HBSE Class 11 Sample Paper 2024 Answers Entrepreneurship

HBSE
MODEL PAPER
2024
Practice Papers
MODEL PAPERS
Marking Scheme
ANSWER KEY

Marking Scheme (2023-24)

Entrepreneurship

Class: XI

Time: 3 Hours Max Marks: 60

General Instructions:

● The Question Paper is divided into 4 parts. There is no overall choice, though the internal
choice is given in selected sections.

● Section A has 15 objective questions carrying 1 mark each.

● Section B has 6 questions carrying 2 marks each. Answer may be within 50 to 75 words.

● Section C has 6 questions carrying 3 marks each. Answers may be about 100 words.

● Section D has 3 questions carrying 5 marks each. Answers may be about 150 words.

SECTION-A
Q1. The first step in the stages of start-up is. 1
A) Business Model/Plan C) Concept and Research
B) Launch of Product D) None of the above

Ans. C) Concept and Research

Q2. Offering permanent jobs and pensions fulfill 1
A) Physiological need C) Safety security need
B) Social need D) Esteem need

Ans. C) Safety security need

Q3. Break-even analysis is a part of 1
A) Organization Plan C) Financial Plan
B) Production Plan D) Human Resource Plan

Ans. B) Production Plan

Q4. The stage of conceiving the idea to stan art enterprise is called 1
A) Embryo Stage C) Nurture Stage
B) Fledging Stage D) Take off Stage
A) Embryo Stage

Q5. The middleman can disappear very easily by use of 1
A) Advertisement
B) Networking and social media
C) Promotion mixes
D) All of the above

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D) All of the above

Q6. Adding a new line of business is known as 1
A) Integration
B) Diversification
C) Innovation
D) Invention

Ans. B) Diversification

Q7. …………. The exemption is available for Start-Up. 1

Ans. Income Tax

Q8. ……………Is the first step in developing a Business Plan 1

Ans. Market Research

Q9. Risk arises due to………. 1

Ans. Uncertainties

Q10. Who is Entrepreneur? 1
Ans. Entrepreneur
1. Entrepreneur conceives the idea to start the business.
2. Entrepreneur earns income by selling goods and services for
themselves.
3. The reward for an entrepreneur is profit.

Q11. What is Ethics? 1
Ans. Ethics studies how to deal with corporate governance,
whistleblowing, corporate culture, and corporate social
responsibility. It emphasizes standard principles prescribed by
governing bodies. Non-compliance with business ethics leads to
unnecessary legal actions.

Q12. What is a feasibility plan? 1
Ans. The feasibility plan acts as a guideline for the implementation
of the project. It includes various aspects, problems, on hurdles that
might come in the way. It explains various risks involved in the
project, potentials of the project and the chances of success of the
project. It gives some idea about how the project can be implemented
successfully.

The feasibility plan is a process of checking resources required for
the project under consideration, their availability, etc.

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Q13. Choose the correct option. 1
Assertion (A): An entrepreneur takes risks.
Reason (R): An entrepreneur is self-confident.
A Both A and R are true; R is the correct explanation of A.
B. A is true but R is False
C. Both A and R are false.
D. Both A and R are true, but R is not the correct explanation of A.

Ans. A) Both A and R are true; R is the correct explanation of A

Q14. Assertion (A): At times, a business may face a situation where it has 1
to shut down its operations.
Reason (R): If the revenue is less than its variable cost, the operation
should be closed down.
In the context of the above two statements, which one of the
following codes is correct
A. A) is correct but R) is not correct
B. A) and R) both are correct and R) is the right explanation of A)
C. A) and R) both are correct and R) is not the right explanation of
A)
D. Both A) and R) are incorrect.

