

Q11. What are the various types of industries?

Answer. The following are the various kinds of industries:

  • Primary: All activities involving the extraction and production of natural resources, as well as the reproduction and growth of living beings, plants, and other living things, are included in this category.
  • Secondary: These are related to the utilisation of materials that have been extracted in their natural state. These companies employ these materials to make items for end customers or for further processing by other companies.
  • Tertiary: These oversee supporting primary and secondary industries and trade-related businesses.

Q12. How can a trader get rid of a person’s stumbling block?

Answer. The following are ways for a trader to get of a person’s hindrance:

  • Getting rid of a person’s obstacle by making goods available to clients via trade from producers.
  • Transportation removes a location’s barrier by delivering goods from their producing area to the marketplace for sale.
  • However, insurance eliminates the risk of goods being lost or damaged due to disasters, theft, or accidents, among other things.
  • Advertising eliminates the data barrier by keeping clients informed about the products and services available in the marketplace.

Q13. Define industry. Explain various types of industries giving examples.

Answer: The economic activities that result in converting resources into valuable items are referred to as an industry. Machines and technological abilities are employed in the production of a variety of things and the rearing of animals. There are three categories of industries:

Primary industry: These industries deal with items derived from natural resources. The primary goal of such sectors is to transform raw materials into consumable forms. Agriculture, hunting, mining, and fishing are examples of such businesses. Primary industries may be divided into two groups based on the actions done.

  • Extractive industries: These industries deal with items that need to be polished before they can be utilised in other fields. Mining and fishing are two examples.
  • Genetic industries: These businesses deal with breeding plants and animals and repurposing them.

Secondary industry: These industries deal with product manufacture, acquiring raw resources and converting them into things that may be further valued. These industries can be classified as follows:

  • Manufacturing industries: Here, basic materials such as petroleum and wax derived from mineral oil are turned into final goods that are readily usable.
  • Synthetic industries: These are essential components combined to create a new product. The cosmetics business is one example.
  • Processing industries: The raw material is treated and refined before being turned into a finished product. The paper and sugar industries are two examples.
  • Assembling industries: Assembling industries specialise in putting together numerous components to create the final product. Electronics, automobiles, and construction companies are just a few examples.

Tertiary industry: These industries act as intermediaries between primary and secondary industries. Baking and transportation are two examples of sectors that provide services to other industries.

Q14. What is commerce, and what role does it play in modern life?

Answer: The control of business among economic agents is referred to as commerce. It usually refers to exchanging goods, services, or other valuable objects between organisations or entities.

The following are the benefits of commerce:

  • Between producers and customers, commerce serves as a catalyst.
  • It creates chances for employment.
  • It promotes trade on a worldwide scale.
  • Assists in the development of new industries.
  • Helps in times of need, such as natural disasters such as earthquakes, floods, and droughts.

Q15. What factors are to be considered while starting a business? Explain.

Answer: The following are some considerations to make while starting a business:

  • Selection of the line of business: The first considerations an entrepreneur must make are the kind and type of business to pursue. They will undoubtedly want to explore the sector of business and industry that gives the most profit possibilities. In addition, market client needs, the entrepreneur’s technical expertise, and excitement for producing a specific product will influence the selection.
  • Size of the company: Another essential decision to make at the start of a firm is the company’s size or scope of activities. Some components favour a wide range of activities, while others want to keep it to a minimum. The enterprise will be started on a vast scale if the entrepreneur is certain that demand for the intended product will be substantial over time and that they can acquire the required finance. On the other hand, if market conditions are unknown and risks are considerable, a small business might be a preferable option.
  • Ownership structure choice: In terms of ownership, the company might be a single proprietorship, a partnership, or a joint-stock corporation. Each kind has its own set of benefits and drawbacks. Considerations such as the type of business, capital requirements, owner responsibility, profit split, legal formalities, company continuity, and interest transferability, among others, will decide the suitable form of ownership.
  • Location of the business: When founding a business, the company’s headquarters is a crucial factor to consider. Any miscalculation here might lead to high production expenses, inconvenient access to the proper manufacturing inputs, or a failure to give clients the most excellent possible service. Likewise, when picking a site, raw materials and labour availability, as well as electricity and services like banking, transportation, communication, and warehousing, are all essential factors to consider.
  • Obtaining funds: Financing is concerned with providing the required money for the start-up and continuance of a potential firm. Fixed assets like land, buildings, machinery, and equipment, as well as current assets like raw materials, books, debts, completed goods stock, and so on, require capital.
  • Physical facilities: When launching a business, the availability of physical infrastructures such as machinery and equipment, as well as a building and accompanying services, is crucial. This decision will be influenced by the kind and scope of the firm, the availability of capital, and the production process.
  • The layout of the plan: Once the necessity for physical facilities has been recognised; the entrepreneur should draft a layout plan explaining how they will organise them. Design refers to the physical arrangement of machinery and equipment needed to manufacture a product.
  • Dedicated workforce: Every company needs qualified and devoted employees to do various duties to turn physical and financial resources into desired outputs. Because no single entrepreneur can do it all, they must assess the demand for skilled and unskilled labour and administrative staff. There should also be plans for how employees will be taught and encouraged to perform at their best.
  • Tax preparation: Due to the country’s complex tax regulations, which touch almost every aspect of contemporary corporate operations, tax planning has become increasingly important in recent years. The tax responsibilities under various tax legislation and their influence on company actions must be evaluated by the business’s founder in advance.
  • The beginning of a new business: Following the decisions mentioned above, the entrepreneur may go on with the actual business launch, which includes mobilizing various resources, completing the legal procedures, starting the manufacturing process, and initiating a sales advertising campaign.

