Q.Define Business. What are its characteristics?

Business is an economic activity concerned with the production or purchase and sale of goods and services with the aim of earning profit by satisfying human wants. Its characteristics are: an economic activity; dealing in goods and services; regularity of dealings; the profit motive; the presence of risk and uncertainty; the need for capital; and the creation of utility to satisfy human wants.

Meaning

The term 'business' is derived from the word 'busy', meaning being occupied in some work. In the economic sense, business means an occupation in which people regularly engage in activities connected with the production, purchase and sale of goods or the supply of services with the object of earning profit. Shopkeepers, manufacturers, transporters, bankers and insurers are all engaged in business.

Characteristics of Business

1. Economic activity. Business is carried on to earn a living and create wealth, so it is an economic activity.
2. Production or exchange of goods and services. Business involves either producing goods and services or buying and selling them; there must be transfer or exchange for value.
3. Regularity of dealings. A single, isolated transaction is not business; there must be regularity and continuity of dealings.
4. Profit motive. The primary object of business is to earn profit; without the profit motive it is not business. …

Business means any lawful economic activity undertaken to earn profit by producing or buying and selling goods and services to satisfy human wants on a regular basis. Its key features are: it is an economic activity, it deals in goods and services, it is carried on regularly, its motive is profit, it involves risk, and it creates utility to satisfy human wants.

Meaning of Business

Business refers to those economic activities that are connected with the production, purchase and sale, or exchange of goods and services with the main object of earning profit. The word 'business' literally means being busy. A person who carries on business is called a businessman. Every business satisfies human wants by supplying goods and services in return for a price.

Characteristics (Features) of Business

• An economic activity: Business is carried on to earn a living and create wealth, so it is an economic activity.
• Production or exchange of goods and services: There must be production or buying and selling of goods and services; goods produced for self-consumption are not business.
• Dealings in goods and services: Business deals either in goods (consumer goods and producer goods) or in services (banking, insurance, transport, etc.).
• Regularity of transactions: A single isolated transaction is not business; dealings must be carried on regularly and continuously.
• Profit motive: The chief aim of business is to earn profit; profit is the reward for the risk taken and is needed for survival and growth.
• Risk and uncertainty: Business always involves risk because future demand, prices and costs are uncertain; losses due to fire, theft or fall in demand are possible. …