Ans. B). A) and R) both are correct and R) is the right explanation of
A)

Q15. Assertion (A): A small enterprise cannot afford to install an 1
expensive control system.
Reason (R): The control system losses some of its effectiveness
when standards cannot be defined in the quantitative term.
A. A) is correct but R) is not correct.
B. A) and R) both are correct and R) is the right explanation of A)
C. A) and R) both are correct and R) is not the right explanation of
A)
D. Both A) and R) are incorrect.

Ans. B. A) and R) both are correct and R) is the right explanation of
A)

SECTION-B
Q16. What are the myths about Entrepreneurs? 2
OR
Explain two characteristics of an entrepreneur.
Ans. (i) Entrepreneurs are born. It is incorrect to say that 1mark for
entrepreneurs are born as all the characteristics of an entrepreneur each point
can be acquired with careful observation, study, and practice. There
are many training institutes which impart training for entrepreneurial
skills. Some individuals might have genetic traits of entrepreneurial
skills but it does not mean all that the entrepreneurs are born.
(ii) Entrepreneurs have to be rich. Many times people believe that

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they cannot become entrepreneurs because they do not have money
and they do not belong to rich families. To be a successful
entrepreneur, one must have the ability, to mobilize the resources in
the most productive manner. To be an entrepreneur, one needs
creativity and innovation. Money does not assure success and it does
not facilitate creativity and innovation.
(iii) Entrepreneurs should have good knowledge of English. To be
successful, an entrepreneur requires good communication skills and
not good English. Lack of knowledge of any language is not a barrier
to entrepreneurship as one can easily learn all the languages with
training. One can acquire competencies through one's own mother
tongue also. An entrepreneur must have measurable amount of
communication skills so that he can communicate easily with others.

OR
CHARACTERISTICS OF AN ENTREPRENEUR
To be categorized as an entrepreneur, an individual must have the
following characteristics:
1. An entrepreneur incubates new ideas. An entrepreneur has a
new vision. He is a creative person. He creates and generates new
products, new services, new methods of production or new methods
of distribution. He may not have the capital or investment to start the
business but he has a new idea to experiment with. He creates
opportunities for innovation, experimentation and production.

2. An entrepreneur identifies opportunities. An entrepreneur
identifies and grabs the opportunity. After identifying, he evaluates
those opportunities. He analyses the feasibility of grabbing that
opportunity. He tries to remove the hurdles and blocks in the growth
process by finding an alternate solution, an alternate method or an
alternate strategy. He creates new ventures with hard work and
creative mind.

3. An entrepreneur takes initiative. An entrepreneur takes initiative
to find new ways to minimise the problems and to get optimum
utilization of resources. He tries to face the warning signals and
threats and tries to convert these threats into opportunities. He makes
his own way. He hesitates to follow the path made by others. He is a
self-instructor. He hesitates to follow the instructions of others while
performing the task.

4. An entrepreneur is achievement oriented. An entrepreneur sets
up a goal and plans his work in a focused manner to achieve that
goal. He never gets satisfied with running business houses and in
making projects in a routine manner like traders or businessmen. He
prefers to:
(Any Two)
Q17. Explain any two types of Entrepreneurs. 2
Ans. Basically, all the entrepreneurs possess some basic 1 mark for
characteristics and more or less perform similar entrepreneurial each point

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functions, but they still are classified on the basis of origin, location,
background, area of operation, types of enterprises, dominant
attribution, etc. 1. Based on the amount of inventiveness,
entrepreneurs are classified as follows:

(i) Innovative entrepreneurs
(ii) Adaptive or imitative entrepreneurs
(iii) Fabian entrepreneurs
iv) Drone entrepreneurs

(i) Innovative Entrepreneurs. They quickly introduce new product,
processes of production and technology. They are generally
aggressive and enthusiastic in practicing and experimenting new and
attractive possibilities. They prefer to explore new technology, new
market etc. They grow with the development of different countries.

(ii) Adaptive or Imitative Entrepreneurs. They follow the
successful innovative entrepreneurs. They just imitate the technology
and practice as innovative entrepreneurs.