Q16. Explain any five objectives of the business.

Answer: The following are the business’s objectives:

  • Market standing refers to a company’s position in the market relative to its rivals. A company should improve its position by supplying consumers with competitive products and meeting their demands.
  • Innovation: Innovation is the introduction of new ideas or techniques into how something is done or generated. Product or service innovation and product and service supply chain innovation in various skills and activities are two forms of innovation in any company. No company can thrive in a competitive climate without innovation. As a result, innovation has become a top priority.
  • Productivity: To determine productivity, the value of output is compared to the value of inputs. It’s a measure used to assess efficiency. Every firm must aim for higher productivity by making the most effective use of available resources to secure long-term survival and profitability.
  • Financial and physical resources: Any company must have material resources, such as plants, machinery, and offices, and financial resources, such as capital, to create and sell goods and services to its customers. The business enterprise’s purpose should be to acquire these resources and put them to good use in line with their demands.
  • Profits: Businesses are operated to make a profit on the money invested. When we talk about profitability, we’re talking about profit as a percentage of invested capital. Every firm must produce a decent profit to secure its existence and growth.

Q17. A company’s primary goal cannot be only profit maximisation. Explain.

Answer: The primary goal of a business is to make money. Hence profit maximisation is the primary goal. However, because business exists in society and consumes society’s resources, it is not its sole goal.

As a result, it has various societal goals that could be pursued to protect the balance, as follows:

  • Supply of desired services and goods: Businesses must provide high-quality goods and services with the necessary certifications. Customer pleasure must be the goal.
  • Social and fair trade activities: Businesses must avoid black marketing, stockpiling, and lowering product quality or safety. Businesses must contribute to the betterment of society.
  • Job possibilities: Businesses must generate employment opportunities for society, particularly for the less fortunate.
  • Employee welfare: Businesses must promote employee growth and development, such as social and personal skill training and a pleasant working environment. Employees have a direct impact on productivity and profitability.
  • Social welfare: Businesses must use their revenues to benefit society by establishing schools, charitable hospitals, and other vital institutions for society’s progress.

Key Topics Covered in Class 11 Business Studies Chapter 1 Important Questions

Business Studies Class 11 Chapter 1 Important Questions covers the following key topics:

Classification of Activities

  • Economic activities: Economic activities are any actions that are carried out to make money or provide a means of subsistence. A manufacturing worker, for example, or a schoolteacher, for example. It is mainly divided into three categories: employment, business, and profession.
  • Non-economic activities: non-economic activities are those carried out for reasons other than profit, such as love, affection, sympathy, and so on—for instance, social work, religious activity, and so forth.

Role of Business in the Development of Economy

Since the beginning of time, people have been conducting business. As a result, there was a flow of products within and beyond the country, and the profits from such economic operations were utilised to fund more investments.

As an example, consider the following:

Hundi- It is a kind of trade employed in the past and consists of a contract that guarantees the payment of money, an unconditional promise or order, and the ability to swap it through proper discussion.

Patliputra, Peshawar, Taxila, Indraprastha, Mithila, Maduram, Surat, and other historic commercial centres emerged to import and export products.


A business is an economic activity carried out regularly and continuously to meet social demands while also earning profit by selling and acquiring products and services.

The following are the characteristics of business activities:

  • Regularity in dealings
  • An economic activity
  • Exchange of goods and services creating value
  • Profit earning
  • Procuring goods and services
  • Uncertainty of return
  • Taking risks


A profession is any economic activity carried out by a person with specialised knowledge and abilities to benefit society.


