Free Small Business 02 Practice Test - 11th Grade - Commerce 

Question 1

Government subsidy of ___ is provided to the small businesses for building capital assets.

A.

20-25%

B.

5-10%

C.

10-15%

D.

50-75%

SOLUTION

Solution : C

Government subsidy of 15-20% is provided to the small businesses for building capital assets.

Question 2

Which are the indirect challenges for small businesses that arise from global competition?

A.

Outdated technology

B.

Labour

C.

Procuring good quality raw materials

D.

Marketing

SOLUTION

Solution : A, C, and D

Due to the global competition, small businesses find themselves lagging behind in technology. Since they don't have enough funds, they end up with no managers, and lack access to good quality raw materials. 

Question 3

Sita opened a small stationery shop in her town. However, she figures the need to hire middlemen to take care of the marketing aspect in order to get her business known and earn more customers. Even then she realizes that it is a challenge. Why?

A.

Middlemen charge an exorbitant fee for marketing

B.

Difficult to find middlemen

C.

Inadequate education among the existing middlemen

D.

No challenges are faced

SOLUTION

Solution : A

Even after Sita hires middlemen for her marketing needs, they charge an exorbitant fee for doing so. This leads to a huge reduction in her revenues earned. 

Question 4

Lack of ___ leads to a loop of other problems such as using outdated technology, hiring unskilled labour, and procuring low quality raw materials.

A.

Marketing

B.

Finance

C.

Global competition

D.

Credit history

SOLUTION

Solution : B

When there is a shortage of funds, it will eventually lead to other challenges as mentioned.

Question 5

Which of the following is closely interlinked with the challenge of capacity utilisation?

A.

Outdated technology

B.

Marketing

C.

Lack of skilled labour

D.

Managerial skill

SOLUTION

Solution : A and C

Due to outdated technology and inefficient labour, small businesses face the issue of capacity utilisation. 

Question 6

In the case of Chandra, we saw she incurred very high production costs using handloom as compared to the mechanized powerloom. Apart from the costs, which of the following factor(s) are impacted due to outdated technology?

A.

Productivity

B.

Managerial skill

C.

Competency

D.

None of the above

SOLUTION

Solution : A and C

Using handloom directly impacted the productivity and competency of Chandra's business since the powerloom works 10 times faster than handloom. 

Question 7

Access to credit is a challenge for small businesses from both formal and informal sources. 

A.

True

B.

False

SOLUTION

Solution : A

Access to credit through formal source is almost impossible for small businesses as they lack guarantee and creditworthiness. Whereas, informal sources charge a very high interest fee on credit. Either way, small businesses face challenge to access credit.

Question 8

Small businesses are registered with the government by filling a simple form called as ___.

SOLUTION

Solution :

Small businesses are registered with the government by filling a simple form called as 'Udyog Aadhaar Memorandum' (UAM).

Question 9

Which of the following is NOT an incentive provided by the government for small businesses?

A.

Loans sanctioned at lower rates 

B.

Tax holiday

C.

Power at a concessional rate 

D.

Water charges exempted forever

SOLUTION

Solution : D

Water charges are exempted for 5 years or supplied at a 50% concessional rate.

Question 10

Which of the following highlight the benefit(s) of clusters?

A.

Procuring raw material for free of cost

B.

Sharing common amenities like internet, training centers

C.

Fetching optimum price by collectively selling the output

D.

Depends on the numbers of enterprises 

SOLUTION

Solution : B and C

Options B and C highlight the benefits of clusters. There is economies of scale in procuring raw material.