(iii) Fabian entrepreneurs. They are very cautious and careful
while adapting or practicing any change. They depend upon past
practices, customs, traditions and religion.

(iv) Drone entrepreneurs. They never prefer to go for any change
production, technology and market.

(Any Two)
Q18. Give two features of attitude. 2
Ans. Attitude refers to feelings, beliefs and behavior that directed 1 mark
towards people, groups, ideas or objects. Attitudes will always have a for
positive and negative element and have a tendency to behave in a meaning
certain way toward that person or object. and .5
Four significant features of attitudes are: Valence (positivity or mark
negativity), Extremeness, Simplicity or Complexity (multiplexity), for
and Centrality. every
feature
Q19. What do you mean by environmental scanning? 2
OR
Explain the importance of pricing.
Ans. Environmental scanning is the process of gathering information 1 mark for
about events and their relationships within an organization's internal meaning
and external environments. The basic purpose of environmental and 1 mark
scanning is to help management determine the future direction of the for
organization. explanation
Environmental scanning is necessary because there are rapid changes
taking place in the environment that has a great impact on the
working of the business firm. Analysis of business environment
helps to identify strength weakness, opportunities and threats.

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OR

Price is the only element in marketing mix that produces revenue
other elements produce cost. Price is a crucial and the most important
element of marketing mix due to the following reasons.

1. Key to revenue: Proceeds for sale is called revenue and price and
volume of sale decide the revenue. High price will bring high
revenues, low price will increase sales volume and will also result in
high revenue.

2. Attract customers: Price is a very crucial element. Even a minor
difference can drag the customers towards competitor. By lowering
the price, entrepreneurs can break the loyal customers of competitor.

3. Edge over competitor: By providing good quality product at
reasonable price, you can always win over your competitors.

4. Crucial to profit: Profit is the difference between sale price and
cost so it directly affects the profit.

(Any Two)
Q20. Explain any two business activities which are auxiliaries to trade. 2
Ans. Aids or Auxiliaries to Trade 1 mark for
each point
The activities which help in smooth flow of trade are known as Aids
to Trade. These activities make buying and selling of goods more
easy. These activities are known as services and together constitute
service sector or tertiary sector of commerce. These help in removing
various hindrances of trade which arise in production and distribution
of goods. The common auxiliaries or aids to trade are:

1. Transport and communication. Transport refers to the
movement of goods from one place to another. The production of
goods takes place at one place whereas these are demanded in
different parts of the country. The obstacle of place is removed by
the transport. For example, tea is produced in Assam and Darjeeling
but is consumed in all the parts of the country. This is made possible
only because of transport. Transport is also helpful in movement of
raw materials and other resources to the industries and factories.
Labour is also moved from one place to the other with the help of
transport.
Along with transport, communication is also an important service.
Communication helps in exchange of information between
producers, consumers and traders The common communication
services are postal service, telephone service, fax, internet etc.

2. Banking and finance. Banks and financial institutions provide
credit facility loan etc. to provide finance for smooth flow of
business activities. Banks help the businessmen to overcome the

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problem of funds. Along with provision of funds, the commercial
banks provide many other facilities such as collection and deposit of
cheques, issue of bank draft, discounting of bills of exchange etc.
The banks also provide the facility of overdraft, cash credit limit,
arrangement and payment in foreign currency in case of foreign
trade.

3. Insurance: Businessmen have to bear various types of risks.
Insurance provides protection from some kinds of risk such as risk of
loss due to fire, theft, accident etc. The insurance company provides
protection to employees also against the risk of accident while
working. Businessmen have to pay a nominal amount of premium
and in return they get compensation for the loss from the insurance
company.
(Any Two)
Q21. Explain the methods of Personal Financing 2

Ans. 1. Personal savings: It is the most conventional source of 1 mark for
finance. Savings of entrepreneur are a dependable source of finance each point
without any liability.