Employment refers to any economic activity that involves doing labour for someone else in exchange for money.

Classification of Business activities

The following are the main categories of business activities:

  • Industry
  • Commerce


It is primarily focused on the commercial production of products and services. It is then subdivided into the following groups: primary, secondary, and tertiary.

Primary industry: It encompasses all actions related to the extraction and production of natural resources and plant development. It is then subdivided into two sections:

  • Extractive industries: These businesses offer specific essential raw resources, which are generally natural items. Farming, mining, and other activities are included.
  • Genetic industries: These businesses specialise in breeding plants and animals for reproduction. Cattle breeding and poultry farming are two examples.

Secondary industry: These businesses are responsible for further processing the raw materials extracted in the primary sector to turn them into a completed product. Take, for example, iron ore mining.

It is then subdivided into two sections: manufacturing industries and the construction industry.

Manufacturing industry– These businesses process raw materials and create utilities to produce commodities. It’s further broken down into four sections:

  • Analytical industry: Analytical industries separate and bifurcate distinct components from the source material to create various by-products from the same element. Petrol, diesel, and other fuels, for example, are all generated from the same raw material: crude oil.
  • Synthetical industries: These businesses blend materials and components from several sources to create a new product. Consider the cement business.
  • Processing industry: The processing industry is concerned with the extraction and processing of resources and raw materials to generate semi-finished or completed goods. The sugar industry, for example, the paper industry, the textile industry, and so on.
  • Assembling industry: Assembling industries combine diverse components from many companies to create a new product. For example, various elements from many sectors are brought together to make and turn them into a television, computer, or automobile.

Construction industry– These businesses operate in the construction industry, which includes constructing dams, bridges, and buildings, among other things.

These businesses provide support services to primary and secondary sectors, allowing them to complete their tasks without interruption—for instance, in the banking, transportation, and communication industries.


All actions necessary for exchanging commodities and services are included in commerce. It also encompasses many activities that aid in eliminating obstacles like people, place, time, money, risk, and information that may arise during the exchange of products and services.

There are two sorts of activities in this category: trade and auxiliaries to trade.

Objectives of Business

  • Innovation
  • Market standing
  • Earning profit
  • Productivity
  • Social responsibility
  • Physical and financial resources

Business risks

Business risk is the risk of insufficient profits or losses due to uncertainty or unexpected events.

Nature of Business risks:

  • Risk is a necessary component of every business. Therefore, it can only be decreased, not wholly abolished.
  • It emerges because of unavoidable uncertainties such as natural disasters such as earthquakes and floods.
  • The risk a company faces is determined by its type and size.
  • Every firm should follow the rule of ‘no risk, no reward.’ As a result, profit is the incentive for taking risks.

Causes of Business Risks

  • Natural causes: Natural disasters like floods and earthquakes are to blame. These factors are beyond the control of most people, if not all.
  • Human causes: unexpected occurrences produced by man, such as employee carelessness, power outages, employee or customer dishonesty, and so on, are among these reasons.
  • Economic causes: Economic reasons include changes and variations in the economy, such as uncertainty resulting from changes in technology and manufacturing methods, political upheavals, pricing fluctuations, and tax rates, among others.
  • Other causes: Other reasons include anything that isn’t covered by the preceding categories, such as exchange rate changes and so on.

Factors for starting a business: 

  • Selection of the line of business
  • Size of the company
  • Choice of ownership structure
  • Location of the Business
  • Obtaining funds
  • Physical facilities
  • The layout of the plan
  • Dedicated workforce
  • Tax preparation
  • The beginning of a new business

The briefly described topics in the sections given above are covered in the Class 11 Business Studies Chapter 1 Important Questions. 

Benefits of Solving Business Trade and Commerce Class 11 Important Questions

Business Studies requires a lot of constant reading and revision. Class 11 teaches the fundamentals of the subject and prepares the base for Class 12. We advise students to access Important Questions Class 11 Business Studies Chapter 1. Students will acquire confidence by solving important questions from the chapter by routinely solving problems and looking over our solutions. 

Mentioned below are some benefits of solving Important Questions Class 11 Business Studies Chapter 1:

  • The questions covered in Important Questions Class 11 Business Studies Chapter 1 are based entirely on the chapter- Business, Trade, and Commerce.
  • These essential questions are prepared by following the exam writing pattern. Therefore, going through these will help students prepare for exams too.
  • Students can entirely rely upon these crucial questions as these are made following all the guidelines laid by CBSE and can help students for Chapter 1 Class 11 Business Studies important questions.

