Plus Two

Kerala State Board New Syllabus Plus Two Computer Application Notes Chapter 8 Database Management System.

Kerala Plus Two Computer Application Notes Chapter 8 Database Management System

DBMS means Data Base Management System. It is a tool used to store a large volume of data, retrieve and modify the data as and when required. DBMS consists of data and programs.

Advantages of DBMS

1. Data Redundancy
2. Inconsistency can be avoided
3. Data can be shared
4. Standards can be enforced
5. Security restrictions can be applied
6. Integrity can be maintained
7. Efficient data access
8. Crash recovery

Structure of DBMS

1. Fields – Smallest unit of data. Eg: Name, age, sex, …
2. Record – Collection of related fields.
3. File – Collection of records

Components of DBMS

1. Databases – It is the main component.
2. Data Definition Language (DDL) – It is used to define the structure of a table.
3. Data Manipulation Language (DML) – It is used to add, retrieve, modify and delete records in a database.
4. Users – With the help of programs users interact with the DBMS.

Database Abstraction – Abstraction means hiding, it hides certain details of how data is stored and main-tained.

Levels of Database Abstraction:

1. Physical Level (Lowest Level) – It describes how the data is actually stored in the storage medium.
2. Logical Level (Next Higher Level) – It describes what data are stored in the database.
3. View Level (Highest level) – It is closest to the users. It is concerned with the way in which the individual users view the data.

Data Independence – It is the ability to modify the scheme definition in one level without affecting the scheme definition at the next higher level.

1. Physical Data Independence – It is the ability to modify the physical scheme without causing application programs to be rewritten.
2. Logical Data Independence – It is the ability to modify the logical scheme without causing application programs to be rewritten.

Users of Database

1. Database Administrator
2. Application Programmer
3. New users

Data models – It is a collection of tools for describing data, data relationship, data semantics and consistency problem. 3 models.

1. Hierarchical model
2. Network model
3. Relational model

RDBMS – Relational DataBase Management System. It consists of a collection of relations as database.

Relation means table.

Domain – A pool of possible values from which col-umn values are drawn. ‘

Tuple means rows.

Attributes means columns.

Cardinality – The number of rows.

Degree – The number of columns

View – A view is a virtual table derived from one or more base tables.

Key is used to identify or distinguish a tuple in a relation.

Candidate key – It is used to uniquely identify the row.

Primary key – It is a set of one or more attributes used to uniquely identify a row.

Alternate key – Acandidate key other than the primary key.

Foreign key – A single attribute ora set of attributes, which is a candidate key in another table is called foreign key.

Relational Algebra – It consists of a set of opera¬tions that takes one or two relations as input and produces a new relation as a result.

1. Select operation (σ)
2. Project Operation (π)
3. Cartesian Product
4. Union Operation (∪)
5. Intersection operation (∩)
6. Set difference operation (-)

Kerala State Board New Syllabus Plus Two Computer Application Notes Chapter 7 Web Hosting.

Kerala Plus Two Computer Application Notes Chapter 7 Web Hosting

Web hosting
Buying or renting storage space to store website in a web server and provide service(made available 24×7) to all the computers connected to the Internet. This is called web hosting. Such service providing companies are called web hosts. Programming languages used are PHP, ASP.NET, JSP.NET, etc.

Types of web hosting
Various types of web hosting services are available. We can choose the web hosting services according to our needs depends upon the storage space heeded for hosting, the number of visitors expected to visit, etc.
1) Shared Hosting
2) Dedicated Hosting
3) Virtual Private Server (VPS)

Buying hosting space
We designed a website of our school and we decide our school website to be made available to all over the world, we have to place the website files on a web server for that we have to purchase hosting space(memory space) in a web server.
Following factors to be considered
1) Buying sufficient amount of memory space for storing ourwebsite files
2) If the web pages contain programming contents supporting technology must be consider
3) Based upon the programs select Windows hosting or Linux hosting

Domain Name System(DNS) Registration
Millions of websites are available over Internet so that ourwebsite must be registered with a suitable name. Domain Name registration is used to identify a website over Internet. A domain name must be unique(i.e. no two website with same name is available). So you have to check the availability of domain name before you register it, for this www.whois.net website will help. If the domain name entered is available then we can register it by paying the Annual registration fees through online.

FTP (File Transfer Protocol) client software When a client requests a website by entering website address. Then FTP client software helps to establish a connection between client computer and remote server computer. Unauthorised access is denied by using username and password hence secure our website files forthat SSH(Secure Shell) FTP simply SFTP is used. Instead of http://, it uses ftp://.
By using FTP client s/w we can transfer(upload) the files from our computer to the web server by using the ‘drag and drop’ method. The popular FTP client software are FileZilla, CuteFTP, SmartFTP, etc.

Free hosting
The name implies it is free of cost service and the expense is meet by the advertisements. Some service providers allow limited facility such as limited storage space, do not allow multimedia(audio and video) files.
A paid service website’s address is as follows
eg: www.bvmhsskalparamba.com

Usually two types of free web hosting services as follows
1) as a directory service.
Service provider’s website address/ ourwebsite address
eg: www.facebook.com / bvm hss kalparambu
2) as a Subdomain
Our website address, service providers website address
eg: bvmhsskalparamba.facebook.com

Earlier web hosting services are expensive but nowadays it is cheaper hence reduced the need for free web hosting.
Example for free web hosting.

Content Management System(CMS)
Do you heard about Data Base Management System(DBMS). DBMS is a software(collection of programs) used to create, alter, modify, delete and retrieve records of a DataBase. Similarly, CMS is a collection of programs that is used to create, modify, update and publish website contents. CMS can be downloaded freely and is useful to design and manage attractive and interactive websites with the help of templates that are available in CMS. WordPress, Joomla, etc are examples of CMS.

Responsive web design
The home page is displayed differently according to the screen size of the browser window(different screen sized devices-mobile phone, palmtop, tablet, laptop, and desktop) we used. The website is designed dynamically(flexibly) that suit the screen size of a different device introduced by Ethan Marcotte. Before this, companies have to design different websites for different screen sized devices. By responsive web design, companies have to design only one website that suitably displayed according to the screen size of the devices. It is implemented by using a flexible grid layout, images, and media queries

Flexible grid layouts: It helps to set the size of the web page to fit the screen size of the device.

Flexible image and video: It helps to set the image or video dimension to fit the screen size of the device.

Media queries: There is an option(settings) to select the size of the web page to match our device, this can be done by using media queries inside the CSS file.

A well known Malayalam daily Malayala Manorama launched their responsive website.

Kerala State Board New Syllabus Plus Two Computer Application Notes Chapter 6 Client-Side Scripting Using Java Script.

Kerala Plus Two Computer Application Notes Chapter 6 Client-Side Scripting Using Java Script

JavaScript(Original name was Mocha) was developed by Brendan Eich for the Netscape Navigator browser later all the browsers support this.

Getting Started With Javascript

Scripts are small programs embedded in the HTML pages, to write scripts <SCRIPT> tag is used.

Two types of scripts
1. Client scripts – These are scripts executed . by the browser(client) hence reduces network traffic and workload on the server.
2. Server scripts – These are scripts executed by the server and the results as a webpage returned to the client browser.

The languages that are used to write scripts are known as scripting languages. Eg: VB Script, Javascript etc.

Javascript and VB Script are the two client-side scripting languages.

Java script developed by Brendan Eich for the Netscape browser) is a platform-independent scripting language. Means It does not require a particular browser. That is it runs on any browser hence it is mostly accepted scripting language. But VB Script(developed by Microsoft) is a platform-dependent scripting language. Means it requires a particular browser(MS Internet Explorer) to work which is why it is not a widely accepted scripting language.

Attribute makes the tags meaningful

Language attribute specifies the name of the scripting language used.

Example:
<SCRIPT Language=”JavaScript”>
</SCRIPT>

The identifiers are case sensitive (means Name and NAME both are treated as different)

CamelCase: An identifier does not use special characters such as space hence a single word is formed using multiple words. Such a naming method is called CamelCase(without space between words and all the words first character is in upper case letter). These are two types
1) UpperCamelCase : when the first character of each word is capitalised.
Eg. Date Of Birth, JoinTime, etc….
2) LowerCamelCase: when the first character of each word except the first word is capitalised.
Eg. dateOfBirth, joinTime, etc,…

To write anything on the screen the following function is used document.write(string);
eg. document.writefWelcome to BVM HSS, Kalparamba”);

Note: Like C++ each and every statement in javascript must be end with semicolon(;).

To create a web page using javascript

<HTML>
<HEAD><TITLE>JAVASCRIPT- WELCOME</
TITLE></HEAD>
<BODY>
<SCRIPT Language=”JavaScript”>
document.write(“welcome to my first javascript page”);
</SCRIPT>
</BODY>
</HTML>

Its output is as follows

Creating Functions in Javascript

Function: Group of instructions(codes) with a name, declared once can be executed any number of times. There are two types
1) built in and
2) user defined

To declare a function, the keyword function is used.

A function contains a function header and function body

Even though a function is defined within the body section, it will not be executed, if it is not called.
Syntax:

function <function name>()
{
Body of the function;
}
Eg: function print()
{
document.write(“Welcome to JS”);
}

Here function is the keyword.
print is the name of the user defined function
To execute(call) the above function namely print do as follows:
print();
Eg:
<HTML>
<HEAD><TITLE>JAVASCRIPT- functions</
TITLE></HEAD>
<SCRIPT Language=”JavaScript”>
function print()
{
document.write(“welcome to my first javascript page using print function”);
}
</SCRIPT>
<BODY>
<SCRIPT Language=”JavaScript”>
print();
</SCRIPT>
</BODY>
</HTML>

Data Types in Javascript

Unlike C++ it uses only three basic data types
1) Number: Any number(whole or fractional) with or without sign.
Eg: +1977, -38.0003, -100, 3.14157,etc
2) String: It is a combination of characters enclosed within double quotes.
Eg: “BVM”, “jobi_cg@rediffmail.com”, etc
3) Boolean: We can store either true or false.lt is case sensitive. That means can’t use TRUE OR FALSE

Variables in Javascript

For storing values you have to declare a variable, for that the keyword var is used. There is no need to specify the data type.
Syntax:
var<variable name1> [, <variable name2>, <variable name3>, etc…]
Here square bracket indicates optional.
Eg: var x, y, z;
x = 11;
y = “BVM”;
z = false;
Here x is of number type, y is of string and z is of Boolean type.
typeof(): this function is used to return the data type
undefined: It is a special data type to represent variables that are not defined using var.

Operators in Javascript
Operators are the symbols used to perform an operation

Arithmetic operators
It is a binary operator. It is used to perform addition(+), subtraction(-), division(/), multiplication(*), modulus (%-gives the remainder) , increment(++) and decrement(–) operations.
Eg. If x = 10 and y = 3 then

If x = 10 then
document.write(++x); -> It prints 10 + 1 = 11
If x = 10 then
document.write(x++); -> It prints 10 itself.
If x = 10 then
document.write(–x); It prints 10 – 1 = 9
If x = 10 then
document.write(x–); -> It prints 10 itself.

Assignment operators
If a = 10 and b = 3 then a = b.
This statement sets the value of a and b are the same, i.e. it sets a to 3.
It is also called shorthands
If X = 10 and Y = 3 then

Relational(Comparison) operators
It is used to perform a comparison or relational operation between two values and returns either true or false.
Eg:
If X = 10 and Y = 3 then

Logical operators
Here AND(&&), OR(||) are binary operators and NOT(!) is a unary operator. It is used to combine relational operations and it gives either true or false
If X = true and Y = false then

Both operands must be true to get a true value in the case of AND(&&) operation
If X = true and Y = false then

Either one of the operands must be true to get a true value in the case of OR(||) operation
If X = true and Y = false then

String addition operator(+)
This is also called a concatenation operator. It joins(concatenates) two strings and forms a string.
Eg:
var x, y, z;
x = “BVM HSS”;
y = “Kalparamba”;
z = x + y;

Here the variable z becomes “BVM HSS Kalparamba”.

Note: If both the operands are numbers then the addition operator(+) produces a number as a result otherwise it produces a string as a result.

Consider the following

Eg:
1) 8(number) + 3(number) = 11 (Result is a number)
2) 8 (number) + “3”( string) = “83” (Result is a string)
3) “8” (string) + 3 (number) = “83”(Result is a string)
4) “8” (string) + “3” (string) = “83” (Result is a string)

Control Structures in JavaScript
In general, the execution of the program is sequential, we can change the normal execution by using the control structures.

Simple if Syntax:

if(test expression)
{
statements;
}
First the test expression is evaluated,

if it is true then the statement block will be executed otherwise not.

if-else Syntax:

if(test expression)
{
statement block1;
}
else
{
statement block2;
}

First the test expression is evaluated, if it is true then the statement block1 will be executed otherwise statement block2 will be evaluated.

Switch
It is a multiple bratich statement. Its syntax is given below.

switch(expression)
{
case value1: statements;break;
case value2: statements;break;
case value3: statements;break;
case value4: statements;break;
case value5: statements;break;
..................................
default: statements;
}

First expression evaluated and selects the statements with matched case value.

for loop
The syntax of for loop isgiven below

For(initialisation; testing; updation)
{
Body of the for loop;
}

while loop
It is an entry controlled loop The syntax is given below

Loop variable initialised
while(expression)
{
Body of the loop;
Update loop variable;
}

Here the loop variable must be initialised outside the while loop. Then the expression is evaluated if it is true then only the body of the loop will be executed and the loop variable must be updated inside the body. The body of the loop will be executed until the expression becomes false.

Built-in Functions (methods)
1) alert(): This is used to display a message (dialogue box) on the screen.
eg: alert(“Welcome to JS”);
2) isNaN(): To check whether the given value is a number or not. It returns a Boolean value.
If the value is not a number(NaN) then this function returns a true value otherwise it returns a false value.
Eg.

1. isNaN(“BVM”); returns true
2. isNaN(8172); returns false
3. isNaN(“680121″); returns false
4. alert(isNaN(8172); displays a message box as false

3. toUpperCase(): This is used to convert the text to uppercase.
Eg: var x=”bvm”;
alert(x.toUpperCase());

4. toLowerCase(): This is used to convert the text to lowercase.
Eg: var x=”BVM”;
alert(x.toLowerCase());

5. charAt(): It returns the character at a particular position.
Syntax: variable.charAt(index);
The index of first character is 0 and the second is 1 and so on.
Eg.var x=”HIGHER SECONDARY”;
alert(x.charAt(4));
Eg 2.
var x=”HIGHER SECONDARY”;
alert(“The characters @ first position is “+x.charAt(O));

6. length property: It returns the number of characters in a string.
Syntax: variable.length;
Eg.
var x=”HIGHER SECONDARY”;
alert(“The number of characters is “+ x.length);
Output is as follows(note that space is a character)

Accessing Values in a Textbox Using JavaScript.

Name attribute of FORM, INPUT, etc is very important for accessing the values in a textbox.

Consider the following program to read a number and display it

<HTML>
<HEAD><TITLE>JAVASCRIPT- read a value from the console</TITLE>
<SCRIPT Language=”JavaScript”>
function print()
{
var num;
num=document.frmprint.txtprint. value;
document.write(“The number you entered is ” + num);
}
</SCRIPT>
</HEAD>
<BODY>
<FORM Name=”frmprint”>
<CENTER>
Enter a number
< IN PUT Type=”text” name=”txtprint”>
<INPUT Type=”button” value=”Show” onClick= “print()”>
</CENTER>
</FORM>
</BOD Y>
</HTML>

In the above code,
print() is the user-defined function.
onClick is an event(lt is a user action). The function print() is executed when the user clicks the show button. Here code is executed as a response to an event.
frmprintisthe name of the form.
txtprint is the name of the text.

Ways to Add Scripts to a Web Page.

Inside <BODY> section
Scripts can be placed inside the <BODY> section.

Inside <HEAD> section
Scripts can be placed inside the <HEAD> section.
This method is a widely accepted method

External (another) JavaScript file
We can write scripts in a file and save it as a separate file with the extension .js. The advantage is that this file can be used across multiple HTML files and can be enhance the speed of page loading.

Kerala State Board New Syllabus Plus Two Business Studies Chapter Wise Previous Questions and Answers Chapter 13 Entrepreneurial Development.

Kerala Plus Two Business Studies Chapter Wise Previous Questions Chapter 13 Entrepreneurial Development

Plus Two Business Studies Business Entrepreneurial Development 3 Marks Important Questions

Question 1.
List out the important characteristics of entrepreneurship. [March – 2016]
Answer:
Characteristics of Entrepreneurship

• It is a systematic and purposeful activity.
• The object of entrepreneurship is a lawful business.
• Entrepreneurship is a creative and innovative response to the environment and an ability to recognize, initiate and exploit an economic opportunity.

Question 2.
“An entrepreneur is not only the composer of the musical score and the conductor of the orchestra but also a one-man band.” In light of the above statement, explain the role of entrepreneurs in relation to an enterprise. [May – 2016]
Answer:
Role of Entrepreneurs in Relation to their Enterprise

• Perceiving market opportunities
• Gaining command over scarce resources.
• Marketing of the products and responding to competition.

Question 3.
State the important characteristics of entrepreneurship. [March – 2017]
Answer:
Characteristics of Entrepreneurship

• It is a systematic and purposeful activity.
• The object of entrepreneurship is a lawful business.
• Entrepreneurship is a creative and innovative response to the environment and an ability to recognize, initiate and exploit an economic opportunity.

Question 4.
Naveen wants to establish a business enterprise of his own. Appraise him about the various steps he needs to go through in the process of setting the business. [May – 2017]
Answer:
Process of Setting up a Business Resource mobilization

Kerala State Board New Syllabus Plus Two Business Studies Chapter Wise Previous Questions and Answers Chapter 12 Consumer Protection.

Kerala Plus Two Business Studies Chapter Wise Previous Questions Chapter 12 Consumer Protection

Plus Two Business Studies Consumer Protection 1 Mark Important Questions

Question 1.
Which is acclaimed to be the ‘Magna Carta’ of Indian Consumers? (February – 2009)
Answer:
Consumer Protection Act 1986.

Question 2.
Smt. Sindhy purchased a silksaree costing Rs. 5000. After first wash, it has lost the colour and caused huge loss to her. She lodged a complaint to the redressal forum. It was held’that she will be given a sum of Rs. 5000 as compensation. Identify the redressal forum she might have lodged the complaint. (May -2010)
Answer:
District Forum

Question 3.
Which of the following pair is ‘not correct? (March – 2011)
a) External Environment- Beyond the Control of the Management.
b) Consumer Protection Act-Technological Environment.
Answer:
b) Consumer Protection Act – Technological Environment

Question 4.
In which year Consumer Protection Act was enacted? (March – 2011)
Answer:
1986

Question 5.
Consumer Protection Act -1968 (May – 2012)
MRTPAct, 1969
Companies Act, 1956
One of the years of the above-mentioned enactments is wrong.
Answer:
Consumer Protection Act -1986

Question 6.
Which of the following is not a consumer right? (March – 2013)
a) Right to safety
b) Right to education
c) Right to choose
d) Right to get goods at lower cost
Answer:
d) Right to get goods at lower cost

Question 7.
Mr.Pradeep purchased a ready-made shirt costing Rs. 1000/- After the first wash, it has lost its colour and caused high loss to him. He lodged a complaint to the redressal forum. It was held that he will be given a sum of Rs. 1000/- as compensation. (May – 2013)
Answer:
District Forum

Plus Two Business Studies Consumer Protection 2 Marks Important Questions

Question 1.
Even though the consumer is regarded as the king of the market, every after his rights are not protected. Comment on this statement with your justification. (February – 2010)
Answer:

• Right to Safety
• Right to be Informed
• Right to Choose
• Right to be Heard
• Right to seek Redressal
• Right to Consumer Education

Plus Two Business Studies Consumer Protection 3 Marks Important Questions

Question 1.
Explain any three consumer rights. (March – 2011)
Answer:

• Right to be Heard: The consumer has a right to file a complaint and to be heard in case of dissatisfaction with goods or services.
• Right to seek Redressal: The consumer has a right to get relief in case the product or service falls short of his expectations.
• Right to Consumer Education: The consumer must be educated about the rights and remedies available under different laws.