2. Friends and relatives: Arrangement of finance in an informal
way from near and dear ones i.e., borrowing from relatives and
friends i.e., borrowing from known persons.

3. Chit funds: Under this some members who can be friends or
members of club, party etc. pay a fixed amount every month and the
amount so collected can be taken by any member as per his need by
taping with less than the total amount.

4. Deposits from dealers: When a business firm selects dealers to
sell its products or service, the dealers or distributors are supposed to
deposit some security money with the entrepreneur. The amount of
security depends upon the goodwill or reputation and brand of
entrepreneur.
(Any Two)
SECTION-C
Q22. Explain the need for and Importance of Entrepreneurship 3
Ans. Need for entrepreneurship can be made more clear from the 1 mark for
following points: each point
1. Life line of a nation: Entrepreneurship is a yardstick to measure
the development of any country as no country can prosper and grow
without development of entrepreneurship. We can see that in U.S.,
U.K., and other developed countries, there are well developed and
well established enterprises. So, every nation tries to increase its
trade by having more enterprises.
2. Provide innovation: Entrepreneur is an innovator who tries new
methods of production, new technology, new ways of marketing etc.
He develops new business ideas and puts them into action to enhance
the process of economic development.

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3. Growth of economy: The Entrepreneurs adapt to changes as
changes take place in the environment. The changes adopted by
entrepreneurs in enterprises even bring changes in the society and
economy. Latest technology used by enterprises not only brings
growth in the enterprises, but it also brings growth of economy at
large.
4. Increased profits: An entrepreneur always tries to minimise cost.
He always tries to get optimum utilization of resources. The
reduction of cost and increase in efficiency always result in increase
in profit.
5. Employment opportunities: Entrepreneurship not only provides
the scope for self-employment but also offers employment to large
number of people as in the case of successful enterprises. Growth in
entrepreneurial activities leads to more and more employment.
6. Social benefits: Entrepreneurs always try to adopt latest
technology and raise the standard of living by providing good quality
products and services at lowest cost. By setting up enterprises in
backward areas, they try to bring balanced regional growth. By
making optimum utilization of resources, they save scarce resources
of society.
(Any Three)
Q23. What are the elements of a proposed business plan? 3
OR
Explain the concept of Misconception.
Ans. 1 mark for
1. General Instructions each point
2. Business Venture
3. Organization Plan
4. Production Plan
5. Human Resource Plan
6. Market Plan
7. Financial Plan

OR

1. Great ideas just appear out of nowhere: It is not correct. In
reality, a lot of time is s spent to generate great ideas. A systematic
planning is done to generate ideas.

2. There are no illogical ideas: In reality, many ideas are not very
good, although, all ideas should be approached as worthy.

3. The customer will tell you what to do if you will only listen:
Although best source of ideas are people but just talking to them will
not generate ideas. One has to focus on unmet needs of customers
and think logically to find solutions to meet their needs.

4. We can generate ideas in meetings: In reality, generation of
ideas is not restricted to meetings. Great ideas can be generated
elsewhere also.

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5. Great ideas are not a problem but implementing them is: In
reality, if ideas are generated logically with proper dialogue and
discussion then, implementing them is not a problem.

