Question

Sunaina and Suma Reddy are best friends. After completing a course in Fashion Designing, five years back, both of them started their own separate outlets in Delhi and Chennai respectively to earn their livelihood. Sunaina buys readymade garments from various manufacturers and sells them in her store. However, Seema Reddy designs her own range of clothing. She gets them made through her team of designers and sells them directly under the brand name ‘Foreever Young’. Although, both of them are making good returns on their investments but in the past they have also incurred huge losses due to changes in the taste and preference of consumer and fashion. Also, despite being in business for such a long time they cannot say with certainty as to what amount of profit will be earned by them in future.

Identify and state any four features of business highlighted in the above case.​

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Answer 1

Explanation:

1. It is an economic activity.

2. sale and distribution of goods and services.

3. Uncertainty of risk

4. Profit is reward for bearing risk.

Answer 2

The four features of business highlighted in the above case are as follows:

• The main purpose of the business is to provide them with livelihood and money so the business can be classified as an economic activity.
• The business of Seema and Reddy is the sale and distribution of clothing.

• They have incurred huge losses which means that the business is not profitable and uncertain.
• Seema is using a brand name to acquire a customer base.

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