question_answer

Explain the concept of business.

Answer:

Ans.     Business: An economic activity involving the production and sale of goods and services undertaken with a motive of earning profit by satisfying human needs in society is called business.

Characteristics of Business:

1. Economic activity: All business activities are economic activities and are done for the sole purpose of earning money.

2. Production and procurement of goods and services: A business activity involves the production or procurement of goods and services. A manufacturer is involved in production, while a shopkeeper is involved in procurement.

3. Sale and exchange of goods and services for the satisfaction of human needs: Sale and exchange of goods and services is done to satisfy human needs.

4. Dealing in goods and services on a regular basis: One time dealing in goods or services cannot be termed as a business. The business should happen on a regular basis.

5. Profit earning: Profit earning is the fundamental motive of doing a business. Other motives are there, but they depend on profit motive.

6. Uncertainty of returns: Returns can never be certain in business activity. This happens because of external factors which are outside the control of the business organization.

7. Element of risk: An element of risk is always present in business activity.