(Any Three)
Q24. What is product mix? Give any two elements of product mix. 3
Ans. A. PRODUCT 1 mark for
The product element of the marketing mix signifies the tangible or meaning
intangible product offered to the customer, which is the satisfier of and 1 mark
the need. for each
Product Mix element
The product mix refers to important decisions related to the product
such as quality of product, design of product, packing of product, etc.
Another important thing included in product mix is product
assortment. It refers to number of products and items a particular
producer offers to the market. For example, the Hindustan Lever is
dealing with soaps, detergents, tea, toothpaste, etc. When a firm
starts its marketing operations it starts with one product but later on it
expands and diversifies its activities by introducing more varieties of
product or more lines of products. For example, Nirma made its entry
with the detergent powder but slowly it entered into other lines of
products such as salt, toilet soap, toothpaste, etc.
Important elements of product mix:
1. Branding
Meaning. A brand is the identification of a product. It can be in the
form of a name, symbol, or design etc. The branding is not only done
to identify the seller or producer but also to make your product
superior than competitor's product.
2. Packaging
The companies always supply the products in packaged form. For
example, Coke comes in bottle, Tide in bag, biscuits in wrapper, oil
in jar, etc.
Packaging is the basic activity of every company. It can be defined as
"A set of tasks or activities which are concerned with the designing
and production of an appropriate wrapper container or bag for the
product".
3. Labelling
Labelling means putting identification marks on the package. Label
is the carrier of information. It provides information like-name of the
product, name of manufacturer. contents of products, expiry and
manufacturing date, general instructions for use, weight, price, etc.
Labels are attached on the product to provide some information to
customer.
Product labels can be (a) In simple tag form as in case of local
products like rice, pulses, etc. (b) Elaborate labels-as used by reputed
companies. These are very attractive and give complete information
about product to customer. Apart firm details of product, some
statutory warnings which are essential for some products must be
printed on label. For example, on tobacco, liquor it is compulsory to

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mention that its consumption is injurious to health 1 mark each for
two essentials/ elements.
(Any Two)
Q25. Difference Between Fixed Cost and Variable Cost. 3
OR
Explain the factors affecting Capital Structure.
Ans. Difference between Fixed Cost and Variable Cost 1 mark for
each point
Variable Cost

1. Variable Cost change with change in the quantity of output.

2. Variable cost is zero at zero level of output.

Example: Raw material cost, wages of casual laborer, etc.

Fixed Cost

Fixed cost remains fixed and does not change with the change in
quantity or output.

Fixed cost is incurred even when the output is zero.

Example: Factory rent, salary of permanent staff, cost of plant and
machinery, etc.

OR
1. Return on Investment. Return on investment is another crucial
factor which helps in deciding the capital structure. If return on
investment is more than rate of interest then company must prefer
debt in its capital structure whereas if return on investment is less
than rate of interest to be paid on debt, then company should avoid
debt and rely on equity capital.

2. Cost of debt. If firm can arrange borrowed fund at low rate of
interest then it will prefer more of debt as compared to equity.

3. Tax rate. High tax rate makes debt cheaper as interest paid to debt
security holders is subtracted from income before calculating tax
whereas companies have to pay tax on dividend paid to shareholders.
So high tax rate means company will prefer debt whereas at low tax
rate, we can prefer equity in capital structure.

4. Cost of equity. Another factor which helps in deciding capital
structure is cost of equity. Owners or equity shareholders expect a
return on their investment i.e., earning per share. As far as debt is
increasing earnings per share (EPS), we should include it in capital
structure but when EPS starts decreasing with inclusion of debt then
we must depend upon equity share capital only.
5. Floatation costs. Floatation cost is the cost involved in the issue

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of shares or debentures. These costs include the cost of
advertisement, underwriting, statutory fees etc. It is a major
consideration for small companies but even large companies cannot
ignore this factor because along with cost, there are many legal
formalities to be completed before entering into capital market. Issue
of shares and debentures requires more formalities as well as more
floatation cost. Whereas there is less cost involved in raising capital
by loans or advances.

6. Risk consideration. Financial risk refers to a position when a
company is unable to meet its fixed financial charges such as
interest, preference dividend. payment to creditors etc. Apart from
financial risk, business has some operating risk also. It depends upon
operating cost, higher operating cost means higher business risk. The
total risk depends upon both financial as well as business risk. If
firm's business risk is low then it can raise more capital by issue of
debt securities whereas at the time of high business risk, it should
depend upon equity.