Question 2.
Two months back, Shyjal purchased a DVD player from Aroma Traders, Kottayam. But at present, it is not working properly. Even though it has 1 year’s replacement warranty, Aroma Traders refused to replace the DVD to Shyjal. Explain the redressal agencies available to Shyjal against Aroma Traders. (May – 2012)
Answer:
District Forum, State Commission and National Commission.

Question 3.
Kochumol purchased a Samsung Cell phone with one year warranty. Before the expiry period the phone get damaged. When she approached the shopkeeper he refused to replace or repair in it. (March – 2013)
a) Is the act of shopkeeper is fair?
b) Where should she lodge her complaint?
Answer:
a) No
b) District Forum

Question 4.
In India there are different consumer protection agencies, Name any six of them. (March – 2015)
Answer:
Consumer Protection Agencies are :-

• Consumer Coordination Council,Delhi
• Common Cause, Delhi
• Voluntary Organisation in Interest of Consumer Education (VOICE), Delhi
• Consumer Education and Research Centre (CERC), Ahmedabad
• Consumer Protection Council (CPC), Ahmedabad
• Consumer Guidance Society of India (CGSI), Mumbai
• Mumbai GrahakPanchayat, Mumbai
• Karnataka Consumer Service Society, Bangalore
• Consumers’Association, Kolkata
• Consumer Unity and Trust Society (CUTS), Jaipur

Plus Two Business Studies Consumer Protection 4 Marks Important Questions

Question 1.
Name any 4 Acts to protect the rights and interests of consumers. (May – 2009)
Answer:

• The Consumer Protection Act-1986
• The Indian contract act-1812
• The Sale of Goods Act -1930
• The essential commodities Act -1955

Question 2.
Explain any four functions of consumer association. (March – 2010)
Answer:

• Educating the general public about consumer rights by organising training programmes, seminars and workshops.
• Publishing periodicals and other publications.
• Collecting various Samples of different goods and testing their quality.
• Encouraging consumers to protest against exploitative and unfair trade practices of sellers.
• Providing legal assistance to consumers by way of providing aid, legal advice, etc.

Question 3.
Consumer problems in India are highly complex in nature. The exploitation of consumers will be stopped only if they start exercising their rights and perform their responsibilities. Point out the responsibilities of customers in this respect. (May -2010)
Answer:

• Be aware of various goods and services available in the market.
• Buy only standardised goods as they provide quality assurance.
• Learn about the risks associated with products and services, follow the manufacturer’s instructions and use the products safely.
• Read labels carefully so. as to have information about prices, net weight, manufacturing and expiry dates, etc.
• Choose only from legal goods and services.

Question 4.
In India there are different means for consumer protection. Explain any four of such agencies. (May – 2011)
Answer:
The following are the important ways and means for consumer protection in India:

1. Lok Adalats : The Lok Adalat is a legal grievance redressal system. These type of courts are introduced for speedy, effective and economic redressal of cases.
2. Public Interest Litigation (PIL): It is means to provide legal representation to previously unrepresented groups and interests.
3. Environment-Friendly Products : The scheme is consumer oriented so that the people prefer the items which are not harmful to the environment in their manufacture, use and disposal.
4. Redressal Forums : Under the Consumer Protection Act 1986, several redressal forums have been created to deal with consumer grievances, i.e. District forums, State Commission and National Commission.

Question 5.
Consumers are often exploited by profiteering business. What are the measures available to safeguard them? (March – 2012)
Answer:
Means of Consumer Protection :

• Consumer Protection Act 1986
• Lok Adalat
• Public Interest Litigation (PIL)
• Environment-friendly products
• Redressal Forums and Consumer Protection Council
• National Youth Award of consumer protection
• Publicity measures

Question 6.
While conducting interviews of marketing executives in J.L.agencies, one candidate replies that ‘consumers have no right’. Do you agree with the candidate? Justify your answer. (March – 2014)
Answer:
a) No

b)

1. Right to Safety : The consumer has a right to’ be protected against goods and services which are hazardous to life and health.
2. Right to be Informed : The consumer has a right to have complete information about the product he intends to buy including its ingredients, date of manufacture, price, quantity, directions for use, etc.
3. Right to Choose : The consumer has the freedom to choose from a variety of products at competitive prices.
4. Right to be Heard: The consumer has a right to file a complaint and to be heard in case of dissatisfaction with goods or services.

Question 7.
‘Due to the ignorance of consumers about their rights they are exploited in the market.’ Briefly describe various consumer rights as per Consumer Protection ACt,. 1986 in the light of above statement. (March -2016)
Answer:
Consumer Rights

1. Right to Safety: The consumer has a right to be protected against goods and services which are hazardous to life and health.
2. Right to be Informed : The consumer has a right to have complete information about the product he intends to buy including its ingredients, date of manufacture, price, quantity, directions for use, etc.
3. Right to Choose: The consumer has the freedom to choose from a variety of products at competitive prices.
4. Right to be Heard : The consumer has a right to file a complaint^nd to be heard in case of dissatisfaction with goods or services.

Question 8.
Define a consumer as defined by the Consumer Protection Act, 1986. Briefly explain how the consumer grievances are redressed in India. (May -2016)
Answer:
Consumer: Under the Consqmer Protection Act, a consumer is defined as:

• Any person who buys any goods for a consideration.
• Any person who hires or avails of any service, for a consideration.
• Redressal Agencies under the consumer protection Act 1986 are:
  1. District forum
  2. State commission
  3. National commission

Question 9.
Consumers also have some responsibility while purchasing and consuming goods and services. Do you agree with this? State any four consumer responsibility in this regard. (March -2017)
Answer:

1. Yes. I agree with this statement.
2. Consumers’ Responsibilities
   • Be aware about various goods and services available in the market.
   • Buy only standardised goods as they provide quality assurance.
   • Learn about the risks associated with products and services, follow the manufacturer’s instructions and use the products safely.

Question 10.
List out the Safeguards and rights provided to customers by the Consumers’Protection Act, 1986. (May -2017)
Answer:
Consumer Rights

1. Right to Safety: The consumer has a right to be protected against goods and services which are hazardous to life and health.
2. Right to be Informed : The consumer has a right to have complete information about the product he intends to buy including its ingredients, date of manufacture, price, quantity, directions for use, etc.
3. Right to Choose : The consumer has the freedom to choose from a vanety of products at competitive prices.
4. Right to be Heard : The consumer has a right to file a complaint and to be heard in case of dissatisfaction with goods õr services.

Plus Two Business Studies Consumer Protection 5 Marks Important Questions

Question 1.
No shopping with closed eyes. Elucidate the statement with regard to consumer rights and responsibilities. (February – 2009)
Answer:

1. Be aware about various goods and services avail’ able in the market.
2. Buy only standardised goods as they provide quality assurance.
3. Learn about the risks associated with products and services, follow manufacturer’s instructions and use the products safely.
4. Read labels carefully so as to have information about prices, net weight, manufacturing and expiry dates, etc.
5. Choose only from legal goods and services.
6. Ask for a cash memo on purchase of goods or services.

Question 2.
Mrs. Mahija purchased a calculator from a nearby shop. They give one-year replacement guarantee. After two weeks the calculator fails to perform. Mahija, approaches the trader for replacement. But the trader refused to replace it. (March -2009)
a) State whether Mahija is considered as a consumer under the Consumer Protection Act. Justify your answer.
b) State different rights of Consumers under this Act.
Answer:
a) Yes
b) Consumer: Under the Consumer Protection Act, a consumer is defined as:
a) Any person who buys any goods for a consideration.
b) Any person who hires or avails of any service, for a consideration.

Kerala State Board New Syllabus Plus Two Business Studies Chapter Wise Previous Questions and Answers Chapter 11 Marketing Management.

Kerala Plus Two Business Studies Chapter Wise Previous Questions Chapter 11 Marketing Management

Plus Two Business Studies Marketing Management 1 Mark Important Questions

Question 1.
Marketing mix is the combination of four Ps which constitute the core of the company’s marketing system. What are they? (MARCH-2009)
Answer:
Product, Price, Place and Promotion.

Question 2.
In a classroom debate, Amitha argues that selling is coming under marketing and Smitha argues that marketing comes under selling. Whose argument is logical? (MARCH-2010)
Answer:
Amitha’s argument is logical. Selling comes under marketing.

Question 3.
The management of New Kerala Soaps Ltd. manufactuers of toilet soaps, in facing the problems of poor sales. As a marketing expert, suggest them a suitable sales promotional measure to increase their sales. (MAY-2010)
Answer:
Rebates, samples, free gifts etc.

Question 4.
Product planning and development begins with identification of consumer needs – Do you agree with this? (MARCH-2012)
Answer:
Yes. Agree

Question 5.
Mr. Vineeth is a producer of Pickles and sells them directly to the households. The above mentioned situation is an example of channel level. (MAY-2012)
a) Three
b) Two
c) One
d) Zero
Answer:
Zero level channel

Question 6.
Time utility is created by (MARCH-2013)
a) Packaging
b) Warehousing
c) Physical distribution
d) Promotion
Answer:
Warehousing

Question 7.
List out any two sales promotional activities. (MARCH-2014)
Answer:
Bonus, Sample, Coupons, Rebate, Free gift etc.

Question 8.
Short term incentives designed to encourage the buyers to make immediate purchase of a product or service is known by the name. (MAY-2016)
a) Personal selling
b) Sales promotion
c) Branding
d) Labelling
Answer:
Sales promotion

Question 9.
Jewellery is an example of (MARCH-2017)
a) Convenience Product
b) Durable Product
c) Shopping Product
d) Non-durable Product
Answer:
Durable Product

Question 10.
Advertising falls under which on the following elements of.marketing mix? (MAY-2017)
a) Promotion
Place
c) Price
Product
Answer:
a) Promotion

Plus Two Business Studies Marketing Management 2 Marks Important Questions

Question 1.
Identify four P’s in marketing mix. (MARCH-2009)
Answer:
Product, Price, Place and Promotion.

Question 2.
Find the odd one and state reason. (MAY-2009)
a) Rebate
b) Discounts
c) Dividend
d) Free gifts
Answer:
Dividend. All others are various sales promotion methods.

Question 3.
What do you mean by‘Marketing Research’? (MARCH-2013)
Answer:
Marketing Research: Marketing Research is a process of collecting and analysing market information to identify the needs and wants of the customers.

Question 4.
Complete the series: (MARCH-2015)
a) Treasury Bills -14 to 364 days
b) Call Money (?)
c) Commercial Paper (?)
Answer:
b) Call Money -1 to 14 Days
c) Commercial Paper – 90 to 180 Days

Question 5.
Colgate Palmolive Ltd. markets Colgate toothpaste in different colours with varying features. (MARCH-2015)
a) Point out the element of the product mix referred here.
b) Explain it.
Answer:
a) Depth of the mix
b) Variation in the product line for a product.

Plus Two Business Studies Marketing Management 3 Marks Important Questions

Question 1.
The management on New Cosmetics Ltd. manufacturers of cosmetics is facing the problem of poor sale. As a marketing expert suggest them a sales promotional measure to increase their sales (MARCH-2016)
Answer:
Samples, Coupons, free gifts etc.

Question 2.
Briefly explain the various levels of packaging of products available. (MAY-2015)
Answer:
Levels of Packaging
1) Primary Package: It refers to the product’s immediate container, e.g. toothpaste tube, match box, etc.
2) Secondary Packaging : It refers to additional layers of protection that are kept till the product is ready for use.
3) Transportation Packaging : It refers to further * packaging components necessary for storage, identification or transportation.

Question 3.
“Packaging performs a number of functions in the marketing of goods.” Give the important functions of packaging. (MAY-2016)
Answer:
Functions of Packaging
1. Packaging helps in identification of the products.
2. Packaging protects the product from spoilage, breakage, leakage, etc.
3. It facilitates easy transfer of goods to customers.

Question 4.
There exists confusion while using theterms ‘marketing’ and ‘selling’. Help in differentiating the terms. (MAY-2017)
Answer:

Marketing	Selling
1. Marketing is a wider term consisting of number of activities.	1. It is a narrow concept.
2. It is concerned with product planning and development.	2. It is concerned with sale of goods already produced.
3. It focuses on maximum satisfaction of the customer.	3. It focuses on the maximum satisfaction of the sellers through the exchange of products.
4. It aims at profits through consumer satisfaction.	4. It aims at maximum profit through maximisation of sales.
5. Marketing begins before actual production.	5. Selling takes place after the production.
6. It is customer oriented. Customer is important.	6. It is product oriented. Product is more important.
7. The principle of “let the seller beware” is followed,	7. The principle of “let the buyer” beware is followed.

Plus Two Business Studies Marketing Management 4 Marks Important Questions

Question 1.
The manager of impact enterprises dealing in cosmetics in facing the problems of poor sales. Suggest and explain any foursales promotional measures that can be undertaken to improve the sales. (FEBRUARY – 2010)
Answer:
Techniques of Sales Promotion
1) Rebate : Offering products at special prices, to clear off excess inventory.
2) Discount: Offering products at less than maximum retail price.
3) Refund: The seller offers to refund a part of the price paid by the customer on production of some proof of purchase.
4) Free gifts : Offering another product as gift along with the purchase of a product.
5) Quantity Gift: Offering extra quantity of the product.
6) Contests : Prize contests are organized for the consumers and winners are given attractive prizes.
7) Money refund: There are certain manufacturers who promise to refund the price of the product, if it does not satisfy the consumer.
8) Samples: Offer of free samples of a product to customers at the time of introduction of a new product.

Question 2.
Marketing mix consist of 4 P’s. Explain these 4 P’s. (FEBRUARY -2010)
Answer:
Marketing Mix: It refers to the combination of four basic marketing tools (Product, Price, Place and Promotion) that a firm uses to pursue its marketing objectives in a target market.

Question 3.
‘Marketing Mix represents a blending of decisions in four inter-related elements.” – Explain. (MAY-2010)
Answer:
Merits of Sales Promotion
1) Sales promotion activities attract attention of the people.
2) Sales promotion tools can be very effective at the time of introduction of a new product in the market.
3) Sales promotion helps to increase sales.
4) It creates new customers and retains existing customers.
5) Consumers can purchase quality products at low cost.

Question 4.
Your friend, who is studying in science class asked you about marketing and what are its functions. What reply to you give? (MARCH-2014)
Answer:
Marketing : Marketing may be defined as all activities that are facilitating the movement of goods and services from producer to the ultimate consumer.
Functions of Marketing
1) Marketing Research : Marketing Research is a process of collecting and analysing market information to identify the needs and wants of the customers.
2) Marketing Planning : Another function of marketing is to develop appropriate marketing plans so that the marketing objectives of the organisation can be achieved.
3) Product Designing and Development: The products are designed and developed according to the needs and wants of the consumers. It requires decision making on various aspects such as the product to be manufactured, its packing, selling price, quality of the product, etc.
4) Standardisation and Grading: Standardisation refers to producing goods of predetermined specifications.
Grading is the process of classification of products info different groups, on the basis of quality, size, etc.
5) Packaging and Labelling : Packaging refers to designing and developing the package for the products. Packaging gives protection to goods. Also it attracts the consumers to buy the product. Labelling refers to designing and developing the label to be put on the package.
6) Branding: A brand is a name, term, sign, symbol, design or some combination of them, used to identify the products of one seller and to differentiate them from those of the competitors.
7) Customer Support Services : An important function of the marketing management is to develop customer support services such as after sales services, handling customer complaints, etc. which provides maximum satisfaction to the customers.
8) Pricing : Price of a product refers to the amount of money which customers have to pay to obtain a product. Price is an important factor affecting the success or failure of a product in the market. Price is fixed after taking into account the cost of production, desired profit, competitor’s price, govt, policy, etc.
9) Promotion : Promotion of products and services involves informing the customers about the firm’s product, its features, etc. and persuading them to purchase these products. It includes Advertising, Personal Selling, Publicity and Sales Promotion.
10) Physical Distribution : It includes decision regarding channels of distribution and physical movement of the product from the production centre to the consumption centre.
11) Transportation: Transportation involves physical movement of goods from one place to another. It removes the hindrance of place and creates time utility.
12) Storage or Warehousing : In order to maintain smooth flow of products in the market, there is a need for proper storage of the products. It stabilizes the prices of products and keep the product without damage until they are sold.

Question 5.
The aim of ‘marketing’ and ‘selling’ is to maximize profit. Yet they differ in their approach. Differentiate between these two by pointing out four differences (MARCH-2015)
Answer:

Marketing	Selling
1. Marketing is a wider term consisting of number of activities.	1. It is a narrow concept.
2. It is concerned with product planning and development.	2. It is concerned with sale of goods already produced.
3. It focuses on maximum satisfaction of the customer.	3. It focuses on the maximum satisfaction of the sellers through the exchange of products.
4. It aims at profits through consumer satisfaction.	4. It aims at maximum profit through maximisation of sales.
5. Marketing begins before actual production.	5. Selling takes place after the production.
6. It is customer oriented. Customer is important.	6. It is product oriented. Product is more important.
7. The principle of “let the seller beware” is followed,	7. The principle of “let the buyer” beware is followed.

Question 6.
“Marketing mix is a combination of 4Ps.” Briefly ex-plain 4Ps of marketing mix. (MARCH-2016)
Answer:
Product, price, Place and Promotion.
Elements / 4 Ps of Marketing Mix Marketing Mix: It refers to the combination of four basic marketing tools (Product, Price, Place and Promotion) that a firm uses to pursue its marketing objectives in a target market.

Elements / 4 P’s of Marketing Mix
1) Product: Product means goods or services or ‘anything of value’, which is offered to the market for sale. The important product decisions include deciding about the features, quality, packaging, labelling and branding of the products.
2) Price : Price is the amount of money paid by the customers to pay to obtain the product. In most of the products, price affects the demand of the products. Desired profits, cost of production, competition, demands, etc. must be considered before fixing the price of a product.
3) Place : Place or Physical Distribution includes activities that make firm’s products available to the target customers. Important decision areas in this respect include selection of dealers, storage, warehousing and transportation of goods from the place of production to the place of consumption.
4) Promotion : Promotion includes activities that communicate availability, features, merits, etc. of the products to the target customers and persuade them to buy it. It includes advertising, personal selling, sales promotion and publicity to promote the sale of products.

Plus Two Business Studies Marketing Management 5 Marks Important Questions

Question 1.
Explain the elements of marketing mix. (FEBRUARY – 2009)
Answer:
Marketing Mix: It refers to the combination of four basic marketing tools (Product, Price, Place and Promotion) that a firm uses to pursue its marketing objectives in a target market.

Elements / 4 P’s of Marketing Mix
1) Product: Product means goods or services or ‘anything of value’, which is offered to the market for sale. The important product decisions include deciding about the features, quality, packaging, labelling and branding of the products.
2) Price : Price is the amount of money paid by the customers to pay to obtain the product. In most of the products, price affects the demand of the products. Desired profits, cost of production, competition, demands, etc. must be considered before fixing the price of a product.
3) Place : Place or Physical Distribution includes activities that make firm’s products available to the target customers. Important decision areas in this respect include selection of dealers, storage, warehousing and transportation of goods from the place of production to the place of consumption.
4) Promotion : Promotion includes activities that communicate availability, features, merits, etc. of the products to the target customers and persuade them to buy it. It includes advertising, personal selling, sales promotion and publicity to promote the sale of products.

