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Karnataka State Syllabus Class 8 Social Science Business Studies Important Questions Chapter 1 Components of Business Studies
How is the word ‘business’ derived?
The word ‘business’ is derived from the word ‘busy’. Thus business means being busy.
What is meant by business?
Business is an economic activity which is related to continuous and regular production and distribution of goods and services to satisfy human wants.
What are economic activities?
The activities that are concerned with the production and exchange of goods and services are called economic activities.
Explain the different types of economic activities.
Economic activities can be broadly classified into three types. They are – Business, Profession and Employment.
- Business: It is mainly concerned with production and exchange of goods and services.
- Profession: It is mainly concerned with rendering of specialized technical and personal services. eg: lawyers, doctors, chartered accountants, etc.
- Employment: It is the work undertaken by the people under an employer for salary or wages. eg: Agricultural labourers, industrial labourers, etc.
What is a profession? Give examples.
A profession is a service requiring specialised knowledge and skill. It is mainly concerned with rendering of specialized technical and personal services. eg: lawyers, doctors, chartered accountants, etc.
What is employment?
Employment is the work undertaken by the people under an employer for salary or wages. eg: Agricultural labourers, industrial labourers, etc.
What is exchange?
The distribution of goods and services is called exchange.
How is exchange the connecting link between production and consumption?
How do production and exchange play a very important role in our daily life?
The distribution of goods and services is called exchange. The goods produced at a place have to reach the consumers at different places for exchange to take place. During the course of production, producers take into consideration market study, transportation, storage of goods, determination of price, advertising, etc.
All these aspects are included in the process of exchange. Today we have money as the medium of exchange through which exchange of goods and services is taking place. Thus exchange is the connecting link between production and consumption.
What is trade?
Trade is the activity of buying, selling, or exchanging goods or services between people, firms, or countries.
What is commerce?
Any economic activity of human beings is considered commerce. It includes production, business, industry, banking, insurance, advertising, transportation and other factors which facilitate exchange of goods and services. Commerce is the part of business which is concerned with distribution of goods and services.
Which are the different stages in the evolution of commerce? Explain briefly.
Commerce has evolved through several stages to reach the present stage. These stages are:
1.Hunting and fishing stage:
This was the earliest stage of human civilisation. During this stage man was a wanderer. He moved in groups from one place to another in search of food. He hunted animals for food. No economic activity existed during this period.
2. Pastoral stage:
People learnt domestication of animals during this stage. Cattle, sheep and goats were reared for food as well as for skin to cover themselves. They moved from place to place in search of grasslands. Commerce did not exist during this stage.
3. Agricultural stage:
In this stage, people learnt the art of growing crops. They started living in a fixed place. Commercial activities started. Villages and communities came into existence.
4. Handicrafts stage:
In this stage some people, called craftsmen, engaged themselves in making tools and in construction of houses. Gradually a body of professional craftsmen such as carpenters, blacksmiths, weavers, builders came into existence. They carried on production of goods in their houses and supplied them to agriculturists who in return provided them with their requirements. Thus barter system came into existence..
5. Barter system stage:
Division of labour enabled quick production of goods. The goods produced were directly exchanged for goods or other things. But some problems cropped up as a result of direct exchange.
6. Money economy stage:
To overcome the difficulties of barter system of exchange many media of exchange were used. E.g., skin of animals, cowrie shells, etc. Later, metals coins made of gold, silver and copper were used as medium of exchange. Here too difficulties of carrying money existed. It was only during modern times paper money came into use.
7. Town economy stage:
The introduction of bank money as medium of exchange resulted in the fast growth of commerce. People began to produce more goods. Local markets came into existence. Merchants came into existence who started producing finished goods and supplied them to consumers.
8. International trade stage:
During the 15th and 16th centuries, geographical discoveries and the industrial revolution encouraged large-scale production of goods not only for the local markets but also for trade to other countries. Standardised goods were produced with the help of machines. Revolution in transport and communication helped in further expansion of the markets.
What are craft guilds?
The associations of different craftsmen-are called craft guilds. They came into existence during the handicrafts stage of evolution. These associations helped the craftsmen to produce goods and to exchange them.
What is barter system of exchange?
The direct exchange of goods for goods or for other things without the use of money is called barter system of exchange.
What were the problems of barter system?
What are the difficulties of barter system of exchange? How has money solved these problems?
There were many problems in the barter system. They were:
- Lack of double co-incidence of wants: If two parties exchange goods with each other we call it co-incidence of wants. But such double co-incidence was rarely found.
