Question

Explain the characteristics of Business.

Answer 1

1. Production or Procurement of Goods: Goods must be produced or procured in order to satisfy human wants.

2. Sale, Transfer, or Exchange: There must be a sale or exchange of goods or services. When a person weaves cloth for his personal consumption, it is not business because there is no transfer or sale.

3. Dealing in Goods and Services: Goods produced or procured may be consumer goods like cloth, pen, brush, bag, etc., or producer goods like plant and machinery. Services refer to activities like a supply of electricity, gas or water, transportation, banking, insurance, etc.

4. Regularity of Dealings: An isolated dealing in buying and selling does not constitute a business. The transactions must be regular.

5. Profit Motive: An important feature of the business is profit motive. Business is an economic activity by which human beings make their living.

6. Element of Risk: The profit that is expected in a business is always uncertain because it depends upon a number of factors beyond the control of the businessman.