Question 2.
Mr. Shahul is a newly appointed salesman in marketing department. He has no clear idea about the factors to be considered while fixing the price of a product. If he is asking you being a commerce stu-dent, which answer will you give? (MARCH -2009)
Answer:
Factors Affecting Price Determination
1) Product Cost: One of the most important factors affecting price of a product or service is its cost of production and distribution. Fixed Costs, Variable Costs and Semi- Variable Costs are to be considered for determining the price.
2) Demand : The price of a product is affected by the elasticity of demand of the product. If the demand of a product is inelastic, the firm is in a better position to fix higher prices.
3) Competition : Competitors’ prices and their anticipated reactions must be considered before fixing the price of a product. In case of high competition, it is desirable to keep price low.
4) Government and Legal Regulations: In order to protect the interest of public against unfair practices, prices of some essential products are regulated by the government under the Essential Commodities Act., e.g. Medicines.
5) Pricing Objectives : Another important factor affecting the fixation of price of a product is pricing objectives, e.g. maximisation of profit, market share, etc.

Question 3.
There are several factors influencing pricing. Classify these factors as internal and external. (FEBRUARY -2010)
Answer:
Factors Affecting Price Determination
1) Product Cost: One of the most important factors affecting price of a product or service is its cost of production and distribution. Fixed Costs, Variable Costs and Semi- Variable Costs are to be considered for determining the price.
2) Demand : The price of a product is affected by the elasticity of demand of the product. If the demand of a product is inelastic, the firm is in a better position to fix higher prices.
3) Competition : Competitors’ prices and their anticipated reactions must be considered before fixing the price of a product. In case of high competition, it is desirable to keep price low.
4) Government and Legal Regulations: In order to protect the interest of public against unfair practices, prices of some essential products are regulated by the government under the Essential Commodities Act., e.g. Medicines.
5) Pricing Objectives : Another important factor affecting the fixation of price of a product is pricing objectives, e.g. maximisation of profit, market share, etc.

Question 4.
Explain different sales promotion techniques. (MARCH-2011)
Answer:
1) Quantity Gift: Offering extra quantity of the product.
2) Contests : Prize contests are organized for the consumers and winners are given attractive prizes.
3) Money refund : There are certain manufacturers who promise to refund the price of the product, if it does not satisfy the consumer.
4) Samples : Offer of free samples of a product to customers at the time of introduction of a new product.

Question 5.
How ‘Advertising’ differs from ‘Personal Selling? (MARCH-2011)
Answer:

Advertising	Personal selling
1.       It is an impersonal form of communication.	1.     It is a personal form of communcation.
2.       It is inflexible.	2.     It is highly flexible.
3.       Same message is sent to all the customers in a market segment	3.     The sales talk is adjusted according to the customer’s background and needs.
4.       Advertising lacks direct feedback	4.     Personal selling provides direct and immediate feedback.
5.       The cost per person is low	5.     The cost per person is very high

Question 6.
Marketing is a continuous process of identifying consumer needs and fulfilling such needs through product development, promotion and pricing. Comment. Is it different from selling? If yes, state the differences. (MARCH-2012)
Answer:
a) Marketing and selling are different.

Marketing	Selling
1. Marketing is a wider term consisting of number of activities.	1. It is a narrow concept.
2. It is concerned with product planning and development.	2. It is concerned with sale of goods already produced.
3. It focuses on maximum satisfaction of the customer.	3. It focuses on the maximum satisfaction of the sellers through the exchange of products.
4. It aims at profits through consumer satisfaction.	4. It aims at maximum profit through maximisation of sales.
5. Marketing begins before actual production.	5. Selling takes place after the production.
6. It is customer oriented. Customer is important.	6. It is product oriented. Product is more important.
7. The principle of “let the seller beware” is followed,	7. The principle of “let the buyer” beware is followed.

Question 7.
What are the factors that Mr.Nassar should consider while fixing the price of a new washing soap introduced by him? (MAY-2012)
Answer:
Pricing : Price may be defined as the amount of money paid by a buyer in consideration of the purchase of a product or a service.
Factors Affecting Price Determination
1) Product Cost: One of the most important factors affecting price of a product or service is its cost of production and distribution. Fixed Costs, Variable Costs and Semi- Variable Costs are to be considered for determining the price.
2) Demand : The price of a product is affected by the elasticity of demand of the product. If the demand of a product is inelastic, the firm is in a better position to fix higher prices.
3) Competition : Competitors’ prices and their anticipated reactions must be considered before fixing the price of a product. In case of high competition, it is desirable to keep price low.
4) Government and Legal Regulations: In order to protect the interest of public against unfair practices, prices of some essential products are regulated by the government under the Essential Commodities Act., e.g. Medicines.
5) Pricing Objectives : Another important factor affecting the fixation of price of a product is pricing objectives, e.g. maximisation of profit, market share, etc.

Question 8.
“Inspite of the existence of large number of super-markets, shopping malls and e-commerce facility, personal selling still plays a crucial role in moving goods and services to required consumers.” Explain the importance of personal selling in the light of this statement in Indian context. (MARCH-2016)
Answer:
Personal Selling : Personal selling involves face to face contact between the seller and prospective customer with an intension of selling some products. It is a personal form of communication.
Features of Personal Selling
1) It is a direct presentation of the product to the consumers.
2) Develop personal relationships with the prospective customers.
3) The sales presentation can be adjusted according to the specific needs of the individual customers.
4) It is possible to take a direct feedback from the customer.
Role of Personal Selling
1) Importance to Businessmen
1) It helps in influencing the prospects about the merits of a product and thereby increasing its sale.
2) Personal selling helps to develop lasting relationship between the sales persons and the customers.
3) Personal selling plays very important role in the introduction stage of a new product.
4) Personal selling increases the competitive strength of a business organisation.
2) Importance to Customers
1) Personal selling helps the customers in identifying their needs and wants.
2) Customers get latest market information.
3) Customers get expert advice and guidance in purchasing various goods and services.
4) Personal selling induces customers to purchase new products.
3) Importance to Society
1) Personal selling offers greater employment opportunities.
2) Personal selling provides attractive career with greater opportunities.
3) Personal selling increases product standardisation and uniformity in consumption pattern.

Plus Two Business Studies Marketing Management 8 Marks Important Questions

Question 1.
Product, price, place and promotion are the four elements which constitute the core of the marketing programmes of a business.”
Elaborate the concept mentioned in the above statement and explain its significance. (MAY-2009)
Answer:
Marketing Mix: It refers to the combination of four basic marketing tools (Product, Price, Place and Promotion) that a firm uses to pursue its marketing objectives in a target market.

Elements / 4 P’s of Marketing Mix
1) Product: Product means goods or services or ‘anything of value’, which is offered to the market for sale. The important product decisions include deciding about the features, quality, packaging, labelling and branding of the products.
2) Price : Price is the amount of money paid by the customers to pay to obtain the product. In most of the products, price affects the demand of the products. Desired profits, cost of production, competition, demands, etc. must be considered before fixing the price of a product.
3) Place : Place or Physical Distribution includes activities that make firm’s products available to the target customers. Important decision areas in this respect include selection of dealers, storage, warehousing and transportation of goods from the place of production to the place of consumption.
4) Promotion : Promotion includes activities that communicate availability, features, merits, etc. of the products to the target customers and persuade them to buy it. It includes advertising, personal selling, sales promotion and publicity to promote the sale of products.

Question 2.
When a new product has been introduced in the market, the board of directors decided that advertisement is the only method for promotion of the product. (FEBRUARY – 2010)
a) If you are a marketing manager, do you agree with the decision of board of directors. Justify your comment.
b) If any other methods prevail, list out them and state its relevance.
Answer:
No. Advertisement is only one of the promotion methods. Other promotion methods are :
Personal Selling : Personal selling involves face to face contact between the seller and prospective customer with an intension of selling some products. It is a personal form of communication.
Sales Promotion : It refers to those marketing activities other than personal selling, advertising and publicity that stimulate short term sales. Sales promotion activities include offering cash discounts, sales contests, free gift offers, and free sample distribution, etc.
Techniques of Sales Promotion
1) Rebate : Offering products at special prices, to clear off excess inventory.
2) Discount: Offering products at less than maximum retail price.
3) Refund: The seller offers to refund a part of the price paid by the customer on production of some proof of purchase.
4) Free gifts : Offering another product as gift along with the purchase of a product.
5) Quantity Gift: Offering extra quantity of the product.
6) Contests : Prize contests are organized for the consumers and winners are given attractive prizes.
7) Money refund: There are certain manufacturers who promise to refund the price of the product, if it does not satisfy the consumer.
8) Samples: Offer of free samples of a product to customers at the time of introduction of a new product.

Question 3.
Jeevan Ltd. started the manufacturing of washing ma-chine. They wish to inform this to the public. What activity they have to undertake to do this? State the factors that they should consider while selecting media for this activity. (MARCH-2010)
Answer:
Advertising : Advertising may be defined as “any paid form of non-personal presentation and promotion of ideas, goods or service of an identified sponsor”.
Merits of Advertising
1. Advantages to Manufacturers and Traders
1) Advertising helps in introducing new products.
2) It stimulates the consumers to purchase the new products.
3) Advertisement helps to increase the sales of new and existing products.
4) It helps to increase the goodwill of the firm.
5) It helps to face the competition in the market.
6) It increases profit of the firm through large sales.
2. Advantages to Consumers
1) It helps the consumers to know about the various products and their prices.
2) Consumers can purchase the better products easily.
3) It helps in maintaining high standard of living.
4) It educates the consumers about the various uses of products.
3. Advantages to the Society
1) Advertisement helps to create more employment opportunities.
2) It provides an important source of income to the press, radio, T.V., etc.
3) It is a source of encouragement to artists.
4) It plays an important role in economic development of the country.
5) It reduces number of middlemen and consumers get quality products at lower cost.

Question 4.
“The basic goal of marketing management is to achieve the objectives of business.” In the light of the above statement, you have to explain. (MARCH-2010)
i) What is Marketing?
ii) What is Marketing Management?
iii) What are the objectives of marketing management?
Answer:
Marketing : Marketing may be defined as all activities that are facilitating the movement of goods and services from producer to the ultimate consumer
Marketing Management : It refers to planning, organising, directing and controlling of the activities.
Role / Objectives of Marketing
1) Role in a Firm : Modern marketing emphasises that customer satisfaction is the key to the survival and growth of an organization. A satisfied customer is the most valuable asset of any firm. So product must be designed according to the needs and wants of the consumers, ensure fair distribution and determine an appropriate pricing strategy.
2) Role in the Economy : Marketing plays a significant role in the economic development of a nation. Marketing helps to increase the standard of living of the people by providing quality goods at reasonable prices. Marketing accelerates the economic activity leading to higher incomes, more consumption and increased savings and investment.

Question 5.
Buying and assembling is an important function of marketing. What are other facilitating functions? (MARCH-2012)
Answer:
Market: It refers to a place where the buyers and sellers meet each other for sale and purchase of the commodity.
Marketing : Marketing may be defined as all activities that are facilitating the movement of goods and services from producer to the ultimate consumer.
Functions of Marketing
1) Marketing Research : Marketing Research is a process of collecting and analysing market information to identify the needs and wants of the customers.
2) Marketing Planning : Another function of marketing is to develop appropriate marketing plans so that the marketing objectives of the organisation can be achieved.
3) Product Designing and Development: The products are designed and developed according to the needs and wants of the consumers. It requires decision making on various aspects such as the product to be manufactured, its packing, selling price, quality of the product, etc.
4) Standardisation and Grading: Standardisation refers to producing goods of predetermined specifications.
Grading is the process of classification of products info different groups, on the basis of quality, size, etc.
5) Packaging and Labelling : Packaging refers to designing and developing the package for the products. Packaging gives protection to goods. Also it attracts the consumers to buy the product. Labelling refers to designing and developing the label to be put on the package.
6) Branding: A brand is a name, term, sign, symbol, design or some combination of them, used to identify the products of one seller and to differentiate them from those of the competitors.
7) Customer Support Services : An important function of the marketing management is to develop customer support services such as after sales services, handling customer complaints, etc. which provides maximum satisfaction to the customers.
8) Pricing : Price of a product refers to the amount of money which customers have to pay to obtain a product. Price is an important factor affecting the success or failure of a product in the market. Price is fixed after taking into account the cost of production, desired profit, competitor’s price, govt, policy, etc.
9) Promotion : Promotion of products and services involves informing the customers about the firm’s product, its features, etc. and persuading them to purchase these products. It includes Advertising, Personal Selling, Publicity and Sales Promotion.
10) Physical Distribution : It includes decision regarding channels of distribution and physical movement of the product from the production centre to the consumption centre.
11) Transportation: Transportation involves physical movement of goods from one place to another. It removes the hindrance of place and creates time utility.
12) Storage or Warehousing : In order to maintain smooth flow of products in the market, there is a need for proper storage of the products. It stabilizes the prices of products and keep the product without damage until they are sold.

Question 6.
What is advertising? Explain its benefits to manufacturers, customers and society. (MARCH-2012)
Answer:
Advertising : Advertising may be defined as “any paid form of non-personal presentation and promotion of ideas, goods or service of an identified sponsor”.
Merits of Advertising
1. Advantages to Manufacturers and Traders
1) Advertising helps in introducing new products.
2) It stimulates the consumers to purchase the new products.
3) Advertisement helps to increase the sales of new and existing products.
4) It helps to increase the goodwill of the firm.
5) It helps to face the competition in the market.
6) It increases profit of the firm through large sales.
2. Advantages to Consumers
1) It helps the consumers to know about the various products and their prices.
2) Consumers can purchase the better products easily.
3) It helps in maintaining high standard of living.
4) It educates the consumers about the various uses of products.
3. Advantages to the Society
1) Advertisement helps to create more employment opportunities.
2) It provides an important source of income to the press, radio, T.V., etc.
3) It is a source of encouragement to artists.
4) It plays an important role in economic development of the country.
5) It reduces number of middlemen and consumers get quality products at lower cost.

Question 7.
Mr. Hari has started a new branch of hair fixing shop at Calicut. How can convey this information to the present and prospective customers? Explain the benefits and evils of this advertising. (MAY-2012)
Answer:
Advertising : Advertising may be defined as “any paid form of non-personal presentation and promotion of ideas, goods or service of an identified sponsor”.
Merits of Advertising
1. Advantages to Manufacturers and Traders
1) Advertising helps in introducing new products.
2) It stimulates the consumers to purchase the new products.
3) Advertisement helps to increase the sales of new and existing products.
4) It helps to increase the goodwill of the firm.
5) It helps to face the competition in the market.
6) It increases profit of the firm through large sales.
2. Advantages to Consumers
1) It helps the consumers to know about the various products and their prices.
2) Consumers can purchase the better products easily.
3) It helps in maintaining high standard of living.
4) It educates the consumers about the various uses of products.
3. Advantages to the Society
1) Advertisement helps to create more employment opportunities.
2) It provides an important source of income to the press, radio, T.V., etc.
3) It is a source of encouragement to artists.
4) It plays an important role in economic development of the country.
5) It reduces number of middlemen and consumers get quality products at lower cost.

Question 8.
What is marketing? Explain the important functions involved in marketing? (MAY-2012)
Answer:
Marketing : Marketing may be defined as all activities that are facilitating the movement of goods and services from producer to the ultimate consumer.
Functions of Marketing
1) Marketing Research : Marketing Research is a process of collecting and analysing market information to identify the needs and wants of the customers.
2) Marketing Planning : Another function of marketing is to develop appropriate marketing plans so that the marketing objectives of the organisation can be achieved.
3) Product Designing and Development: The products are designed and developed according to the needs and wants of the consumers. It requires decision making on various aspects such as the product to be manufactured, its packing, selling price, quality of the product, etc.
4) Standardisation and Grading: Standardisation refers to producing goods of predetermined specifications.
Grading is the process of classification of products info different groups, on the basis of quality, size, etc.
5) Packaging and Labelling : Packaging refers to designing and developing the package for the products. Packaging gives protection to goods. Also it attracts the consumers to buy the product. Labelling refers to designing and developing the label to be put on the package.
6) Branding: A brand is a name, term, sign, symbol, design or some combination of them, used to identify the products of one seller and to differentiate them from those of the competitors.
7) Customer Support Services : An important function of the marketing management is to develop customer support services such as after sales services, handling customer complaints, etc. which provides maximum satisfaction to the customers.
8) Pricing : Price of a product refers to the amount of money which customers have to pay to obtain a product. Price is an important factor affecting the success or failure of a product in the market. Price is fixed after taking into account the cost of production, desired profit, competitor’s price, govt, policy, etc.
9) Promotion : Promotion of products and services involves informing the customers about the firm’s product, its features, etc. and persuading them to purchase these products. It includes Advertising, Personal Selling, Publicity and Sales Promotion.
10) Physical Distribution : It includes decision regarding channels of distribution and physical movement of the product from the production centre to the consumption centre.
11) Transportation: Transportation involves physical movement of goods from one place to another. It removes the hindrance of place and creates time utility.
12) Storage or Warehousing : In order to maintain smooth flow of products in the market, there is a need for proper storage of the products. It stabilizes the prices of products and keep the product without damage until they are sold.

Question 9.
After completing his MBA in marketing Mr. Johnson joined a new multinational company as Marketing Manager. He called a meeting of his subordinate marketing executives soon after his appointment. He wishes to deliver a talk in functions of marketing. What points he should include in his talk? (MARCH -2013)
Answer:
Marketing : Marketing may be defined as all activities that are facilitating the movement of goods and services from producer to the ultimate consumer.
Functions of Marketing
1) Marketing Research : Marketing Research is a process of collecting and analysing market information to identify the needs and wants of the customers.
2) Marketing Planning : Another function of marketing is to develop appropriate marketing plans so that the marketing objectives of the organisation can be achieved.
3) Product Designing and Development: The products are designed and developed according to the needs and wants of the consumers. It requires decision making on various aspects such as the product to be manufactured, its packing, selling price, quality of the product, etc.
4) Standardisation and Grading: Standardisation refers to producing goods of predetermined specifications.
Grading is the process of classification of products info different groups, on the basis of quality, size, etc.
5) Packaging and Labelling : Packaging refers to designing and developing the package for the products. Packaging gives protection to goods. Also it attracts the consumers to buy the product. Labelling refers to designing and developing the label to be put on the package.
6) Branding: A brand is a name, term, sign, symbol, design or some combination of them, used to identify the products of one seller and to differentiate them from those of the competitors.
7) Customer Support Services : An important function of the marketing management is to develop customer support services such as after sales services, handling customer complaints, etc. which provides maximum satisfaction to the customers.
8) Pricing : Price of a product refers to the amount of money which customers have to pay to obtain a product. Price is an important factor affecting the success or failure of a product in the market. Price is fixed after taking into account the cost of production, desired profit, competitor’s price, govt, policy, etc.
9) Promotion : Promotion of products and services involves informing the customers about the firm’s product, its features, etc. and persuading them to purchase these products. It includes Advertising, Personal Selling, Publicity and Sales Promotion.
10) Physical Distribution : It includes decision regarding channels of distribution and physical movement of the product from the production centre to the consumption centre.
11) Transportation: Transportation involves physical movement of goods from one place to another. It removes the hindrance of place and creates time utility.
12) Storage or Warehousing : In order to maintain smooth flow of products in the market, there is a need for proper storage of the products. It stabilizes the prices of products and keep the product without damage until they are sold.

