Question 2 of 17beginner💡 UnderstandShort Answer3 marks

Why is business considered as economic activity?

Correct Answer

Business is considered an economic activity because it is undertaken with the primary objective of earning money or livelihood. Unlike non-economic activities performed out of love, affection, or sympathy, business activities are driven by the necessity to earn a living rather than emotions.

Furthermore, business involves the production and sale of goods and services with a specific motive of earning profit. Since people engage in these activities regularly to satisfy human needs in society and generate income, business is classified as an economic activity.

Exercise: EXERCISES - Short Answer Questions | Q: 1 | (Page 23)
For More Understanding

Explanation

The answer is derived directly from the textbook context which defines business as an economic activity undertaken for earning money or livelihood (Chunk 1). It contrasts this with non-economic activities done out of emotion (Chunk 2) and highlights the profit motive involved in the production and sale of goods/services (Chunk 2 and Chunk 3).

Solution Steps

  1. Step 1: Identify the primary reason: Business is undertaken to earn money or livelihood, not out of emotions.

  2. Step 2: Mention the process: It involves production and sale of goods and services.

  3. Step 3: State the motive: The fundamental objective is earning profit.

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