(Any Three)
Q26. Explain the factors affecting requirement of Fixed Capital 3
Ans. Estimating Requirement of Fixed Capital Factors Affecting 1 mark for
Requirement of Fixed Capital each point

Investment in fixed assets is for longer duration and is called fixed
capital. Fixed capital is financed through long term sources of
finance such as equity shares, preference shares, debentures, long
term loans, etc. The requirement of fixed capital depends upon
various factors which are explained below:

1. Nature of business. The type of business the company is involved
in is the first factor which helps in deciding the requirement of fixed
capital. A manufacturing company needs more fixed capital as
compared to a trading company, as trading company does not need
plant, machinery, etc.

2. Scale of operation. The companies which are operating at large
scale require more fixed capital as they need more machineries and
other assets whereas small scale enterprises need less amount of
fixed capital.

3. Technique of production. Companies using capital-intensive
techniques require more fixed capital whereas companies using
labour-intensive techniques require less capital because capital-
intensive techniques make use of plant and machinery, and company
needs more fixed capital to buy plants and machinery.

4. Technology upgradation. Industries in which technology
upgradation is fast need more amount of fixed capital as when new

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technology is invented, old machines become obsolete and they need
to buy new plants and machinery whereas companies where
technological upgradation is slow, they require less fixed capital as
they can manage with old machines.

5. Growth prospects. Companies which are expanding and have
higher growth plan require more fixed capital as to expand, they need
to expand their production capacity and to expand production
capacity, companies need more plant and machinery, hence more
fixed capital.

6. Diversification, Companies which have plans to diversify their
activities by including more range of products require more fixed
capital as to produce more

(Any Three)
Q27. Give classification of employees on the basis of job. 3

Ans. Before calculating the number and types of employees required, 1 mark for
the organization must find out what job has to be taken up by the each point
employees. Job is the smallest unit in which the work of an
organization is divided. Type of job determines the position or
Based on job, employees can be classified into following three
categories:
1. Managerial staff
2. Non- Managerial Staff
3. Others
4. Professionals

1. Managerial staff: It comprises of all the employees who are
involved in managerial activities. Managerial staff can be divided
into the following categories.

(a) Top level

(b) Middle level

(c) Lower level

2. Non-managerial staff: It comprises of labour involved in doing
work. Non- managerial staff can be classified as:

(a) Highly skilled labour

(c) Semi-skilled labour

(b) Skilled labour

(d) Unskilled labour

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3. Others: It comprises of technical experts, professionals and
administrators. Following employees are included in this category:

a) Technical or trained manpower

b) Administrative staff such as book keeping experts, computer
operators, etc.

4. Professionals: People like CA, CS, lawyer, bankers and auditors,
etc.

SECTION-D
Q28. Explain the difference between Employee and Entrepreneur 5
OR
Explain the stages of growth of an enterprise
Ans. Difference between Employee and Entrepreneur 1 mark for
each point
Entrepreneur

1. Entrepreneur conceives the idea to start the business.

2. Entrepreneur earns income by selling goods and services for
himself.

3.The reward for an entrepreneur is profit.

4. Entrepreneur acts as a worker as well as an owner.

5. Entrepreneur creates the enterprise.

6. Entrepreneur innovates the new concepts.

7. Entrepreneur focuses on business.

8. Entrepreneur builds a team.

Employee

1. Employee helps in implementing the idea of entrepreneur.

2. Employee sells goods and services for someone else.

3. The reward for an employee is salary or wages.

4. Employee acts as a worker only.

5. Employees/managers maintain the enterprise created by
entrepreneur.

6. Employees make sure that the innovations are carried out

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smoothly.

7. Employees focus on processes and systems which are must for
smooth functioning of business.

8. A manager ensures that the team works together. He supervises
and controls the team.

OR
Different stages of growth of an enterprise are:
1. Embryo Stage
2. Nurture stage
3. Fledgling stage
4. Take-off stage
5. Viable, growing enterprise

1. Embryo stage. This is the initial stage of conceiving idea. This is
the stage when an opportunity is perceived, and entrepreneur thinks
of starting the enterprise and looks for commercial viability of that
opportunity. In this stage, entrepreneur gets the vision of setting an
enterprise. This is called embryo stage.