Question 10.
The amount spent on advertising is a national waste.’ (MARCH-2013)
i) Do-you agree with this statement?
ii) Give merits and demerits of advertisement.
Answer:
i) No
ii) Merits of Advertising
1. Advantages to Manufacturers and Traders
1) Advertising helps in introducing new products.
2) It stimulates the consumers to purchase the new products.
3) Advertisement helps to increase the sales of new and existing products.
4) It helps to increase the goodwill of the firm.
5) It helps to face the competition in the market.
6) It increases profit of the firm through large sales.
2. Advantages to Consumers
1) It helps the consumers to know about the various products and their prices.
2) Consumers can purchase the better products easily.
3) It helps in maintaining high standard of living.
4) It educates the consumers about the various uses of products.
3. Advantages to the Society
1) Advertisement helps to create more employment opportunities.
2) It provides an important source of income to the press, radio, T.V., etc.
3) It is a source of encouragement to artists.
4) It plays an important role in economic development of the country.
5) It reduces number of middlemen and consumers get quality products at lower cost.
Disadvantages / Objections to Advertising
1) Advertisement encourages consumers to buy unwanted goods.
2) Most of the advertisements are misleading.
3) Advertisement may lead to monopoly of a brand.
4) Advertisement is a costly affair. So, ultimately it increases the price of the product.
5) Advertisement persuades people to purchase even the inferior products.
6) It undermines social and ethical values.

Question 11.
‘ What is Marketing? Write an essay on objectives of marketing management. (MARCH-2014)
Answer:
Role / Objectives of Marketing
1) Role in a Firm : Modern marketing emphasises that customer satisfaction is the key to the survival and growth of an organization. A satisfied customer is the most valuable asset of any firm. So product must be designed according to the needs and wants of the consumers, ensure fair distribution and determine an appropriate pricing strategy.
2) Role in the Economy : Marketing plays a significant role in the economic development of a nation. Marketing helps to increase the standard of living of the people by providing quality goods at reasonable prices. Marketing accelerates the economic activity leading to higher incomes, more consumption and increased savings and investment.

Question 12.
What are the different components of marketing mix? (MARCH-2014)
Answer:
Marketing Mix: It refers to the combination of four basic marketing tools (Product, Price, Place and Promotion) that a firm uses to pursue its marketing objectives in a target market.

Elements / 4 P’s of Marketing Mix
1) Product: Product means goods or services or ‘anything of value’, which is offered to the market for sale. The important product decisions include deciding about the features, quality, packaging, labelling and branding of the products.
2) Price : Price is the amount of money paid by the customers to pay to obtain the product. In most of the products, price affects the demand of the products. Desired profits, cost of production, competition, demands, etc. must be considered before fixing the price of a product.
3) Place : Place or Physical Distribution includes activities that make firm’s products available to the target customers. Important decision areas in this respect include selection of dealers, storage, warehousing and transportation of goods from the place of production to the place of consumption.
4) Promotion : Promotion includes activities that communicate availability, features, merits, etc. of the products to the target customers and persuade them to buy it. It includes advertising, personal selling, sales promotion and publicity to promote the sale of products.

Question 13.
Mr. Mohan Das, the proprietor of Das Automobiles Ltd. wants to open a branch of its business at Nagercoil. He is not aware of any sales promotion measures. As a marketing expert, you are requested to narrate him the various objectives of sales promotion and the different sales promotion techniques suitable for his business. (MARCH-2015)
Answer:
Sales Promotion : It refers to those marketing activities other than personal selling, advertising and publicity that stimulate short term sales. Sales promotion activities include offering cash discounts, sales contests, free gift offers, and free sample distribution, etc.
Techniques of Sales Promotion
1) Rebate : Offering products at special prices, to clear off excess inventory.
2) Discount: Offering products at less than maximum retail price.
3) Refund: The seller offers to refund a part of the price paid by the customer on production of some proof of purchase.
4) Free gifts : Offering another product as gift along with the purchase of a product.
5) Quantity Gift: Offering extra quantity of the product.
6) Contests : Prize contests are organized for the consumers and winners are given attractive prizes.
7) Money refund: There are certain manufacturers who promise to refund the price of the product, if it does not satisfy the consumer.
8) Samples: Offer of free samples of a product to customers at the time of introduction of a new product.

Question 14.
“It is often criticized that “advertisement is a wasteful activity and an unnecessary cost”. You are asked to establish the statement by highlighting the various arguments against advertisement. (MARCH-2015)
Answer:
i) Advertising: Advertising may be defined as “any paid form of non-personal presentation and pro-motion of ideas, goods or service of an identified sponsor”.
ii) Disadvantages / Objections to Advertising
1) Advertisement encourages consumers to buy unwanted goods.
2) Most of the advertisements are misleading.
3) Advertisement may lead to monopoly of a brand.
4) Advertisement is a costly affair. So, ultimately it increases the price of the product.
5) Advertisement persuades people to purchase even the inferior products.
6) It undermines social and ethical values.

Question 15.
What do you mean by the term marketing? Explain its different functions. (MARCH-2016)
Answer:
Functions of Marketing
1) Marketing Research : Marketing Research is a process of collecting and analysing market information to identify the needs and wants of the customers.
2) Marketing Planning : Another function of marketing is to develop appropriate marketing plans so that the marketing objectives of the organisation can be achieved.
3) Product Designing and Development: The products are designed and developed according to the needs and wants of the consumers. It requires decision making on various aspects such as the product to be manufactured, its packing, selling price, quality of the product, etc.
4) Standardisation and Grading: Standardisation refers to producing goods of predetermined specifications.
Grading is the process of classification of products info different groups, on the basis of quality, size, etc.
5) Packaging and Labelling : Packaging refers to designing and developing the package for the products. Packaging gives protection to goods. Also it attracts the consumers to buy the product. Labelling refers to designing and developing the label to be put on the package.
6) Branding: A brand is a name, term, sign, symbol, design or some combination of them, used to identify the products of one seller and to differentiate them from those of the competitors.
7) Customer Support Services : An important function of the marketing management is to develop customer support services such as after sales services, handling customer complaints, etc. which provides maximum satisfaction to the customers.
8) Pricing : Price of a product refers to the amount of money which customers have to pay to obtain a product. Price is an important factor affecting the success or failure of a product in the market. Price is fixed after taking into account the cost of production, desired profit, competitor’s price, govt, policy, etc.
9) Promotion : Promotion of products and services involves informing the customers about the firm’s product, its features, etc. and persuading them to purchase these products. It includes Advertising, Personal Selling, Publicity and Sales Promotion.
10) Physical Distribution : It includes decision regarding channels of distribution and physical movement of the product from the production centre to the consumption centre.
11) Transportation: Transportation involves physical movement of goods from one place to another. It removes the hindrance of place and creates time utility.
12) Storage or Warehousing : In order to maintain smooth flow of products in the market, there is a need for proper storage of the products. It stabilizes the prices of products and keep the product without damage until they are sold.

Question 16.
“Marketing is concerned with exchange of goods and service from producers to consumers by enhancing the satisfaction level of consumers.” Describe the various functions to be addressed by marketing in order to fulfill the above objective. (MAY-2016)
Answer:
Functions of Marketing
1) Marketing Research : Marketing Research is a process of collecting and analysing market information to identify the needs and wants of the customers.
2) Marketing Planning : Another function of marketing is to develop appropriate marketing plans so that the marketing objectives of the organisation can be achieved.
3) Product Designing and Development: The products are designed and developed according to the needs and wants of the consumers. It requires decision making on various aspects such as the product to be manufactured, its packing, selling price, quality of the product, etc.
4) Standardisation and Grading: Standardisation refers to producing goods of predetermined specifications.
Grading is the process of classification of products info different groups, on the basis of quality, size, etc.
5) Packaging and Labelling : Packaging refers to designing and developing the package for the products. Packaging gives protection to goods. Also it attracts the consumers to buy the product. Labelling refers to designing and developing the label to be put on the package.
6) Branding: A brand is a name, term, sign, symbol, design or some combination of them, used to identify the products of one seller and to differentiate them from those of the competitors.
7) Customer Support Services : An important function of the marketing management is to develop customer support services such as after sales services, handling customer complaints, etc. which provides maximum satisfaction to the customers.
8) Pricing : Price of a product refers to the amount of money which customers have to pay to obtain a product. Price is an important factor affecting the success or failure of a product in the market. Price is fixed after taking into account the cost of production, desired profit, competitor’s price, govt, policy, etc.
9) Promotion : Promotion of products and services involves informing the customers about the firm’s product, its features, etc. and persuading them to purchase these products. It includes Advertising, Personal Selling, Publicity and Sales Promotion.
10) Physical Distribution : It includes decision regarding channels of distribution and physical movement of the product from the production centre to the consumption centre.
11) Transportation: Transportation involves physical movement of goods from one place to another. It removes the hindrance of place and creates time utility.
12) Storage or Warehousing : In order to maintain smooth flow of products in the market, there is a need for proper storage of the products. It stabilizes the prices of products and keep the product without damage until they are sold.

Question 17.
No product or service can be launched without a proper and accurate price tag in place. Discuss about the importance of fixation of prices and the various factors affecting price determination. (MAY-2016)
Answer:
Pricing : Price may be defined as the amount of money paid by a buyer in consideration of the purchase of a product or a service. The success or failure of a product depends on the pricing strategy of a firm.
Factors Affecting Price Determination
Factors Affecting Price Determination
1) Product Cost: One of the most important factors affecting price of a product or service is its cost of production and distribution. Fixed Costs, Variable Costs and Semi- Variable Costs are to be considered for determining the price.
2) Demand : The price of a product is affected by the elasticity of demand of the product. If the demand of a product is inelastic, the firm is in a better position to fix higher prices.
3) Competition : Competitors’ prices and their anticipated reactions must be considered before fixing the price of a product. In case of high competition, it is desirable to keep price low.
4) Government and Legal Regulations: In order to protect the interest of public against unfair practices, prices of some essential products are regulated by the government under the Essential Commodities Act., e.g. Medicines.
5) Pricing Objectives : Another important factor affecting the fixation of price of a product is pricing objectives, e.g. maximisation of profit, market share, etc.

Question 18.
After completing her Post Graduate Diploma in Marketing, Smt. Jayasree was appointed as the Marketing Manager of Alpha Ltd. She is of the opinion that marketing effort of her organization should be formulated after analysing the concept behind it. Explain different marketing management concepts she should consider before formulating her marketing strategies. (MARCH-2017)
Answer:
Functions of Marketing
1) Marketing Research : Marketing Research is a process of collecting and analysing market information to identify the needs and wants of the customers.
2) Marketing Planning : Another function of marketing is to develop appropriate marketing plans so that the marketing objectives of the organisation can be achieved.
3) Product Designing and Development: The products are designed and developed according to the needs and wants of the consumers. It requires decision making on various aspects such as the product to be manufactured, its packing, selling price, quality of the product, etc.
4) Standardisation and Grading: Standardisation refers to producing goods of predetermined specifications.
Grading is the process of classification of products info different groups, on the basis of quality, size, etc.
5) Packaging and Labelling : Packaging refers to designing and developing the package for the products. Packaging gives protection to goods. Also it attracts the consumers to buy the product. Labelling refers to designing and developing the label to be put on the package.
6) Branding: A brand is a name, term, sign, symbol, design or some combination of them, used to identify the products of one seller and to differentiate them from those of the competitors.
7) Customer Support Services : An important function of the marketing management is to develop customer support services such as after sales services, handling customer complaints, etc. which provides maximum satisfaction to the customers.
8) Pricing : Price of a product refers to the amount of money which customers have to pay to obtain a product. Price is an important factor affecting the success or failure of a product in the market. Price is fixed after taking into account the cost of production, desired profit, competitor’s price, govt, policy, etc.
9) Promotion : Promotion of products and services involves informing the customers about the firm’s product, its features, etc. and persuading them to purchase these products. It includes Advertising, Personal Selling, Publicity and Sales Promotion.
10) Physical Distribution : It includes decision regarding channels of distribution and physical movement of the product from the production centre to the consumption centre.
11) Transportation: Transportation involves physical movement of goods from one place to another. It removes the hindrance of place and creates time utility.
12) Storage or Warehousing : In order to maintain smooth flow of products in the market, there is a need for proper storage of the products. It stabilizes the prices of products and keep the product without damage until they are sold.
Pricing : Price may be defined as the amount of money paid by a buyer in consideration of the purchase of a product or a service.
Factors Affecting Price Determination
1) Product Cost: One of the most important factors affecting price of a product or service is its cost of production and distribution. Fixed Costs, Variable Costs and Semi- Variable Costs are to be considered for determining the price.
2) Demand : The price of a product is affected by the elasticity of demand of the product. If the demand of a product is inelastic, the firm is in a better position to fix higher prices.
3) Competition : Competitors’ prices and their anticipated reactions must be considered before fixing the price of a product. In case of high competition, it is desirable to keep price low.
4) Government and Legal Regulations: In order to protect the interest of public against unfair practices, prices of some essential products are regulated by the government under the Essential Commodities Act., e.g. Medicines.
5) Pricing Objectives : Another important factor affecting the fixation of price of a product is pricing objectives, e.g. maximisation of profit, market share, etc.

Question 19.
“It is a process of giving name or sign or symbol to a product.” Identify the definition and explain its ad-vantages to the marketers and consumers. (MAY-2016)
Answer:
a) Branding
b) Branding: The process of giving a name or a sign ora symbol, etc. to a product is called branding. Advantages of branding Refer Section Branding : The process of giving a name or a sign or a symbol, etc. to a product is called branding. Terms related with branding
1) Brand : A brand is a name, term, sign, symbol, design or some combination of them, used to identify the products of one seller or group of sellers and to differentiate them from those of the competitors.
2) Brand Name: That part of a brand, which can be vocalized i.e. can be spoken is called a brand name, e.g. Asian Paints, Maggie, Lifebuoy, Dunlop, etc.
3) Brand Mark: A brand mark is that part of a brand which can be recognized but cannot be vocalized,
i. e. non-utterable. It appears in the form of a symbol, design or distinct colour scheme. For example:‘Girl’of Amul.
4) Trade Mark : A brand or part of a brand that is given legal protection against its use by other firms is called trade mark. The firm which got its brand registered with the government, gets the exclusive right for its use.-
Advantages of branding
1) Advantages to the Firm
1) Branding helps a firm in distinguishing its product from that of its competitors.
2) It helps in advertising and display Programmes.
3) Branding enables a firm to charge competitive price for its products than that charged by its competitors.
4) It helps in Introduction of new product in the market.
2) Advantages to Customers
1) Branding helps the customers in identifying the products.
2) Branding ensures a particular level of quality of the product.
3) Some brands become status symbols because of their quality It creates a feeling of proud and satisfaction in the consumers.

Question 20.
Mr. Alphi. the Head of Marketing Division in a Private Ltd. company is confronted with the issue of pushing the demand of its major product. As part of the promotion of the product, he has made up his mind to go for intense advertising campaign. Before committing to the decision. He wants to weigh the merits and demerits of advertising. Assist him in enlisting the merits and demerits of advertising. (MAY-2017)
Answer:
a) Advertising: Advertising may be defined as “any paid form of non-personal presentation and pro-motion of ideas, goods or service of an identified sponsor”.
b) Merits of Advertising
Merits of Advertising
1. Advantages to Manufacturers and Traders
1) Advertising helps in introducing new products.
2) It stimulates the consumers to purchase the new products.
3) Advertisement helps to increase the sales of new and existing products.
4) It helps to increase the goodwill of the firm.
5) It helps to face the competition in the market.
6) It increases profit of the firm through large sales.
2. Advantages to Consumers
1) It helps the consumers to know about the various products and their prices.
2) Consumers can purchase the better products easily.
3) It helps in maintaining high standard of living.
4) It educates the consumers about the various uses of products.
3. Advantages to the Society
1) Advertisement helps to create more employment opportunities.
2) It provides an important source of income to the press, radio, T.V., etc.
3) It is a source of encouragement to artists.
4) It plays an important role in economic development of the country.
5) It reduces number of middlemen and consumers get quality products at lower cost.
Disadvantages / Objections to Advertising
1) Advertisement encourages consumers to buy unwanted goods.
2) Most of the advertisements are misleading.
3) Advertisement may lead to monopoly of a brand.
4) Advertisement is a costly affair. So, ultimately it increases the price of the product.
5) Advertisement persuades people to purchase even the inferior products.
6) It undermines social and ethical values.

Question 21.
One of the most important decisions that a marketer has to take with regard to a product is its branding. Explain the various terms associated with branding process.(MAY-2017)
Also narrate the characteristics, a good brand name is required to possess.
Answer:
Branding : The process of giving a name or a sign or a symbol, etc. to a product is called branding. Terms related with branding Refer Section
Branding : The process of giving a name or a sign or a symbol, etc. to a product is called branding. Terms related with branding
1) Brand : A brand is a name, term, sign, symbol, design or some combination of them, used to identify the products of one seller or group of sellers and to differentiate them from those of the competitors.
2) Brand Name: That part of a brand, which can be vocalized i.e. can be spoken is called a brand name, e.g. Asian Paints, Maggie, Lifebuoy, Dunlop, etc.
3) Brand Mark: A brand mark is that part of a brand which can be recognized but cannot be vocalized,
i. e. non-utterable. It appears in the form of a symbol, design or distinct colour scheme. For example:‘Girl’of Amul.
4) Trade Mark : A brand or part of a brand that is given legal protection against its use by other firms is called trade mark. The firm which got its brand registered with the government, gets the exclusive right for its use.
Qualities of a Good Brand Name
1) The brand name should be short, easy to pronounce, spell, recognise and remember.
2) A brand should suggest the product’s benefits and qualities.
3) A brand name should be distinctive.
4) Brand name should be adaptable to packing or labelling requirements, to different advertising media and to different languages.
5) The brand name should be sufficiently versatile to accommodate new products.
6) It should be capable of being registered and protected legally.

Kerala State Board New Syllabus Plus Two Business Studies Chapter Wise Previous Questions and Answers Chapter 10 Financial Markets.

Kerala Plus Two Business Studies Chapter Wise Previous Questions Chapter 10 Financial Markets

Plus Two Business Studies Financial Markets 1 Mark Important Questions

Question 1.
State the market for medium and long term funds. (FEBRUARY – 2009)
a) Money market
b) Capital market
c) Commodity market
d) Exchange market
Answer:
Capital Market

Question 2.
Complete the series: (MAY-2009)
Bombay Stock Exchange -1875
Cochin Stock Exchange -1978
National Stock Exchange – ?
Answer:
National stock exchange – 1992

Question 3.
Complete the following series: (MAY-2009)
Bombay Stock Exchange -1875
Cochin Stock Exchange -1978
National stock exchange – 1992
OTCEI – ?
Answer:
OTCEI – 1992

Question 4.
The settlement cycle in NSE is (MARCH-2015)
a) T + 3
b) T + 2
c) T +1
d) T + 4
Answer:
b) T + 2

Question 5.
The method of issuing securities through intermediaries like issue houses or stock brokers is. (MARCH-2016)
a) Offer for sale
b) Offer through prospectus
c) Private placement
d) Rights issue
Answer:
a) Offer for sale

Question 6.
National Stock Exchange of India (NSE) started its operation in (MARCH-2017)
(a) 1992
(b) 1994
(c) 1993
(d) 2000
Answer:
(b) 1994

Question 7.
Pick out from the following a short term money instrument having a maternity period of one day to fifteen days used for meeting, cash reserve ratio requirement by commercial bank: (MAY-2017)
a) Treasury Bills
b) Call Money
c) Commercial Paper
d) Certificate of Deposits
Answer:
b) Call money

Plus Two Business Studies Financial Markets 2 Marks Important Questions

Question 1.
Write two protective functions performed by SEBI. (FEBRUARY – 2009)
Answer:
a) Prohibition of fraudulent and unfair, trade practices.
b) Controlling insider trading price rigging etc. and imposing penalties for such practices.