Extramarks provides comprehensive learning solutions for students from Class 1 to Class 12. We have abundant resources available on our website, along with essential questions and answers. Students can click on the links given below to access some of these resources:

Q.1 Rita had a match stick factory in Nepal which got destructed by the recent earthquake. Highlight the risk.

A. Natural Causes

B. Human Causes

C. Economic Causes

D. Other Causes


Natural Causes

Q.2 _______________is the bustling emporium that was even visited by Chinese ships to acquire items such as frankincense and myrrh.

A. Calicut

B. Bombay

C. Bangalore

D. Hyderabad



Q.3 Woolsworth was the Australias most valuable retail brand. The learning from Woolworths’ collapse was clear no business was too big, too old, or too close to the hearts of the British public to fail.Woolsworth shut down made its staff wept and the nation mourned. People of the High Street say that retail chains come, and retail chains go, but Woolworth’s was different. How important do you think it is to anticipate the failures also


There is some amount of risk involved in every business. These can be minimised but not eliminated altogether. There are some of the causes of business risk that are beyond the control of humans.
Causes can be natural, human or economic. Anticipating and providing for such risks is important to stop businesses from failing and leading to shutdown.

Q.4 Fresh Bakery Ltd. produces bread and cakes for sale in its 25 retail shops located across Southern part. The bakery needs goods and services from primary, secondary and tertiary sectors to make the bread and cakes and to sell the goods to customers.

a. Explain the interdependence of primary, secondary and tertiary sectors by using two examples.

Sector Examples of goods/services provided
Primary sector Ingredients: flour, sugar, butter, eggs, yeast
Secondary Sector Production of cakes and breads
Tertiary sector Advertising, insurance, banking, shops to sell the bread and cakes

(2 marks)

b. Give one example of business in the primary sector that Fresh Bakery Ltd. might trade with. (1 marks)

c. Give two examples of businesses in the tertiary sector that Fresh Bakery Ltd. might trade with. (2 marks)


a) Interdependence of primary, secondary and tertiary sector means that the sectors of industry are dependent upon each other and cannot work in isolation or without each other.

  • Ingredients from the primary sector are used in the production of bread and cakes in the secondary sector.
  • Fresh Bakery will have to buy insurance from the tertiary sector for the premises and employees.
  • Fresh Bakery Ltd will have a bank account and a bank loan from the tertiary sector.
  • Fresh Bakery Ltd may use the services of an advertising agency from the tertiary sector to design an advertising campaign for the company.

b) Example of business in the primary sector that Fresh Bakery Ltd. might trade with could include:

Farmer who produces flour, eggs, butter, milk.

c) Two examples of businesses in the tertiary sector that Fresh Bakery Ltd might trade with could include:

  • Bank for finance and banking services (loan, financial advice)
  • Transport for carrying in bulk: sugar, icing sugar, baking powder, salt, etc.
  • An advertising agency for an advertising campaign.

Q.5 Mohan is a farmer who produces wheat to serve only his family. He does not generate any additional wheat for commercial sale purposes. To buy seeds and machinery, he has taken a loan from bank. Due to excessive rainfall, there was sever damage to wheat and it was all destroyed, which led to Mohan start working as a security guard for a business firm.

(i) In context to above case, state the economic activity that Mohan is engaged in.

(ii) Due to which cause of risk Mohan suffered damage

(iii) Can Mohan be considered as a businessman State your views in support of your answer.


(i) In context to above case, state the economic activity that Mohan is engaged in is Employment.

Employment refers to the occupation in which people work for others and get remuneration or salary in return.

(ii) Due to natural cause of risk, Mohan suffered damage.

Natural causes of risk involve natural calamities resulting in heavy loss of life, property and income in business.

(iii) No, Mohan is not a businessman as he produces wheat for his family to eat and not for any commercial sale in the market.

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FAQs (Frequently Asked Questions)

1. How to quickly grasp all the concepts of Chapter 1 of Class 11 Business Studies?

Constantly keeping in touch with the chapter is one way to understand the chapter. But referring to Extramarks Important Questions Class 11 Business Studies Chapter 1 is the easiest way to comprehend this chapter thoroughly.

2. Can you suggest how to get above 90% in class 11?

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3. Is Chapter 1 of Business Studies for Class 11 simple?

As it is the first time the students are introduced to this subject, Chapter 1 of Class 11 Business Studies may appear challenging. However, to avoid trouble with Business Studies, they must pay more attention and put in extra effort to grasp it. Students will better understand the chapter through regular study and practice, and they will lay the groundwork for the Class 12 board examinations.