2. Nurture stage. In this stage, the commercial potential of the
opportunity is identified and the product or services which have to be
produced are planned. At this stage, entrepreneur focuses on
producing goods and services effectively. In this stage, he tries to
exploit all the opportunities.

3. Fledgling stage. This stage comes after exploiting the
opportunities. Here, the focus of entrepreneur is on trading goods and
services. In this stage, the entrepreneur tries to attract more and more
customers.

4. Take-off stage. This stage comes when enterprise starts running
successfully. The enterprise grows and becomes a viable enterprise.
At this stage, the entrepreneur focuses on profitability and marketing.

5. Viable, growing enterprise. At this stage, the enterprise becomes
a well- established enterprise which has a lot of potential to grow and
expand.) In this stage, enterprise earns sufficient profit to meet all the
commitments and for reinvestment. Here, the focus of entrepreneur is
on expansion, diversification and growth.
(Any Five)
Q29. Differentiate between E-business and Traditional Business. 5
OR
Explain the Features of Personal Selling
Ans. -Business v/s Traditional Business 1 mark for
each point
Basic of E-business Traditional
Difference Business

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1. Formation Easy to form. Difficult to form.

2. Personal touch No personal touch Personal touch is
present specially in
sole-
proprietorship and
partnership.

3. Setting up cost Low High

4. Operating cost Low High

5. Physical Not possible Possible
examination of
goods

6. Ease of Much, as internet Difficult, as
expansion has no geographical various legal
boundaries. formalities are to
be completed.

7.Human resource Technically Semiskilled and
required qualified and IT skilled labour
professionals are required.
required
8. Risk Involved High risk as there is Less risk as parties
no direct contact has personal
between the parties. interaction.

9. Distribution No distribution Various
Channel channel used as intermediaries such
manufacturers prefer as wholesaler,
to sell directly to retailers etc. are
customers. involved.

10. Length of Shorter, because Longer, because
Business Cycle various processes one process is
can be carried out carried out at one
simultaneously. time, for example,
purchase then
production then
sale etc.

OR
Personal Selling

Meaning. Personal selling means selling personally. This involves
face to face interaction between seller and buyer for the purpose of

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sale.

The personal selling does not mean getting the prospects to desire
what seller wants but the concept of personal selling is also based
on customer satisfaction.

Features of Personal Selling:

(i) Personal interaction. In personal selling, the buyers and sellers
have face to face interaction. This closeness allows both the parties
to observe each other's action closely.

(ii) Two-way communication. In personal selling, the sellers give
information about the product, at the same time, the buyer gets a
chance to clarify his doubts. It is suitable for sale of complex
products where buyer wants to interact with the manufacturer.

(iii) Better response. When seller is personally explaining the
utilities of product to the customers then customer do pay some
attention and listen to the information.

(iv) Relationship. When the seller and buyer come together, this
may improve relation between the customer and seller. Salespersons
normally make friendly relations with the customers.

(v) Better convincing. Personal selling is the most effective form of
promotion because with this, the salesperson can convince the buyer
by demonstrating the use of product and making changes in the
product according to the need of customer.

(Any Five)

Q30. What is the difference between Direct Tax and Indirect Tax 5
Ans. 1 mark for
Basis of Difference Direct Tax Indirect tax each point
Levy Direct taxes are Indirect taxes are
levied on taxpayer charged on goods
income and profits. and services.
Governed By Central Board of Central Board of
Direct Taxes Indirect taxes and
customs.
Nature Progressive Regressive
Incidence and It falls on the same It falls on the
Impact person different persons
Inflation Direct Tax helps in Indirect Taxes
reducing Inflation promotes Inflation
Collection of tax Difficult Easy

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