Question 2.
Shaheena, one of your classmates in Plus Two Com-merce class, was absent in one day. On that day teacher takes class on the process of dematerialisation. Can you help Shaheena to understand the topic that the teacher taught that day? (MARCH-2010)
Answer:
Dematerialisation : It is a process by which physical share certificates are converted into an equivalent number of securities to be held in electronic form and credited in the investors’ account. For this, the investor has to open a Demat account with an organisation called a depository.

Question 3.
Smt. Faseela is a shareholder of ABC Co. Ltd. She gets allotment of 50 shares free of cost from the company. (MARCH-2012)
i) Find out the method of share allotment referred here.
ii) How it will affect ownership?
Answer:
i) Bonus shares/Stock dividend
ii) Issue of bonus shares does not affect the capital structure of the company.

Question 4.
Complete the following series. (MAY-2013)
a) Calcutta stock exchange -1909
b) Bombay stock exchange – ?
c) OTCEI – ?
Answer:
BSE – 1875
OTCEI – 1992

Plus Two Business Studies Financial Markets 4 Marks Important Questions

Question 1.
This is the agency which regulates the securities market and protects the interest of investors.(MAY-2009)
a) Identify the agency and explain its functions.
Answer:
SEBI
Functions of SEBI
1. Regulatory Functions
a) Registration of brokers and sub brokers and other players in the market.
b) Registration of Mutual Funds.
c) Regulation of stock brokers, portfolio exchanges, underwriters, etc.
d) Regulation of takeover bids by companies
e) Calling for information by undertaking inspection, conducting enquiries and audits of stock exchanges and intermediaries.
1) Levying fee or other charges for carrying out the purposes of the Act.
2) Development Functions
a) Training of intermediaries of the securities market.
b) Conducting research and publishing information useful to all market participants.
c) Undertaking measures to develop the capital markets by adapting a flexible approach.
3) Protective Functions
a) Prohibition of fraudulent and unfair, trade practices.
b) Controlling insider trading price rigging etc. and imposing penalties for such practices.
c) Undertaking steps for investor protection.
d) Promotion of fair practices and code of conduct in securities market.

Question 2.
Your teacher told you to prepare a table showing various money market instruments and their maturity periods. How will you prepare such a table? (MAY-2012)
Answer:
Call money market – 1 -14 days
Commercial Bill Market – 90 days
Treasury Bill Market – 14- 364 days
Commercial Paper – 3-12 Months
Certificate of deposit – 3-12 Months

Question 3.
Differentiate between money market and capital market. (MARCH-2014)
Answer:

Capital Market	Money Market
1) Market deals only long term fund.	1) Market deals only short term fund.
2) It arranges large amount of fund.	2) It arranges small amount of fund.
3) Return is high.	3) Return is high.
4) The instruments used are equity shares, preference shares, debentures and bonds.	4) The instruments used are call money, treasury bills, trade bills, commercial paper and certificate of deposit
5) SEBI is the market regulator.	5) SEBI is the market regulator.
6) Capital market instruments are highly risky.	6) Money market _ instruments are safe

Question 4.
“These are markets for short term funds.”(MARCH-2016)
Identify the type of financial market and list out its various instruments.
Answer:
Money Market
Money Market Instruments
1) Treasury Bill : They are issued by the RBI on behalf of the Central Government to meet its short¬term requirement of funds. They are issued at a discount on the face value of the instruments and repayable at par. They are issued in the form of promissory notes. They are also known as Zero Coupon Bonds as no interest is paid on such bills. They are highly liquid. The maturity period of these bills may be between 14 to 364 days.
2) Commercial Paper : Commercial paper is a short-term unsecured promissory note, negotiable and transferable by endorsement and delivery with a maturity period of 15 days to one year. It is sold at a discount and redeemed at par.
3) Call Money : Call money is short term finance repayable on demand, with a maturity period of one day to fifteen days, used for inter-bank transactions.
4) Certificate of Deposit: Certificates of Deposit (CDs) are short-term instruments issued by Commercial Banks and Special Financial Institutions (SFIs), which are freely transferable from one party to another. The maturity period of CDs ranges from 91 days to one year.
5) Commercial Bill: A commercial bill is a Bill of Exchange used to finance the working capital requirements of business firms. When goods are sold in credit, the seller draws the bill and the buyer accepts it. The seller can discount the bill before its maturity with the bank.
When a trade bill is accepted by a commercial bank it is known as commercial bills.

Question 5.
The SEBI has made it mandatory forthe settlement procedure to take place in demat form in certain selected securities. Forthe benefit of an investor in the Capital market, explain how does the demat system work. (MAY-2016)
Answer:
Working of the Demat System
1) A depository participant (DP), either a bank, broker, or financial services company, may be identified.
2) An account opening form and documentation (PAN card details, photograph, power of attorney) may be completed.
3) The physical certificate is to be given to the DP along with a dematerialisation request form.
4) If shares are applied in a public offer, details of DP and demat account are to be given to the depository registrar.
5) If shares are to be sold through a broker, the DP is to be instructed to debit the account with the number of shares.
6) The broker then gives instruction to his DP for delivery of the shares to the stock exchange.
7) The broker then receives payment and pays the person forthe shares sold.
8) Alt these transactions are to be completed within 2 days, i.e., delivery of shares and payment received from the buyer is on a T+2 basis, settlement period.

Question 6.
Briefly explain different methods of floating new is-sues in the primary market. (MARCH-2017)
Answer:
Methods of flotation: There are various methods of floating new issues in the primary market. They are:
Methods of flotation: There are various methods of floating new issues in the primary market. They are:
a) Offer through Prospectus : Prospectus is an invitation to the public for the subscription of shares and debentures of a company. The issues may be underwritten and also are required to be listed on at least one stock exchange.
b) Offer for Sale: Under this method new securities are not offered directly to the public. Initially the entire lots of securities are sold to an intermediary at a fixed price. The intermediary sells these securities to the public at a higher price.
c) Private Placement: Private placement is the allotment of securities by a company to institutional investors or some selected individuals. It is less expensive and saves time.
d) Rights Issue: According to the Companies Act, if a public company wants to issue additional shares, it must first be offered to the existing shareholders, in proportion to the amount paid up on their shares. This right is known as ‘Pre-emptive right’ and such an issue is called right issue.

Question 7.
Agni Ltd. is a medium scale enterprise engaged in the manufacture of match boxes in Kerala. Forfunding its modenisation requirement, it wanted to access capital market with the least cost that is possible. Identify the stock exchange format most suited to the company.
Give any six advantage of the above market. (MAY-2017)
Answer:
a) Overthe counter exchange of India (OTCEI)
b) Advantages of OTCEI
0 It provide online trading facilities to the investors
ii) It ensures a transparent system of trading
iii) It provides a trading platform to smaller and medium companies

Plus Two Business Studies Financial Markets 5 Marks Important Questions

Question 1.
Match the following. (MARCH-2009)

Answer:

Question 2.
‘SEBI’ is the watch dog of the securities market.’ Substantiate your answer. (FEBRUARY-2010)
Answer:
Functions of SEBI
1. Regulatory Functions
a) Registration of brokers and subbrokers and other players in the market.
b) Registration of Mutual Funds.
c) Regulation of stock brokers, portfolio exchanges, underwriters, etc.
d) Regulation of takeover bids by companies
e) Calling for information by undertaking inspection, conducting enquiries and audits of stock exchanges and intermediaries.
1) Levying fee or other charges for carrying out the purposes of the Act.
2) Development Functions
a) Training of intermediaries of the securities market.
b) Conducting research and publishing information useful to all market participants.
c) Undertaking measures to develop the capital markets by adapting a flexible approach.
3) Protective Functions
a) Prohibition of fraudulent and unfair, trade practices.
b) Controlling insidertrading price rigging etc. and imposing penalties for such practices.
c) Undertaking steps for investor protection.
d) Promotion of fair practices and code of conduct in securities market.

Question 3.
It is a market for short-term financial assets having a maturity period of less than one year.(MARCH-2010)
a) Explain the concept referred above.
b) How it differs from capital market?
Answer:
a) Money Market

Capital Market	Money Market
1) Market deals only long term fund.	1) Market deals only short term fund.
2) It arranges large amount of fund.	2) It arranges small amount of fund.
3) Return is high.	3) Return is high.
4) The instruments used are equity shares, preference shares, debentures and bonds.	4) The instruments used are call money, treasury bills, trade bills, commercial paper and certificate of deposit
5) SEBI is the market regulator.	5) SEBI is the market regulator.
6) Capital market instruments are highly risky.	6) Money market _ instruments are safe

Question 4.
Stock exchanges are termed as the barometer of the economic progress in a country. (MAY-2010)
a) Do you agree with this statement?
b) Analyse the statement by connecting with the functions of stock exchange.
Answer:
a) Yes.
b) Functions of a Stock Exchange
1) Providing Liquidity and Marketability to Existing Securities: Stock Exchange provides
a ready and continuous market for the sale and purchase of securities.
2) Pricing of Securities : A stock exchange is a mechanism of constant valuation through which the prices of secuqjies are determined. It is based on the forces of demand and supply.
3) Safety of Transaction: Stock exchange has its own well-defined rules and regulations. This ensures safety and fair dealings to investors.
4) Contributes to Economic Growth : Stock exchange provides a platform by which savings are channelised into the most productive investment proposals, which leads to capital formation and economic growth.
5) Providing Scope for Speculation : Stock exchange provides scope within the provisions of Law for speculation in a restricted and controlled manner.
6) Economic barometer: A stock exchange serves as a barometer of a country’s economic condition. Price trends in stock exchange indicate whether economy is going through boom or depression

Question 5.
Mercy, a computer operator of a private firm, wishes to buy some shares from stock exchange. (MARCH-2012)
1) Can she buy shares directly from the stock ex-change? State the reason.
2) Can she purchase shares of all companies from the stock exchange? State the reasons.
Answer:
1) No. Only members of stock exchange are allowed to enter the stock exchange.
2) No. Only listed and govt, securities are permitted to be traded in the stock exchange.

Question 6.
Manoj purchased 250 shares of Coal India Ltd. from the primary market. Later, he sold the shares of Coal India and earned a profit of Rs. 7,500/-. But all these transactions were done without physical transfer of share certificate. What is this system? What are the advantages of this system? (MAY-2012)
Answer:
Dematerialisation : It is a process by which physical share certificates are converted into an equivalent number of securities to be held in electronic form and credited in the investors’ account. For this, the investor has to open a Demat account with an organisation called a depository.
Benefits of Depository Services and Demat Account
1) Sale and Purchase of shares and stocks of any company make easy.
2) Saves time.
3) No paperwork.
4) Lower transaction costs.
5) Ease in trading.
6) Transparency in transactions.
7) No counterfeiting of security certificate.
8) Physical presence of investor is not required in stock exchange.

Question 7.
‘Money market is a wholesale market and capital market is a retail market.’ Do you agree with this statement? (MARCH-2013)
Give other 5 differences between them.
Answer:
a) Yes

Capital Market	Money Market
1) Market deals only long term fund.	1) Market deals only short term fund.
2) It arranges large amount of fund.	2) It arranges small amount of fund.
3) Return is high.	3) Return is high.
4) The instruments used are equity shares, preference shares, debentures and bonds.	4) The instruments used are call money, treasury bills, trade bills, commercial paper and certificate of deposit
5) SEBI is the market regulator.	5) SEBI is the market regulator.
6) Capital market instruments are highly risky.	6) Money market instruments are safe

Question 8.
“Only listed securities are permitted to be traded in the stock exchange” – Comment. Also explain functions of stock exchange. (MAY-2013)
Answer:
Only listed and Government securities are traded in the stock exchange,
Functions of a Stock Exchange
1) Providing Liquidity and Marketability to Existing Securities: Stock Exchange provides
a ready and continuous market for the sale and purchase of securities.
2) Pricing of Securities : A stock exchange is a mechanism of constant valuation through which the prices of secuqjies are determined. It is based on the forces of demand and supply.
3) Safety of Transaction: Stock exchange has its own well-defined rules and regulations. This ensures safety and fair dealings to investors.
4) Contributes to Economic Growth : Stock exchange provides a platform by which savings are channelised into the most productive investment proposals, which leads to capital formation and economic growth.
5) Providing Scope for Speculation : Stock exchange provides scope within the provisions of Law for speculation in a restricted and controlled manner.
6) Economic barometer: A stock exchange serves as a barometer of a country’s economic condition. Price trends in stock exchange indicate whether economy is going through boom or depression.

Question 9.
Indian money market is a well developed one with the active participation of large number of financial institutions and the presence of innovative financial instruments. (MARCH-2015)
a) Name any three participants of Indian money market.
b) Name any three innovative financial instruments prevailing in Indian money market.
Answer:
a) RBI, Commercial bank, IFCI, IDBI, ICICI, LIC, UTI etc.
b) Call money Commercial bill Treasurybill Commercial paper Certificate of deposit

Plus Two Business Studies Financial Markets 8Marks Important Questions

Question 1.
“It is the regulatory & development agency of Indian Capital Market.” (MARCH-2011)
1) Identify the agency referred here,
Explain the functions performed by this agency,
Answer:
SEBI
Functions of SEBI
1. Regulatory Functions
a) Registration of brokers and subbrokers and other players in thd market.
b) Registration of Mutual Funds.
c) Regulation of stock brokers, portfolio exchanges, underwriters, etc.
d) Regulation of takeover bids by companies
e) Calling for information by undertaking inspection, conducting enquiries and audits of stock exchanges and intermediaries.
1) Levying fee or other charges for carrying out the purposes of the Act.
2) Development Functions
a) Training of intermediaries of the securities market.
b) Conducting research and publishing information useful to all market participants.
c) Undertaking measures to develop the capital markets by adapting a flexible approach.
3) Protective Functions
a) Prohibition of fraudulent and unfair, trade practices.
b) Controlling insidertrading price rigging etc. and imposing penalties for such practices.
c) Undertaking steps for investor protection.
d) Promotion of fair practices and code of conduct in securities market.

Question 2.
“BSE Sensex reached a new record of 20893 point as a result of Listing by Coal India Ltd.” This was headline in a newspaper. (MARCH-2011)
i) Which Financial Market is referred here?
ii) What are its functions?
iii) Which types of Secuitites are traded in this mar-ket?
Answer:
a) Stock Exchange
b) Functions of a Stock Exchange
1) Providing Liquidity and Marketability to Existing Securities: Stock Exchange provides a ready and continuous market for the sale and purchase of securities.
2) Pricing of Securities : A stock exchange is a mechanism of constant valuation through which the prices of secuqjies are determined. It is based on the forces of demand and supply.
3) Safety of Transaction: Stock exchange has its own well-defined rules and regulations. This ensures safety and fair dealings to investors.
4) Contributes to Economic Growth : Stock exchange provides a platform by which savings are channelised into the most productive investment proposals, which leads to capital formation and economic growth.
5) Providing Scope for Speculation : Stock exchange provides scope within the provisions of Law for speculation in a restricted and controlled manner.
6) Economic barometer: A stock exchange serves as a barometer of a country’s economic condition. Price trends in stock exchange indicate whether economy is going through boom or depression.
c) Securities traded in the secondary market are:
i) Corporate Securities
ii) Government Securities
iii) Listed Securities

Question 3.
Explain in detail the difference between capital market and money market of the country. (MAY-2013)
Answer:
Money Market: The money market is a market for short-term funds, which deals in financial assets whose period of maturity is up to one year. It enables in raising short term fund for meeting day-to-day requirements. The major participants in the money market are the Reserve Bank of India, Commercial Banks, Non-Banking Finance Companies, State Governments, Large Corporate Houses and Mutual Funds.
Money Market Instruments
1) Treasury Bill : They are issued by the RBI on behalf of the Central Government to meet its short¬term requirement of funds. They are issued at a discount on the face value of the instruments and repayable at par. They are issued in the form of promissory notes. They are also known as Zero Coupon Bonds as no interest is paid on such bills. They are highly liquid. The maturity period of these bills may be between 14 to 364 days.
2) Commercial Paper : Commercial paper is a short-term unsecured promissory note, negotiable and transferable by endorsement and delivery with a maturity period of 15 days to one year. It is sold at a discount and redeemed at par.
3) Call Money : Call money is short term finance repayable on demand, with a maturity period of one day to fifteen days, used for inter-bank transactions.
4) Certificate of Deposit: Certificates of Deposit (CDs) are short-term instruments issued by
Commercial Banks and Special Financial Institutions (SFIs), which are freely transferable from one party to another. The maturity period of CDs ranges from 91 days to one year.
5) Commercial Bill: A commercial bill is a Bill of Exchange used to finance the working capital requirements of business firms. When goods are sold in credit, the seller draws the bill and the buyer accepts it. The seller can discount the bill before its maturity with the bank.
When a trade bill is accepted by a commercial bank it is known as commercial bills.
Capital Market: It is a market for long term funds where debt and equity are traded. It consists of development banks, commercial banks and stock exchanges. The capital markfet can be divided into:
1. Primary Market.
2. Secondary Market
Primary Market : The primary market is also known as the new issues market. It deals with new securities being issued for the first time. A company can raise capital through the primary market in the form of equity shares, preference shares, debentures, loans and deposits. Funds raised may be for setting up new projects, expansion, diversification, etc. of existing enterprises. The investors in this market are banks, financial institutions, insurance companies, mutual funds and individuals.
Methods of flotation: There are various methods of floating new issues in the primary market. They are:
a) Offer through Prospectus : Prospectus is an invitation to the public for the subscription of shares and debentures of a company. The issues may be underwritten and also are required to be listed on at least one stock exchange.
b) Offer for Sale: Under this method new securities are not offered directly to the public. Initially the entire lots of securities are sold to an intermediary at a fixed price. The intermediary sells these securities to the public at a higher price.
c) Private Placement: Private placement is the allotment of securities by a company to institutional investors or some selected individuals. It is less expensive and saves time.
d) Rights Issue: According to the Companies Act, if a public company wants to issue additional shares, it must first be offered to the existing shareholders, in proportion to the amount paid up on their shares. This right is known as ‘Pre-emptive right’ and such an issue is called right issue.
e) Electronic Initial Public Offer (e-IPOs): It is a method of issuing securities through on-line system of stock exchange. Such a company has to enter into an agreement with the stock exchange. This is called an e-initial public offer.

Capital Market	Money Market
1) Market deals only long term fund.	1) Market deals only short term fund.
2) It arranges large amount of fund.	2) It arranges small amount of fund.
3) Return is high.	3) Return is high.
4) The instruments used are equity shares, preference shares, debentures and bonds.	4) The instruments used are call money, treasury bills, trade bills, commercial paper and certificate of deposit
5) SEBI is the market regulator.	5) SEBI is the market regulator.
6) Capital market instruments are highly risky.	6) Money market _ instruments are safe

Question 4.
Asianet Communications Ltd. proposes to raise additional capital through issue of its shares for modernising their communication equipments. Being a specialist in securities you are asked to advice them the various methods of raising capital in the primary market. Advise the company in this issue (MAY-2013)
Answer:
Primary Market : The primary market is also known as the new issues market. It deals with new securities being issued for the first time. A company can raise capital through the primary market in the form of equity shares, preference shares, debentures, loans and deposits. Funds raised may be for setting up new projects, expansion, diversification, etc. of existing enterprises. The investors in this market are banks, financial institutions, insurance companies, mutual funds and individuals.
Methods of flotation: There are various methods of floating new issues in the primary market. They are:
a) Offer through Prospectus : Prospectus is an invitation to the public for the subscription of shares and debentures of a company. The issues may be underwritten and also are required to be listed on at least one stock exchange.
b) Offer for Sale: Under this method new securities are not offered directly to the public. Initially the entire lots of securities are sold to an intermediary at a fixed price. The intermediary sells these securities to the public at a higher price.
c) Private Placement: Private placement is the allotment of securities by a company to institutional investors or some selected individuals. It is less expensive and saves time.
d) Rights Issue: According to the Companies Act, if a public company wants to issue additional shares, it must first be offered to the existing shareholders, in proportion to the amount paid up on their shares. This right is known as ‘Pre emptive right’ and such an issue is called right issue.
e) Electronic Initial Public Offer (e-IPOs): It is a method of issuing securities through on-line system of stock exchange. Such a company has to enter into an agreement with the stock exchange. This is called an e-initial public offer.