- Lack of common measure of value: It was very difficult to decide the quantity of one commodity against another. E.g. for one cow how many sheep or ‘for one measure of wheat how many measures of jowar, etc.
- Difficulty of sub-division: It was difficult to divide certain goods or animals.
- Difficulty in storing or transporting the goods: The movement of goods from one place to another was a problem. It was also difficult to preserve some goods over a long period.
To overcome these difficulties of the barter system of exchange many other media of exchange were used. Further, man gradually invented money. Use of money solved all the difficulties of the barter system.
Describe the evolution of money.
To overcome the difficulties of barter system of exchange many media of exchange were used. E.g., Skin of animals, cowrie shells, etc. Later, metals were used as medium of exchange. The metals were cut into certain shape, size and weight and used in exchange. Later, metals like gold, silver and copper coins came into use.
Here too difficulties of carrying money existed. It was only during the modern times paper money came into use. Paper money is a token money which generally comprises of bank notes issued by the central bank of the country. Now-a-days bank money in the form of cheques, drafts, bills, credit cards, debit cards, etc., are in use.
What are aids to trade or auxiliaries to trade? Name them.
The aids to trade include those facilities which help in the smooth conduct of trade. The aids to trade include transport, banking, warehouse facilities, advertising, insurance, etc.
Discuss the role of commerce and business in economic development.
Trade is nothing but buying and selling of goods. On the other hand, commerce includes trade and also aids to trade or auxiliaries to trade. The aids to trade include transport, banks, warehouse facilities, advertising agencies, insurance etc. Traders supply goods to the consumers according to their daily needs.
They provide some services also. For the smooth conduct of business, transport helps ‘ in the movement of goods from one place to another, banks provide financial assistance, insurance companies cover the risk to which goods are exposed while in movement or during storage.
Warehouses help to store goods and bridge the gap between production and consumption. Advertisements give information about the goods produced and also about the goods available in the market.
Explain the importance of commerce.
Commerce is responsible for smooth and continuous supply of goods to consumers. Commerce helps in bringing together the factors required for the establishment of industries. Commerce brings the different parts of the world closer, thereby creating one market.
It equalizes the prices, blends ideas and cultures, and helps in national and international integration. More than anything else, it helps in economic development. It contributes through different taxes, rates and duties to the income of governments.
Which developments of the 21st century have enabled quick access to goods and services?
The 21st century is called the age of information technology. Facilities like internet banking, privatization of insurance, telemarketing system, electronic advertising, etc., have enabled consumers to have quick access to goods and services.
Due to the technological advancements, the world has become a global village. Multinational companies have spread their business in many countries. On the whole, commerce is developing at a greater speed.
What are the advantages of multinational companies?
Multinational companies have their businesses in many countries. They help to increase production and supply of goods to the world market. They produce specialised goods on a large scale at competitive prices.
Multiple Choice Questions
The work undertaken by people for wages is called
The connecting link between production and consumption is
The exchange of goods directly for goods is called
(A) barter system
(B) financial system
(C) exchange system
(D) Goods exchange
(A) barter system
Cheques, drafts, credit cards and debit cards are examples for
(A) token money
(B) paper money
(C) bank money
(D) Plastic money
(C) bank money
The geographical discoveries and the _________ in Britain brought about international trade.
(A) parliamentary system
(B) industrial revolution
(C) scientific discoveries
(D) technological developments.
(B) industrial revolution
The auxiliary services like transport, insurance, banking, warehousing facilities are included in
The services of lawyers, doctors, chartered accountants come under
Craftsmen and craft guilds came into existence during this stage of evolution of commerce.
Fill Up In The Blanks
- The economic activity that provides technical and specialised personal services to the consumers is called profession
- In ancient times goods were exchanged for goods, which was called barter system of exchange.
- Issue of paper money is the responsibility of the Reserve Bank of India
- The emergence of communities and villages took place during agricultural stage.
- The main cause for international trade was Industrial Revolution
- Trade and commerce contribute to economic development by paying taxes and duties to the government.
- The activities that are concerned with production and exchange of goods and services are called economic activities
- Distribution of goods and services is called exchange
Match The Following
|a. International trade stage||1. Migration from place to place|
|b.Town economy stage||2. Craft guilds|
|c. Handicrafts stage||3. Use of paper money|
|d. Pastoral stage||4. Local markets developed into towns|
|e. Money economy stage||5. Barter system|
|6. Industrial Revolution|
a – 6, b – 4, c – 2, d – 1, e – 3.