Business Basics: 16 MCQs with answers

A farmer ploughing his field

Economic activities are related to production, exchange, distribution, and consumption of wealth. Ploughing the field by a farmer is production of wealth, hence an economic activity.

Money

Economic activities are performed to earn money or satisfy material needs, so they are directly related to money.

A person donating clothes to an orphanage

Non-economic activities are performed to satisfy human sentiments such as charity, religion, and recreation. Donating clothes is a charitable activity, hence non-economic.

Economic and Non-economic Activities

Human activities are broadly divided into economic activities and non-economic activities.

Charity

Charity is a non-economic activity performed to satisfy human sentiments, not for economic gain.

A teacher teaching in a school

Teaching in a school is an economic activity as it is done for earning money, while the others are non-economic.

True

Economic activities are performed to earn money or satisfy material needs, so they are directly related to money.

True

Non-economic activities are those performed to satisfy human sentiments, not for economic gain.

Distribution of wealth

Payment of salary to employees is part of distribution of wealth, as it involves sharing the generated wealth among factors of production.

A person painting a picture for his own pleasure

Painting for personal pleasure is a non-economic activity as it is not done for earning money or satisfying material needs.

Business, Profession, and Employment

Economic activities are classified into business, profession, and employment.

A shopkeeper selling goods to customers

Selling goods to customers is an exchange of wealth, as it involves transfer of goods for money.

Wearing clothes

Wearing clothes is consumption of wealth, as it involves using goods to satisfy human wants.

They are related to production, exchange, distribution, and consumption of wealth

Economic activities are related to production, exchange, distribution, and consumption of wealth, and are directly related to money.

A doctor charging fees from patients

A doctor charging fees is an economic activity as it involves earning money, while the others are non-economic activities.

An entrepreneur paying interest to the lender

Paying interest to the lender is part of distribution of wealth, as it involves sharing the income generated.