Kerala State Board New Syllabus Plus Two Business Studies Chapter Wise Previous Questions and Answers Chapter 9 Financial Management.

Kerala Plus Two Business Studies Chapter Wise Previous Questions Chapter 9 Financial Management

Plus Two Business Studies Financial Management 1 Mark Important Questions

Question 1.
Which among the following is the cheapest source of finance? (FEBRUARY – 2009)
a) Equity share capital
b) Debentures
c) Long term loans
d) Retained earnings
Answer:
d) Retained earnings

Question 2.
The main source of finance of K.K. Ltd. is Equity Capital of Rs. 8,00,000. The company also uses Fixed Inter est Bearing sources of debentures of Rs. 3,00,000 and long term loans Rs. 2,00,000 with an intention to enhance the return to equity shareholders.
a) Identify the concept of Financial Management used in this context. (MAY-2009)
Answer:
Trading on equity

Question 3.
Which among the following is not a factor affecting dividend decision? (MARCH-2010)
Nature of industry
b) Taxation policy
c) Competition
d) Legal restrictions
Answer:
Competition

Question 4.
The prime responsibility of a Finance Manager is to determine in advance the amount of capital and its sources. Give a suitable name to this process. (MAY-2011)
Answer:
Financial planning

Question 5.
Choose the correct pair from the following (MAY-2011)
a) Capital – Capitalisation structure
b) Fixed capital – Short term needs of the firm
c) Working capital – Net current assets
d) Investment decision-Distribution of profit Working
Answer:
capital – Net current assets

Question 6.
EPS stands for (MARCH-2013)
a) Equity per share
b) Earning per share
c) Equity pro share
d) Earning pro share
Answer:
Earnings per share

Question 7.
A major decision of the financial management is whether to distribute profits to shareholders or to retain the profits and reinvest into the business. Name the decision with regard to this. (MAY-2013)
Answer:
Dividend decision

Question 8.
‘Shortage of capital leads to over capitalisation.’ Do you agree with this statement? (MARCH-2014)
a) Letters
b) Memos
c) Complaints
d) Orders
Answer:
Complaints

Question 9.
Select the wrong pair from the following : (MARCH-2015)
a) Interest – Debentures
b) Buildings – Working Capital
c) Mix of debt and equity – Capital Structure
d) Dividend – Share Capital
Answer:
Buildings – Working capital

Question 10.
Financial leverage is favourable when, (MARCH-2016)
a) Return on investment is lower than cost of debt.
b) Debt is easily available.
c) The dividends are paid more.
d) Return on investment is higher than cost of debt.
Answer:
Return investment is higher than debt

Question 11.
List out the twin objectives of financial planning. (MAY-2016)
Answer:
a) To ensure availability of funds
b) To see that the firm does not raise resources unnecessarily

Question 12.
Zero working capital means Zero working capital (MARCH-2017)
a) Current Asset > Current Liability
b) Current Asset < Current Liability
c) Current Asset = Current Liability
d) Current Asset * Current Liability
Answer:
c) Current Asset = Current Liability

Question 13.
Ratios which help in determining the ability of the enterprise to service its long term debts are: (MAY-2017)
a) Liquidity
b) Profitability
c) Turnover
d) Solvency
Answer:
Solvency

Plus Two Business Studies Financial Management 2 Marks Important Questions

Question 1.
Mr.Joseph appointed as the Finance Manager of Venus Exporting Company Ltd. As the Finance Manager, point out two important decisions he has to take. (MAY-2010)
Answer:
Investment decisions, Finance decision and Dividend decision.

Question 2.
Following is the details of dividend received by Mr.Amal from a company during the year 2009-10. (MAY-2012)
Decks Ltd. Additional shares What is the type of dividend payment followed by the company?
Answer:
Bonus share

Question 3.
Determination of capital structure of a firm is a crucial management decision. Point out any four factors influencing the determination of capital structure. (MAY-2013)
Answer:
1) Trading on Equity (Financial Leverage)
2) Stability of Earnings
3) Cost of Debt
4) Interest Coverage Ratio (ICR)

Question 4.
Financial planning strive to achieve mainly two objectives. State these objectives. (MAY-2017)
Answer:
The twin objectives of financial planning are
a) To ensure availability of fund at the right time and its possible Sources.
b) To see that firm does not raise fund unnecessarily.

Plus Two Business Studies Financial Management 3 Marks Important Questions

Question 1.
a) Financial Service (MAY-2010)
b) Financial Markets
c) Financial Management
d) Financial institutions
i) Spot the odd one
ii) Justify your answer.
Answer:
Financial management

Question 2.
Briefly explain the term “Financial Planning”. (MARCH-2016)
Answer:
Financial Planning: The process of estimating the fund requirement of a business and specifying the sources of funds is called financial planning.
It ensures that enough funds are available at right time. The twin objectives of financial planning are
a) To ensure availability of fund at the right time and its possible sources.
b) To see that firm does not raise fund unnecessarily.

Question 3.
Capital structure is the ratio between owned capital and borrowed capital. Several factors are to be considered in determining an appropriate capital structure. Prepare a chart showing the factors affecting capital structure. (MARCH-2017)
Answer:
Factors affecting capital structure
1) Trading on Equity
2) Stability of earnings
3) Cost of debt
4) Interest Cover Ratio
5) Desire for control
6) Capital market condition
7) Taxation policy
8) Legal Requirements

Plus Two Business Studies Financial Management 4 Marks Important Questions

Question 1.
“Finance function is concerned with taking three important decisions”.Comment. (MARCH-2011)
Answer:
Finance Functions: The finance function is concerned with three broad decisions which are :

Finance Decision : It relates to the amount of . finance to be raised from various long term sources.
The main sources of funds for a firm are shareholders’ funds (equity capital and the retained earnings) and borrowed funds (debentures or other forms of debt). A firm needs to have a judicious mix of both debt and equity in making financing decisions.
Investment Decision : The investment decision relates to how the firm’s funds are invested in different assets. Investment decision can be long-term or short-term. A long-term investment decision is also called a Capital budgeting decision.
Short-term investment decisions (also called working capital decisions) are concerned with the decisions about the levels of cash, inventory and receivables.
Dividend Decision : Dividend is that portion of profit which is distributed to shareholders. The decision involved here is how much of the profit earned by company (after paying tax) is to be distributed to the shareholders and how much of it should be retained in the business.

Plus Two Business Studies Financial Management 5 Marks Important Questions

Question 1.
“A Firm’s total investment in the form of Bills Receivable, Debtors, Stock of goods, Cash in hand and at bank were Rs. 5,00,000.” Receivable , Debtors, Stock of goods, Cash in hand and at Bank (MARCH-2011)
a) Identify the type of Capital referred here
b) Explain the factors influencing the investment in these assets.
Answer:
a) Working Capital
b) Factors affecting Working Capital
1) Nature of Business : A trading organisation usually needs a smaller amount of working capital as compared to a manufacturing organisation.
2) Scale of Operations: A large scale organisation requires large amount of working capital as compared to the organisations which operate on a lower scale.
3) Business Cycle : In the boom period larger amount of working capital is needed to meet the demand. In case of depression, demand for goods declines so less working capital is required.
4) Seasonal Factors: During peak season demand of a product will be high and thus high working capital will be required as compared to lean season.
5) Production Cycle: Production cycle is the time span between the receipt of raw material and their conversion into finished goods. Working capital requirement is higher in firms with longer processing cycle and lower in firms with shorter processing cycle.
6) Credit Policy : A liberal credit policy results in higher amount of debtors, increasing the requirement of working capital.
7) Operating Efficiency : If cash, debtors and inventory are efficiently managed, working capital requirement can be reduced.
8) Availability of Raw Materials : If the raw materials are easily available in the market and there is no shortage, huge amount need not be blocked in inventories, so it needs less working capital.

Question 2.
The prime responsibility of a finance manager is to determine in advance the amount of capital, its sources and patterns. (MAY-2013)
a) Give a suitable name to this process.
b) Mention the importance of this process.
Answer:
a) Financial Planning
b) Importance of Financial Planning
1) It ensures adequate funds from various sources.
2) It reduces the uncertainty about the availability of funds.
3) It integrates the financial policies and procedures.
4) It helps the management to eliminate waste of funds and reduce cost.
5) It helps to achieve a balance between the inflow and outflow of funds and ensure liquidity.
6) It serves as the basis of financial control
7) It helps to reduce cost of financing to the minimum.
8) It helps to ensure stability and profitability of business.
9) It makes the firm better prepared to face the future

Question 3.
Spencers India a wholesaler of grocery goods, want to start a new branch in Kerala. They are requiring capital for a period of 20 yrs. Briefly explain the factors that determine the size of their capital requirement, (MARCH-2016)
Answer:
Factors affecting Fixed Capital
1) Nature of Business : A trading concern needs lower investment in fixed assets compared with a manufacturing organization.
2) Scale of Operations: An organisation operating on large scale require more fixed capital as compared to an organisation operating on small scale.
3) Choice of Technique : A capital-intensive organisation requires more amount of fixed capital than labour intensive organisations.
4) Technology Upgradation : Organisations using assets which become obsolete faster require more fixed capital as compared to other organisations.
5) Growth Prospects : Higher growth of an organisation generally requires higher investment in fixed assets.
6) Diversification : The firms dealing in number of products (Diversification) requires more investment in fixed capital.
7) Use of Fixed Assets: Companies acquiring fixed assets on hire purchase or lease system require lesser amount as against cash purchases.

Question 4.
“It is a decision regarding the distribution of profit to shareholders.” Identify the decision and explain the factors affecting such decision. (MARCH-2017)
Answer:
a) Dividend decision
b) Factors affecting Dividend Decision
1) Stability Earnings : A company having stable earnings can declare higher dividends. Otherwise, pay lower dividend.
2) Stability of Dividends : Companies generally follow a policy of stabilising dividend per share. Dividend per share is not altered if the change in earnings is small.
3) Growth Opportunities: Companies having good growth opportunities retain more money out of their earnings to finance the required investment. In such a case, they can declare dividend at a lower rate.
4) Cash Flow Positions : Availability of enough cash in the company is necessary for declaration of dividend.
5) Shareholders’ Preference : While declaring dividends, managements must keep in mind the preferences of the shareholders in this regard.
6) Taxation Policy : A company is required to pay tax on dividend declared by it. If tax on dividend is higher, company will prefer to pay less by way of dividends whereas if tax rates are lower, then more dividends can be declared by the company.
7) Capital Market: Reputed companies have easy access to the capital market and, therefore, they can pay higher dividends than the smaller companies.
8) Legal Constraints: The companies Act has laid down certain restrictions regarding payment of dividend. No dividend can be paid out of capital.

Plus Two Business Studies Financial Management 8 Marks Important Questions

Question 1.
a) What is working capital? (FEBRUARY – 2009)
b) What are the factors determining working capital?
Answer:
a) Working Capital: Working capital is that portion of capital required for investing in current as-sets for meeting day to day working of an organization. Current assets can be converted into cash within a period of one year. They provide liquidity to the business.
Working capital is of two types:
1) Gross working capital = Total of current asset
2) Net working capital = Current assets – Current Liabilities
b) Factors affecting Working Capital
1) Nature of Business : A trading organisation usually needs a smaller amount of working capital as compared to a manufacturing organisation.
2) Scale of Operations: A large scale organisation requires large amount of working capital as compared to the organisations which operate on a lower scale.
3) Business Cycle : In the boom period larger amount of working capital is needed to meet the demand. In case of depression, demand for goods declines so less working capital is required.
4) Seasonal Factors: During peak season demand of a product will be high and thus high working capital will be required as compared to lean season.
5) Production Cycle: Production cycle is the time span between the receipt of raw material and their conversion into finished goods. Working capital requirement is higher in firms with longer processing cycle and lower in firms with shorter processing cycle.
6) Credit Policy : A liberal credit policy results in higher amount of debtors, increasing the requirement of working capital.
7) Operating Efficiency : If cash, debtors and inventory are efficiently managed, working capital requirement can be reduced.
8) Availability of Raw Materials : If the raw materials are easily available in the market and there is no shortage, huge amount need not be blocked in inventories, so it needs less working capital.

Question 2.
“It refers to the mix or components of long term sources of funds”. (MARCH-2009)
a) Identify the concept referred above.
b) What are the factors to be considered while determining it?
Answer:
a) Capital structure
b) Factors Affecting Capital Structure
1) Trading on Equity (Financial Leverage) : It refers to the use of fixed income securities such as debentures and preference capital in the capital structure so as to increase the return of equity shareholders.
2) Stability of Earnings: If the company is earning regular and reasonable income, the management can rely on preference shares or debentures. Otherwise issue of equity shares is recommended.
3) Cost of Debt: A firm’s ability to borrow at lower rate, increases its capacity to employ higher debt.
4) Interest Coverage Ratio (ICR) : The interest . coverage ratio refers to the number of times
earnings before interest and taxes of a company covers the interest obligation. Higher the ratio, better is the position of the firm to raise debt.
5) Desire for control : If the management has a desire to control the business, it will prefer preference shares and debentures in capital structure because they have no voting rights.
6) Flexibility: Capital structure should be capable of being adjusted according to the needs of changing conditions.
7) Capital Market Conditions : In depression, debentures are considered good. In a booming situation, issue of shares will be more preferable.
8) Period of Finance: If funds are required for short period, borrowing from bank should be preferred. If funds are required for longer period company can issue shares and debentures.
9) Taxation Policy : interest on loan and debentures is deductible item under the Income Tax Act whereas dividend is not deductible. In order to take advantage of this provision, companies may issue debentures.
10) Legal Requirements : The structure of capital of a company is also influenced by the statutory requirements. For example, Banking Regulation Act, Indian Companies Act, SEBI, etc.

Question 3.
What is working Capital? What are the factors influencing the working capital requirements. (MARCH-2009)
Answer:
Working Capital: Working capital is that portion of capital required for investing in current assets for meeting day to day working of an organization. Current assets can be converted into cash within a period of one year. They provide liquidity to the business.
Working capital is o f two types:
1) Gross working capital = Total of current asset
2) Net working capital = Current assets – Current Liabilities

Factors affecting Working Capital

1) Nature of Business : A trading organisation usually needs a smaller amount of working capital as compared to a manufacturing organisation.
2) Scale of Operations: A large scale organisation requires large amount of working capital as compared to the organisations which operate on a lower scale.
3) Business Cycle : In the boom period larger amount of working capital is needed to meet the demand. In case of depression, demand for goods declines so less working capital is required.
4) Seasonal Factors: During peak season demand of a product will be high and thus high working capital will be required as compared to lean season.
5) Production Cycle: Production cycle is the time span between the receipt of raw material and their conversion into finished goods. Working capital requirement is higher in firms with longer processing cycle and lower in firms with shorter processing cycle.
6) Credit Policy : A liberal credit policy results in higher amount of debtors, increasing the requirement of working capital.
7) Operating Efficiency : If cash, debtors and inventory are efficiently managed, working capital requirement can be reduced.
8) Availability of Raw Materials : If the raw materials are easily available in the market and there is no shortage, huge amount need not be blocked in inventories, so it needs less working capital.

Question 4.
Mr. Ganesh, the newly appointed Finance Manager of Soorya Ltd, identified that the poor management of capital required for the day to day operation of the business is one of the problems faced by the Finance Department. He decided to take certain remedial measures to make it efficient. (MAY-2009)
a) State the factors to be considered while deter-mining the amount of capital.
Answer:
Working Capital: Working capital is that portion of capital required for investing in current assets for meeting day to day working of an organization. Current assets can be converted into cash within a period of one year. They provide liquidity to the business.
Working capital is o f two types:
1) Gross working capital = Total of current asset
2) Net working capital = Current assets – Current Liabilities

Factors affecting Working Capital

1) Nature of Business : A trading organisation usually needs a smaller amount of working capital as compared to a manufacturing organisation.
2) Scale of Operations: A large scale organisation requires large amount of working capital as compared to the organisations which operate on a lower scale.
3) Business Cycle : In the boom period larger amount of working capital is needed to meet the demand. In case of depression, demand for goods declines so less working capital is required.
4) Seasonal Factors: During peak season demand of a product will be high and thus high working capital will be required as compared to lean season.
5) Production Cycle: Production cycle is the time span between the receipt of raw material and their conversion into finished goods. Working capital requirement is higher in firms with longer processing cycle and lower in firms with shorter processing cycle.
6) Credit Policy : A liberal credit policy results in higher amount of debtors, increasing the requirement of working capital.
7) Operating Efficiency : If cash, debtors and inventory are efficiently managed, working capital requirement can be reduced.
8) Availability of Raw Materials : If the raw materials are easily available in the market and there is no shortage, huge amount need not be blocked in inventories, so it needs less working capital.

Question 5.
What is capital structure and what are the essential features of an appropriate capital structure? (MAY-2010)
Answer:
Capital Structure : Capital structure refers to the mix between owners funds and borrowed funds. Owners fund consists of equity share capital,
preference share capital and reserves and surpluses or retained earnings. Borrowed funds can be in the form of loans, debentures, public deposits, etc.
A capital structure will be said to be optimal when . the proportion of debt and equity is such that it results in an increase in the value of the equity share.

Factors Affecting Capital Structure

1) Trading on Equity (Financial Leverage) : It refers to the use of fixed income securities such as debentures and preference capital in the capital structure so as to increase the return of equity shareholders.
2) Stability of Earnings: If the company is earning regular and reasonable income, the management can rely on preference shares or debentures. Otherwise issue of equity shares is recommended.
3) Cost of Debt: A firm’s ability to borrow at lower rate, increases its capacity to employ higher debt.
4) Interest Coverage Ratio (ICR) : The interest . coverage ratio refers to the number of times earnings before interest and taxes of a company covers the interest obligation. Higher the ratio, better is the position of the firm to raise debt.
5) Desire for control : If the management has a desire to control the business, it will prefer preference shares and debentures in capital structure because they have no voting rights.
6) Flexibility: Capital structure should be capable of being adjusted according to the needs of changing conditions.
7) Capital Market Conditions : In depression, debentures are considered good. In a booming situation, issue of shares will be more preferable.
8) Period of Finance: If funds are required for short period, borrowing from bank should be preferred. If funds are required for longer period company can issue shares and debentures.
9) Taxation Policy : interest on loan and debentures is deductible item under the Income Tax Act whereas dividend is not deductible. In order to take advantage of this provision, companies may issue debentures.
10) Legal Requirements : The structure of capital of a company is also influenced by the statutory requirements. For example, Banking Regulation Act, Indian Companies Act, SEBI, etc.

Question 6.
No business Can run successfully without adequate working capital. By considering this fact, you are required to ‘
a) Narrate the significance of adequacy of working capital and
b) The important factors influencing working capital. (MARCH-2010)
Answer:
Working Capital: Working capital is that portion of capital required for investing in current assets for meeting day to day working of an organization. Current assets can be converted into cash within a period of one year. They provide liquidity to the business.
Working capital is o f two types:
1) Gross working capital = Total of current asset
2) Net working capital = Current assets – Current Liabilities

Factors affecting Working Capital

1) Nature of Business : A trading organisation usually needs a smaller amount of working capital as compared to a manufacturing organisation.
2) Scale of Operations: A large scale organisation requires large amount of working capital as compared to the organisations which operate on a lower scale.
3) Business Cycle : In the boom period larger amount of working capital is needed to meet the demand. In case of depression, demand for goods declines so less working capital is required.
4) Seasonal Factors: During peak season demand of a product will be high and thus high working capital will be required as compared to lean season.
5) Production Cycle: Production cycle is the time span between the receipt of raw material and their conversion into finished goods. Working capital requirement is higher in firms with longer processing cycle and lower in firms with shorter processing cycle.
6) Credit Policy : A liberal credit policy results in higher amount of debtors, increasing the requirement of working capital.
7) Operating Efficiency : If cash, debtors and inventory are efficiently managed, working capital requirement can be reduced.
8) Availability of Raw Materials : If the raw materials are easily available in the market and there is no shortage, huge amount need not be blocked in inventories, so it needs less working capital.

Question 7.
A major policy decision of the Financial Manager of a company is whether to distribute profits to shareholders or retain the profits and reinvest into business. (MAY-2010)
a) Name the policy decision of the Financial Manager with regard to this aspect.
b) Explain the various factors affecting the policy of the management in the maximization of the wealth of the owners.
Answer:
a) Dividend Decision

b) Factors affecting Dividend Decision

1) Stability Earnings : A company having stable earnings can declare higher dividends. Otherwise, pay lower dividend.
2) Stability of Dividends : Companies generally follow a policy of stabilising dividend per share. Dividend per share is not altered if the change in earnings is small.
3) Growth Opportunities: Companies having good growth opportunities retain more money out of their earnings to finance the required investment. In such a case, they can declare dividend at a lower rate.
4) Cash Flow Positions : Availability of enough cash in the company is necessary for declaration of dividend.
5) Shareholders’ Preference : While declaring dividends, managements must keep in mind the preferences of the shareholders in this regard.
6) Taxation Policy : A company is required to pay tax on dividend declared by it. If tax on dividend is higher, company will prefer to pay less by way of dividends whereas if tax rates are lower, then more dividends can be declared by the company.
7) Capital Market: Reputed companies have easy access to the capital market and, therefore, they can pay higher dividends than the smaller companies.
8) Legal Constraints: The companies Act has laid down certain restrictions regarding payment of dividend. No dividend can be paid out of capital.

Question 8.
“Financial planning is one of the important functions of management.” – Explain the statement. Also state various steps and objectives of it. (MARCH-2012)
Answer:
Financial Planning: The process of estimating the fund requirement of a business and specifying the
sources of funds is called financial planning. It ensures that enough funds are available at right time.
The twin objectives of financial planning are
a) To ensure availability of fund at the right time and its possible sources.
b) To see that firm does not raise fund unnecessarily.

Importance of Financial Planning

1) It ensures adequate funds from various sources.
2) It reduces the uncertainty about the availability of funds.
3) It integrates the financial policies and procedures.
4) It helps the management to eliminate waste of funds and reduce cost.
5) It helps to achieve a balance between the inflow and outflow of funds and ensure liquidity.
6) It serves as the basis of financial control
7) It helps to reduce cost of financing to the minimum.
8) It helps to ensure stability and profitability of business.
9) It makes the firm better prepared to face the future

Question 9.
“It is that part of profit of a company which is distributed among the shareholders.” (MARCH-2012)
a) Identify it.
b) Explain internal and external factors affecting it.
Answer:
a) Dividend
b) Factors affecting Dividend Decision
1) Stability Earnings : A company having stable earnings can declare higher dividends. Otherwise, pay lower dividend.
2) Stability of Dividends : Companies generally follow a policy of stabilising dividend per share. Dividend per share is not altered if the change in earnings is small.
3) Growth Opportunities: Companies having good growth opportunities retain more money out of their earnings to finance the required investment. In such a case, they can declare dividend at a lower rate.
4) Cash Flow Positions : Availability of enough cash in the company is necessary for declaration of dividend.
5) Shareholders’ Preference : While declaring dividends, managements must keep in mind the preferences of the shareholders in this regard.
6) Taxation Policy : A company is required to pay tax on dividend declared by it. If tax on dividend is higher, company will prefer to pay less by way of dividends whereas if tax rates are lower, then more dividends can be declared by the company.
7) Capital Market: Reputed companies have easy access to the capital market and, therefore, they can pay higher dividends than the smaller companies.
8) Legal Constraints: The companies Act has laid down certain restrictions regarding payment of dividend. No dividend can be paid out of capital.

Question 10.
Current assets = Working capital current assets – Current liabilities = Working capital. The above two equations are based on two different concepts of working capital. Describe these two concepts of working capital. Explain factors influencing working capital (MAY-2012)
Answer:
a) 1) Gross Working Capital = Total of Current
Assets
2) Net Working Capital = Current Assets – Current Liabilities
b) Factors affecting Working Capital
1) Nature of Business : A trading organisation usually needs a smaller amount of working capital as compared to a manufacturing organisation.
2) Scale of Operations: A large scale organisation requires large amount of working capital as compared to the organisations which operate on a lower scale.
3) Business Cycle : In the boom period larger amount of working capital is needed to meet the demand. In case of depression, demand for goods declines so less working capital is required.
4) Seasonal Factors: During peak season demand of a product will be high and thus high working capital will be required as compared to lean season.
5) Production Cycle: Production cycle is the time span between the receipt of raw material and their conversion into finished goods. Working capital requirement is higher in firms with longer processing cycle and lower in firms with shorter processing cycle.
6) Credit Policy : A liberal credit policy results in higher amount of debtors, increasing the requirement of working capital.
7) Operating Efficiency : If cash, debtors and inventory are efficiently managed, working capital requirement can be reduced.
8) Availability of Raw Materials : If the raw materials are easily available in the market and there is no shortage, huge amount need not be blocked in inventories, so it needs less working capital.

Question 11.
‘It is a composition of owner, equity and debt in the capitalisation.’ (MARCH-2013)
i) Identify the above definition
ii) Explain the factor, determining its make up
Answer:
Capital Structure : Capital structure refers to the mix between owners funds and borrowed funds. Owners fund consists of equity share capital,
preference share capital and reserves and surpluses or retained earnings. Borrowed funds can be in the form of loans, debentures, public deposits, etc.
A capital structure will be said to be optimal when . the proportion of debt and equity is such that it results in an increase in the value of the equity share.

Factors Affecting Capital Structure

1) Trading on Equity (Financial Leverage) : It refers to the use of fixed income securities such as debentures and preference capital in the capital structure so as to increase the return of equity shareholders.
2) Stability of Earnings: If the company is earning regular and reasonable income, the management can rely on preference shares or debentures. Otherwise issue of equity shares is recommended.
3) Cost of Debt: A firm’s ability to borrow at lower rate, increases its capacity to employ higher debt.
4) Interest Coverage Ratio (ICR) : The interest . coverage ratio refers to the number of times earnings before interest and taxes of a company covers the interest obligation. Higher the ratio, better is the position of the firm to raise debt.
5) Desire for control : If the management has a desire to control the business, it will prefer preference shares and debentures in capital structure because they have no voting rights.
6) Flexibility: Capital structure should be capable of being adjusted according to the needs of changing conditions.
7) Capital Market Conditions : In depression, debentures are considered good. In a booming situation, issue of shares will be more preferable.
8) Period of Finance: If funds are required for short period, borrowing from bank should be preferred. If funds are required for longer period company can issue shares and debentures.
9) Taxation Policy : interest on loan and debentures is deductible item under the Income Tax Act whereas dividend is not deductible. In order to take advantage of this provision, companies may issue debentures.
10) Legal Requirements : The structure of capital of a company is also influenced by the statutory requirements. For example, Banking Regulation Act, Indian Companies Act, SEBI, etc.

Question 12.
i) What is dividend? (MARCH-2013)
ii) What are the factor, affecting dividend decision?
Answer:
i) Dividend is that part of the profits of a company which is distributed among shareholders.
ii) Dividend Decision : Dividend is that portion of profit which is distributed to shareholders. The decision involved here is how much of the profit earned by company (after paying tax) is to be distributed to the shareholders and how much of it should be retained in the business.
iii) Factors affecting Dividend Decision
1) Stability Earnings : A company having stable earnings can declare higher dividends. Otherwise, pay lower dividend.
2) Stability of Dividends : Companies generally follow a policy of stabilising dividend per share. Dividend per share is not altered if the change in earnings is small.
3) Growth Opportunities: Companies having good growth opportunities retain more money out of their earnings to finance the required investment. In such a case, they can declare dividend at a lower rate.
4) Cash Flow Positions : Availability of enough cash in the company is necessary for declaration of dividend.
5) Shareholders’ Preference : While declaring dividends, managements must keep in mind the preferences of the shareholders in this regard.
6) Taxation Policy : A company is required to pay tax on dividend declared by it. If tax on dividend is higher, company will prefer to pay less by way of dividends whereas if tax rates are lower, then more dividends can be declared by the company.
7) Capital Market: Reputed companies have easy access to the capital market and, therefore, they can pay higher dividends than the smaller companies.
8) Legal Constraints: The companies Act has laid down certain restrictions regarding payment of dividend. No dividend can be paid out of capital.

Question 13.
It is the capital required for meeting the permanent or long term needs of the business. (MARCH-2014)
a) Identify it.
b) Explain factors determining it.
Answer:
i) Fixed capital
ii) Fixed Capital : Fixed capital refers to the capital needed for the the acquisition of fixed assets to be used for a longer period.
Factors affecting Fixed Capital
1) Nature of Business : A trading concern needs lower investment in fixed assets compared with a manufacturing organization.
2) Scale of Operations: An organisation operating on large scale require more fixed capital as compared to an organisation operating on small scale.
3) Choice of Technique : A capital-intensive organisation requires more amount of fixed capital than labour intensive organisations.
4) Technology Upgradation : Organisations using assets which become obsolete faster require more fixed capital as compared to other organisations.
5) Growth Prospects : Higher growth of an organisation generally requires higher investment in fixed assets.
6) Diversification : The firms dealing in number of products (Diversification) requires more investment in fixed capital.
7) Use of Fixed Assets: Companies acquiring fixed assets on hire purchase or lease system require lesser amount as against cash purchases.

Question 14.
“Capital budgeting is an important decision making area for the finance manager.” Explain. (MARCH-2014)
Answer:
a) Capital Budgeting
b) Importance of Financial Planning
1) It ensures adequate funds from various sources.
2) It reduces the uncertainty about the availability of funds.
3) It integrates the financial policies and procedures.
4) It helps the management to eliminate waste of funds and reduce cost.
5) It helps to achieve a balance between the inflow and outflow of funds and ensure liquidity.
6) It serves as the basis of financial control
7) It helps to reduce cost of financing to the minimum.
8) It helps to ensure stability and profitability of business.
9) It makes the firm better prepared to face the future.

Question 15.
a) “No business can run successfully without adequate working capital.” By highlighting this fact:  Narrate the significance of adequacy of working capital.(MARCH-2015)
ii) Identify the important factors influencing working capital of a firm
Answer:
i) Working Capital : Working capital is that portion of capital required for investing in current as¬sets for meeting day to day working of an organization. Current assets can be converted into cash within a period of one year. They provide liquidity to the business.
Working capital is of two types:
1) Gross working capital = Total of current asset
2) Net working capital = Current assets-Current Liabilities
ii) Factors affecting Working Capital

Factors affecting Working Capital

1) Nature of Business : A trading organisation usually needs a smaller amount of working capital as compared to a manufacturing organisation.
2) Scale of Operations: A large scale organisation requires large amount of working capital as compared to the organisations which operate on a lower scale.
3) Business Cycle : In the boom period larger amount of working capital is needed to meet the demand. In case of depression, demand for goods declines so less working capital is required.
4) Seasonal Factors: During peak season demand of a product will be high and thus high working capital will be required as compared to lean season.
5) Production Cycle: Production cycle is the time span between the receipt of raw material and their conversion into finished goods. Working capital requirement is higher in firms with longer processing cycle and lower in firms with shorter processing cycle.
6) Credit Policy : A liberal credit policy results in higher amount of debtors, increasing the requirement of working capital.
7) Operating Efficiency : If cash, debtors and inventory are efficiently managed, working capital requirement can be reduced.
8) Availability of Raw Materials : If the raw materials are easily available in the market and there is no shortage, huge amount need not be blocked in inventories, so it needs less working capital

Question 16.
“Management of fixed capital involves allocation of firms capital to different long term assets or projects.” By highlighting this statement, you are required to :(MARCH-2015)
i) Identify and explain the various factors influencing the fixed capital requirements of a company, and
ii) State the principles to be followed in managing the fixed assets of a company.
Answer:
i) Fixed Capital: Fixed capital refers to the capital needed for the the acquisition of fixed assets to be used fora longer period.
ii) Factors affecting Fixed Capital
1) Nature of Business : A trading concern needs lower investment in fixed assets compared with a manufacturing organization.
2) Scale of Operations: An organisation operating on large scale require more fixed capital as compared to an organisation operating on small scale.
3) Choice of Technique : A capital-intensive organisation requires more amount of fixed capital than labour intensive organisations.
4) Technology Upgradation : Organisations using assets which become obsolete faster require more fixed capital as compared to other organisations.
5) Growth Prospects : Higher growth of an organisation generally requires higher investment in fixed assets.
6) Diversification : The firms dealing in number of products (Diversification) requires more investment in fixed capital.
7) Use of Fixed Assets: Companies acquiring fixed assets on hire purchase or lease system require lesser amount as against cash purchases.

Question 17.
Mr. Ankit is a newly appointed Finance Manager of Neo Ltd., a manufacturing and trading enterprise. His first assignment with the new employer is about allocation of its capital among projects/assests with long-term implications. Explain the various factors he needs to consider in this regard. (MAY-2016)
Answer:
Factors affecting Fixed Capital
1) Nature of Business : A trading concern needs lower investment in fixed assets compared with a manufacturing organization.
2) Scale of Operations: An organisation operating on large scale require more fixed capital as compared to an organisation operating on small scale.
3) Choice of Technique : A capital-intensive organisation requires more amount of fixed capital than labour intensive organisations.
4) Technology Upgradation : Organisations using assets which become obsolete faster require more fixed capital as compared to other organisations.
5) Growth Prospects : Higher growth of an organisation generally requires higher investment in fixed assets.
6) Diversification : The firms dealing in number of products (Diversification) requires more investment in fixed capital.
7) Use of Fixed Assets: Companies acquiring fixed assets on hire purchase or lease system require lesser amount as against cash purchases.

Question 18.
“Overall financial health of a business enterprise is determined by the quality of its financial management.” Justify the above statement with suitable examples. (MAY-2016)
Answer:
Financial Management: Financial Management is concerned with optimal procurement as well as usage of finance. For optimal procurement, different available sources of finance are identified and compared in terms of their costs and associated risks. Financial Management aims at reducing the cost of funds procured and ensuring availability of enough funds whenever required.
Objectives of Financial Management : The primary aim of financial management is to maximise shareholder’s wealth. It means maximisation of the market value of equity shares. It is the responsibility of the company to pay reasonable dividend and also to maximize the value of its shares.
Finance Functions,: The finance function is concerned with three broad decisions which are :

Finance Decision : It relates to the amount of . finance to be raised from various long term sources.
The main sources of funds for a firm are shareholders’ funds (equity capital and the retained earnings) and borrowed funds (debentures or other forms of debt). A firm needs to have a judicious mix of both debt and equity in making financing decisions.
Investment Decision : The investment decision relates to how the firm’s funds are invested in different assets. Investment decision can be long-term or short-term. A long-term investment decision is also called a Capital budgeting decision.
Short-term investment decisions (also called working capital decisions) are concerned with the decisions about the levels of cash, inventory and receivables.
Dividend Decision : Dividend is that portion of profit which is distributed to shareholders. The decision involved here is how much of the profit earned by company (after paying tax) is to be distributed to the shareholders and how much of it should be retained in the business.

Question 19.
Mr.Amitabh has been appointed as the Finance Manager of a newly floated manufacturing and trading concern. Help him in preparing a note addressed to Board of directors citing the relevance of capital structure decision for the concern and any six prominent factors that determine the choice of capital structure. (MAY-2017)
Answer:
Capital Structure : Capital structure refers to the mix between owners funds and borrowed funds. Owners fund consists of equity share capital, preference share capital and reserves and surpluses or retained earnings. Borrowed funds can be in the form of loans, debentures, public deposits, etc.
A capital structure will be said to be optimal when . the proportion of debt and equity is such that it results in an increase in the value of the equity share.
Factors Affecting Capital Structure
1) Trading on Equity (Financial Leverage) : It refers to the use of fixed income securities such as debentures and preference capital in the capital structure so as to increase the return of equity shareholders.
2) Stability of Earnings: If the company is earning regular and reasonable income, the management can rely on preference shares or debentures. Otherwise issue of equity shares is recommended.
3) Cost of Debt: A firm’s ability to borrow at lower rate, increases its capacity to employ higher debt.
4) Interest Coverage Ratio (ICR) : The interest . coverage ratio refers to the number of times
earnings before interest and taxes of a company covers the interest obligation. Higher the ratio, better is the position of the firm to raise debt.
5) Desire for control : If the management has a desire to control the business, it will prefer preference shares and debentures in capital structure because they have no voting rights.
6) Flexibility: Capital structure should be capable of being adjusted according to the needs of changing conditions.
7) Capital Market Conditions : In depression, debentures are considered good. In a booming situation, issue of shares will be more preferable.
8) Period of Finance: If funds are required for short period, borrowing from bank should be preferred. If funds are required for longer period company can issue shares and debentures.
9) Taxation Policy : interest on loan and debentures is deductible item under the Income Tax Act whereas dividend is not deductible. In order to take advantage of this provision, companies may issue debentures.
10) Legal Requirements : The structure of capital of a company is also influenced by the statutory requirements. For example, Banking Regulation Act, Indian Companies Act, SEBI, etc.

Question 20.
The Managing Director of Ellexi Ltd., is not same about the primary objective of financial management and the broad decision making horizons of it. Assist him forgetting a better idea in this regard. (MAY-2017)
Answer:
Financial Management: Financial Management is concerned with optimal procurement as well as usage of finance. For optimal procurement, different available sources of finance are identified and compared in terms of their costs and associated risks. Financial Management aims at reducing the cost of funds procured and ensuring availability of enough funds whenever required.
Objectives of Financial Management : The primary aim of financial management is to maximise shareholder’s wealth. It means maximisation of the market value of equity shares. It is the responsibility of the company to pay reasonable dividend and also to maximize the value of its shares.
Finance Functions,: The finance function is concerned with three broad decisions which are :

Finance Decision : It relates to the amount of . finance to be raised from various long term sources.
The main sources of funds for a firm are shareholders’ funds (equity capital and the retained earnings) and borrowed funds (debentures or other forms of debt). A firm needs to have a judicious mix of both debt and equity in making financing decisions.
Investment Decision : The investment decision relates to how the firm’s funds are invested in different assets. Investment decision can be long-term or short-term. A long-term investment decision is also called a Capital budgeting decision.
Short-term investment decisions (also called working capital decisions) are concerned with the decisions about the levels of cash, inventory and receivables.
Dividend Decision : Dividend is that portion of profit which is distributed to shareholders. The decision involved here is how much of the profit earned by company (after paying tax) is to be distributed to the shareholders and how much of it should be retained in the business.

Kerala State Board New Syllabus Plus Two Business Studies Chapter Wise Previous Questions and Answers Chapter 8 Controlling.

Kerala Plus Two Business Studies Chapter Wise Previous Questions Chapter 8 Controlling

Plus Two Business Studies Controlling 1 Mark Important Questions

Question 1.
Controlling function of management ensures events to conform to _______ (MAY-2009)
a) Performance
b) Standards
c) Future activites
d) Deviations
Answer:
b) Standards

Question 2.
In the controlling process only those deviations from standard which seem exceptionally are brought to the attention of top management. Identify the relevant principle behind this. (MAY-2010)
Answer:
Management by exception

Question 3.
Find the odd one. (MARCH-2011)
a) Bill of Exchange
b) Treasury Bill
c) Debenture
d) Commercial Paper
Answer:
c) Debenture

Question 4.
________ is the criterion against which actual performance is measured. (MARCH-2012)
Answer:
Standard

Question 5.
Identify the one which is not a feature of controlling function. (MAY-2013)
a) Authority
b) Supervision
c) Forward locking
d) Continuous process
Answer:
Authority

Question 6.
The first step in control process is ______ (MARCH-2014)
a) Corrective action
b) Fixing standard
c) Analysing deviation
d) Measuring actual performance
Answer:
Fixing standard

Question 7.
Identify the management function which denotes th process of ensuring that actual activities conform to planned activities. (MARCH-2015)
Answer:
Controlling

Question 8.
“Control implies the measurement of accomplishment against the standard and the correction of deviations to assure attainment of objectives according to plans’’ is a definition given by (MARCH-2016)
a) Koontz & O Donnel
b) Henry Fayol
c) F.W. Taylor
d) Oliversheldon
Answer:
a). Koontz & O Donnel

Question 9.
Pick out a modern technique of managerial control from the following: (MAY-2016)
a) Statistical reports
b) MIS
c) Breakeven analysis
d) Budgetary control
Answer:
b) MIS (Management Information System)

Question 10.
“Without control system in place, the best of plans can go awry.” Substantiate. (SAY-2016)
Answer:
i) It helps to accomplish organisational goals.
ii) Controlling helps to judge accuracy of standards.
iii) Controlling creates an atmosphere of order and discipline in the organisation.

Plus Two Business Studies Controlling 2 Marks Important Questions

Question 1.
The various steps involved in the control process are given below. Arrange them in their sequence. (SAY-2011)
a) Comparison of performance with the standards.
b) Taking corrective action
c) Measurement of performance
d) Establishment of standards
Answer:
Establishment of standards, Measurement of performance, Comparison of performance with standards, Taking corrective action.

Question 2.
Devu, the Manager of a business unit opined that ‘control without’, planning is meaningless.’ (MARCH-2014)
a) Do you agree with Devu?
b) State reason.
Answer:
a) Yes
b) 1) Planning and control are interdependent and
inseparable functions of management.
2) Planning is a prerequisite for controlling.
3) Planning initiates the process of management and controlling complete the process.
4) Planning is prescriptive where as controlling is evaluative.

Plus Two Business Studies Controlling 3 Marks Important Questions

Question 1.
“If you try to control everything you may end up by controlling nothing.” (FEBRUARY – 2009)
a) Do you agree with the statement?
b) Why?
Answer:
a) Yes. The principle is Management by exception
b) According to this principle, only those deviations which are exceptionally high and which cannot be easily solved by lower level management alone, should be reported to top management.

Question 2.
Mr. Thomas is working as the Marketing Manager in a pharmaceutical company. The target performance fixed by the top management for the Marketing Man-ager is Rs. 40 lakhs sales in a month. During the month of January, 2009 he can make sales of Rs. 32 lakhs only.
a) Which management function is to be applied here? (MAY-2009)
b) Name the steps to be followed while performing this function.
Answer:
Controlling
1) Setting performance standards
2) Measurement of actual performance
3) Comparison of actual performance with standards
4) Analysing deviations
5) Taking corrective action

Question 3.
Just as planning, controlling should also be primarily a forward looking function.” To what extent, this statement is true?(FEBRUARY-2010)
Answer:
Controlling is a forward looking function – However, Like planning, control is also forward looking. Con¬trolling provides valuable information forfuture planning. Corrective action in controlling helps to improve the future performance. Thus controlling is a forward looking.

Question 4.
“Planning without control is a ship without a captain.” (MAY-2011)
a) Do you agree with this statement?
b) Establish the relationship between planning and control.
Answer:
a) yes.
b) 1) Planning and control are interdependent and inseparable functions of management.
2) Planning is a prerequisite for controlling.
3) Planning initiates the process of management and controlling complete the process.
4) Planning is prescriptive where as controlling is evaluative.

Question 5.
An essential part of the control process is corrective actions as and when needed – State your opinion (MARCH-2012)
Answer:
Meaning : Controlling is the process of ensuring that actual performance conform to planned performance. It also ensures that an organisation’s resources are being used effectively for the achievement of predetermined goals. So controlling is a goal oriented function.The controlling functions measure actual performance against standards, find out the deviations, analyse the causes of such deviations and take corrective actions.

Question 6.
The following table shows the details of defective per 1000 units of tooth brush during 4 months (MAY-2012)

The supervisor reported only the defective of Jan.2011 to top management. Explain the underlying principle behind this practice.
Answer:
Management by Exception

Question 7.
Mr. Salam, the new manager of Rubco Ltd., believes that controlling function should concentrate on Key Result Areas, do you agree with Mr. Salam? Sub-stantiate. (MARCH-2016)
Answer:
Yes., I agree with Salam
Controlling function should concentrate on key result areas. This is known as control by exception or management by exception. (MBE)

Question 8.
A system of control pre-supposes the existence of certain standard of performance which eventually are provided by planning. In the light of the above, establish that planning and controlling are inter-related. (MAY-2017)
Answer:
Relationship between Planning and Controlling
1) Planning and control are interdependent and inseparable functions of management.
2) Planning is a prerequisite for controlling.
3) Planning initiates the process of management and controlling complete the process.
4) Planning is prescriptive where as controlling is evaluative.
5) Planning and controlling are both backward looking as well as forward looking functions.
6) Planning based on facts makes controlling easier and effective

Plus Two Business Studies Controlling 4 Marks Important Questions

Question 1.
Planning without control is a ship without a captain. Do you agree with this statement? Establish the relationship between planning and control. (MAY-2010)
Answer:
a) Yes. Planning and control, both are complementary.
b) Relationship between Planning and Controlling
1) Planning and control are interdependent and inseparable functions of management.
2) Planning is a prerequisite for controlling.
3) Planning initiates the process of management and controlling complete the process.
4) Planning is prescriptive where as controlling is evaluative.
5) Planning and controlling are both backward looking as well as forward looking functions.
6) Planning based on facts makes controlling easier and effective

Question 2.
Prepare a seminar paper in ‘Steps in Control Process (MARCH-2013)
Answer:
Controlling Process : Controlling is a systematic process involving the following steps.
1. Setting performance standards
2. Measurement of actual performance
3. Comparison of actual performance with standards
4. Analysing deviations
5. Taking corrective action
1. Setting Performance Standards : Standards are the criteria against which actual performance would be measured. Standards can be set in both quantitative as well as qualitative terms.
2. Measurement of Actual Performance : After establishing standards, the next step is measure-ment of actual performance. Performance should be measured in an objective and reliable manner.
3. Comparing Actual Performance with Standards : This step involves comparison of actual performance with the standard. Such comparison will reveal the deviation between actual and desired results.
4. Analysing Deviations: The deviations from the standards are assessed and analysed to identify the causes of deviations.
5. Taking Corrective Action: The final step in the controlling process is taking corrective action. No corrective action is required when the deviations are within the acceptable limits.

Question 3.
“Planning and Corrtffilling are inseparable Siamese twins of management.” Why? (MARCH-2015)
Answer:
Relationship between Planning and Controlling
1) Planning and control are interdependent and inseparable functions of management.
2) Planning is a prerequisite for controlling.
3) Planning initiates the process of management and controlling complete the process.
4) Planning is prescriptive where as controlling is evaluative.
5) Planning and controlling are both backward looking as well as forward looking functions.
6) Planning based on facts makes controlling easier and effective.

Question 4.
Identify the idea behind the diagram and explain its importance. (MARCH-2017)

Answer:
a) Controlling
b) Importance of Controlling
1) Accomplishing organizational goals : The controlling function measures progress towards the organizational goals and brings to light the deviations, if any, and indicates corrective action.
2) Judging accuracy of standards: A good control system enables management to verify whether the standards set are accurate and objective.
3) Making efficient use of resources : By exercising control, a manager seeks to reduce wastage of resources.

Plus Two Business Studies Controlling 5 Marks Important Questions

Question 1.
Analyze the following activities. (MARCH-2009)
1) Measurement of performance.
2) Taking corrective action.
3) Comparing actual performance with standards.
4) Establishments of standards.
a) Identify the management function.
b) Arrange it in correct order as it takes place in an organisation.
c) Explain the relationship of this function with planning
Answer:
a) Controlling
b) 1) Establishments of standards
2) Measurement of performance
3) Comparing actual performance with standards
4) Taking corrective action

Question 2.
Just as traffic signals are essential to make our roads accident free, management controls are necessary forthe smooth functioning of the organisation. (MARCH-2010)
a) State your opinion about this statement.
b) Briefly explain the steps in control process.
Answer:
a) Yes. Control is necessary for the smooth func¬tioning of the organization.

Question 3.
“This management function is similar to thermostat in refrigerator, which compares actual temperature with the standard and acts when there is deviations.” (MARCH-2011)
a) Which management function is referred here?
b) Write the process involved in it.
Answer:
a) Controlling
b) Controlling Process : Controlling is a systematic process involving the following steps.
1. Setting performance standards
2. Measurement of actual performance
3. Comparison of actual performance with standards
4. Analysing deviations
5. Taking corrective action
1. Setting Performance Standards : Standards are the criteria against which actual performance would be measured. Standards can be set in both quantitative as well as qualitative terms.
2. Measurement of Actual Performance : After establishing standards, the next step is measure-ment of actual performance. Performance should be measured in an objective and reliable manner.
3. Comparing Actual Performance with Standards : This step involves comparison of actual performance with the standard. Such comparison will reveal the deviation between actual and desired results.
4. Analysing Deviations: The deviations from the standards are assessed and analysed to identify the causes of deviations.
5. Taking Corrective Action: The final step in the controlling process is taking corrective action. No corrective action is required when the deviations are within the acceptable limits.

Question 4.
The sales report of Usha Fans Ltd. for the last six months is given below. The target fixed for each month was 2000 fans. In the last 3 months the sales manager of the company was on leave for personal reasons Just as traffic signals are essential to make our roads accident free, management controls are necessary forthe smooth functioning of the organisation. (MAY-2013)

a) Identify the management function in the absence of which the production declined.
b) State the steps to be taken by the management to achieve the target.
Answer:
a) Controlling
b) Controlling Process : Controlling is a systematic process involving the following steps.
1. Setting performance standards
2. Measurement of actual performance
3. Comparison of actual performance with standards
4. Analysing deviations
5. Taking corrective action
1. Setting Performance Standards : Standards are the criteria against which actual performance would be measured. Standards can be set in both quantitative as well as qualitative terms.
2. Measurement of Actual Performance : After establishing standards, the next step is measure-ment of actual performance. Performance should be measured in an objective and reliable manner.
3. Comparing Actual Performance with Standards : This step involves comparison of actual performance with the standard. Such comparison will reveal the deviation between actual and desired results.
4. Analysing Deviations: The deviations from the standards are assessed and analysed to identify the causes of deviations.
5. Taking Corrective Action: The final step in the controlling process is taking corrective action. No corrective action is required when the deviations are within acceptable limits.

Kerala State Board New Syllabus Plus Two Economics Chapter Wise Previous Questions and Answers Part I Chapter 6 Non-Competitive Markets.

Kerala Plus Two Microeconomics Chapter Wise Previous Questions Chapter 6 Non-Competitive Markets

Question 1.
a) Draw the demand curves of perfect competition and monopoly market situations. (MARCH-2008)
b) Give reasons for the different shapes of demand curves in these markets?
Answer:
a) Demand curve of firm in perfect competition will be a horizontal straight line and that of monopoly will be a downward sloping. It is drawn below.

b) In perfect competition demand curve is horizontal because the price for every unit sale will be uniform. In monopoly, price varies for every unit of output. Therefore demand curve slopes downward.

Question 2.
From your experience identify two examples each for the following market forms: (MARCH-2008)
a) Monopoly
b) Monopolistic competition
Answer:
Monopoly
KSEB
Indian Railway
Monopolistic competition
Soap industry
Toothpaste industry

Question 3.
State whether the following statements are correct or false. Give justification for your answer. (MARCH-2009)
1) Price discrimination is an important feature of perfect competition.
2) Selling cost is the cost for producing the commodity.
3) Product differentiation is one of the main features of Monopoly.
4) Price leadership is an important feature of Oligopoly.
Answer:
1) False
2) False
3) False
4) True

Question 4.
Write the correct market form in which the following firms operate. (MARCH-2009)

Answer:
KSEB – Monopoly
Reliance – Communication Ltd. Oligopoly

Question 5.
Pick up the odd one and justify your answer. (MARCH-2009)
a) Monopolistic competition
b) Oligopoly
c) Monopsony
d) Perfect competition
Answer:
Monopsony

Question 6.
From the data given in table find TR and AR. Write any two relation between TR and MR. (MARCH-2009)

Answer:

When TR is maximum, MR becomes zero.
When TR reduces, MR becomes negative.

Question 7.
Fill up the following table appropriately: (MARCH-2009)

Answer:

Question 8.
The average revenue curves of two market situations are given below: (MAY-2009)

Draw MR curves corresponding to AR curves.
State the market situation corresponding to AR curves.
Give reasons for difference in AR and MR between two market forms.
Answer:
a)

b) First curve is related to perfect competition. Second curve is related to monopoly.
c) In perfect competition AR and MR are equal because every unit of the product is called sold at uniform price. Whereas, in monopoly firm can sell more only at lower prices. Therefore, different units are sold at different prices. This leads to difference in AR and MR curves.

Question 9.
Output and average revenue of firm are given below.
Fill up the missing columns and write the relevant equation of TR and MR : (MAY-2009)

Answer:

Question 10.
State whether the following statements are true or false. Rewrite if they are wrong: (MAY-2009)
a) The products in perfect competitive market are homogenous.
b) Seller in monopoly is a price taker.
c) Price leadership is an important feature of monopolistic competition.
d) Selling cost is a feature of monopoly.
e) Price discrimination under monopoly is always profitable.
1) Market in which there is only one buyer is called duopoly.
Answer:
True
b) False – price maker
c) False – a feature of Oligopoly
d) False – a feature of monopolistic competition
e) True
f) False – called monopsony

Question 11.
The average revenue curve of two market situation are given below: (MARCH-2010)

a) State the market situation corresponding to AR curves.
b) Give reasons for the different shapes.
c) Draw MR curves corresponding to AR curves.
Answer:
a) Perfect competition, monopoly
b) Under perfect competition, firm is price taker, therefore, AR = MR
Under monopoly, firm is price maker, therefore, AR > MR
c)

Question 12.
The main objective of the monopoly firm is profit maximisation. State the profit maximisation condition of a monopolist firm. (MARCH-2010)
Answer:
A monopolist maximises profit at that level of output for which the MC = MR and MC is rising. In other words, monopolist maximises profit at that level of output for which the vertical difference between TR and TC is maximum and TR is above the TC. In this level, the firm produces half of the market demand.

Question 13.
The following table shows the total cost schedule of a competitive firm. It is given that the price of the good is ₹15 (MARCH-2010)

a) Calculate profit at each level of output.
b) Find the profit maximising level of output.
Answer:
a)

b) The profit maximising level of outputs is 6, where the difference between TR and TC is highest.

Question 14.
Which of the following is a characteristic of oligopoly? (MARCH-2013)
i) A market situation with only a few buyers
ii) A market situation with only a few sellers
iii) A market situation with only one seller
iv) Government control overprice.
Answer:
ii) A market situation with only a few sellers

Question 15.
Which type of market have full control over price? (MARCH-2013)
i) Perfect competition
ii) Monopolistic competition
iii) Monopoly
iv) Oligopoly
Answer:
iii) Monopoly

Question 16.
Can you explain why the demand curve facing a firm under monopolistic competition is negatively sloped? (MAY-2014)
Answer:
Monopolistic competition

The demand curve under monopolistic competition is neither perfectly elastic nor elastic but more elastic then monopoly. This is basically beacuse, close substitutes are available in monopolistic competition but not in monopoly.
Monopolistically competitive firms maximize their profit when they produce at a level where its marginal costs equals its marginal revenues. Because the individual firm’s demand curve is downward sloping, reflecting market power, the price these firms will charge will exceed their marginal costs. Due to how products are priced in this market, consumer surplus decreases below the pare to optimal levels you would find in a perfectly competitive market, at least in the short run. As a result, the market will suffer dead weight loss. The suppliers in this market will also have excess production capacity.

Question 17.
Monopolistic competition consists of: (MAY-2015)
a) A few firms selling identical products.
b) A few firms selling differentiated products.
c) Large number of firms selling identical products.
d) Large number of firms selling differentiated products.
Answer:
d) Large number of firms selling differentiated products

Question 18.
Which of the following describes monopoly? (MAY-2015)
a) Large number of buyers
b) Large number of sellers
c) Only a single buyer
d) Only a single seller with complete control over industry.
Answer:
Only a single seller with complete control over industry.

Question 19.
Linder Oligopoly the output decision of any one firm necessarily affect the price and quantity sold by other firms. Hence the rivals may react to protect the profit. List the three different ways in which oligopoly firms may behave. (MAY-2015)
Answer:
If the market of a particular commodity consists of more than one seller but the number of sellers is few, the market structure is termed oligopoly. The special case of oligopoly where there are exactly two sellers is termed duopoly. We shall explain the different ways in which the oligopoly firms may behave.

• Firstly duopoly firms may collude together and decide not to compete with each other and maximize total profits of the two firms together. In such a case the two firms would behave like a single monopoly firm that has two different factories producing the commodity.
• Secondly, take the case of a duopoly where each of the two firms decide how much quantity to produce by maximizing its own profit assuming that the other firm would not change the quantity that it is supplying. We can examine the impact using a simple example where both the firms have zero cost.
• Thirdly, some economists argue that oligopoly market structure makes the market price of the commodity rigid, i.e., the market price does not move freely in response to changes in demand.

Question 20.
From the schedule given below, calculate the Total Revenue (TR) and derive the demand schedule. (MARCH-2016)

Answer:

Question 21.
The demand curve faced by a firm under monopolistic competition is negatively sloped. Explain. (MARCH-2016)
Answer:
The demand curve faced by a firm under monopolistic competition is negatively sloped because a firm under monopolistic competition could sell more of the commodity only by reducing the price.

Question 22.
What do you mean by monopoly market? Explain the features of monopoly. Also explain the short run equilibrium of a monopoly producer. (MAY-2016)
Answer:
Monopoly may be defined as a market situation in which there is only a single seller. He controls the entire market. The term monopoly has derived from two Greek words such as ‘mono’ means single and poly means ‘seller’. The meaning of the combined term is single seller. In a boarder sense, a monopolist is single seller of a commodity which does not have close substitutes. E.g. KSEB Features of Monopoly Market Some of the salient features of monopoly are as follows:
1) There is only a single firm producing the product
2) There is no close substitute for the product
3) Entry is denied for other producers
4) Since there is only one seller, the firm and the industry are same
5) The firm under monopoly is the price maker

Question 23.
Oligopoly is a market situation in which there is only (MAY-2016)
a) a few buyers
b) one seller
c) a few sellers
d) large number of sellers
Answer:
c) A few sellers

Question 24.
Why the Average Revenue Curve and Marginal Revenue Curve of a firm under monopolistic competition is negatively sloped? (MARCH-2017)
Answer:
The demand curve under monopolistic competition is much flatter, i.e, the demand curve of monopolistic competition is more price elastic, which can be explained with diagram.

Question 25.
Examine the diagram given below. Identify the mistake and redraw the diagram. What is the relation between Total Revenue and Marginal Revenue as the firm expands its output? (MARCH-2017)

Answer:
Relation between TR and MR
As more and more units of output is sold the TR increases at a decreasing rate MR decreases. When TR reaches maximum MR is zero.
When TR decreases MR is negative.