MCQs For NCERT Class 12 Business Studies Chapter 3 Business Environment

Please refer to the MCQ Questions for Class 12 Business Studies Chapter 3 Business Environment with Answers. The following Business Environment Class 12 Business Studies MCQ Questions have been designed based on the latest syllabus and examination pattern for Class 12. Our experts have designed MCQ Questions for Class 12 Business Studies with Answers for all chapters in your NCERT Class 12 Business Studies book.

Business Environment Class 12 MCQ Questions with Answers

See below Business Environment Class 12 Business Studies MCQ Questions, solve the questions and compare your answers with the solutions provided below.

Question. Which one of the following is not a feature of business environment?     
(a) Uncertainty
(b) Interdependence
(c) Complexity
(d) Stability

Question. __________ feature of business environment states that various factors of business environment affect each other.       
(a) Pervasive
(b) Continuous
(c) Dynamic
(d) Interrelatedness

Question. Legal rules and regulations relevant to business are included in _______________ environment of business.   
(a) Legal
(b) Political
(c) Economic
(d) Technological

Question. Which one of the following is a part of economic environment?     
(a) Public debt
(b) Lifestyle of people
(c) Technological changes
(d) Level of education

Question. ____________ nature of business environment suggests that environment keeps on changing.     
(a) Dynamic
(b) Pervasive
(c) Continuous
(d) Multidimensional

Question. Proper understanding of business environment is not a prerequisite for     
(a) tapping of useful resources.
(b) identification of opportunities and threats.
(c) formulation of strategies.
(d) better coordination of employee efforts.

Question. Which one of the following is the impact of Government policy changes on business and industry?           
(a) Increase in agricultural productivity
(b) Increase in product prices
(c) Increase in competition
(d) Increase in urbanisation

Question. Globalisation means         
(a) reduced role of public sector.
(b) integration of economies.
(c) lowering interest rates.
(d) control of inflation.  

Question. ___________ is the integration of world economy into a single market through removal of trade barriers between countries.     
(a) Privatisation
(b) Liberalisation
(c) Globalisation
(d) Both (a) and (b)

Question. ___ nature of business environment suggests that environment keeps on changing.
(a) Dynamic
(b) Pervasive
(c) Continuous
(d) Multidimensional

Question. As a result of major government initiatives, more and more people are going ‘green’. In order to keep in line with the trend, ‘Clap away’ a carpet cleaning company has advertised that they only use natural cleaners that come from renewable resources and that all their service vehicles are hybrid vehicles that use both gas and electricity. Identify one of the points related to the importance of business environment and its understanding by a manager which is being highlighted in the above case.
(a) It helps in assisting in planning and policy formulation.
(b) It helps in coping with rapid changes.
(c) It helps in improving performance.
(d) It enables the firm to identify opportunities and getting the first mover advantage.

Question. Through environmental scanning business can enjoy______
(a) First mover advantage
(b) Benefit of taxes
(c) Last mover advantage
(d) None of the above

Question. With the introduction of photocopier machines in the market the carbon paper industry was badly affected. Which component of environment was responsible for it
(a) Economic
(b) Political
(c) Technological
(d) All of the above

Question.  ___ feature of business environment states that various factors of business environment affect each other.
(a) Pervasive
(b) Continuous
(c) Dynamic
(d) Interrelatedness

Question. Which of the following are the dimensions of the business environment:-
(a) Economic & Social
(b) Technological & Economic
(c) Legal & Social 
(d) All of the above

Question. Which factor is not included in internal environment
(a) Objectives
(b) Policies
(c) Public
(d) Production methods

Question. General forces consist of…..
(a) Political system
(b) Demographic factors
(c) Culture of the society
(d) All the above

Question.  According to the World Health Organization, 39% of adults are overweight. Over the last 40 years, the prevalence of obesity has tripled around the world. With over half of consumers drinking at least one sugary drink on a given day, regulations towards the beverage sector are likely to become increasingly onerous. In the U.K., for example, a sugar tax was introduced in 2018 on beverages containing more than 5% sugar. Identify the related dimensions of business environment.
(a) Legal dimension and Social dimension
(b) Social dimension and Technological dimension
(c) Technological dimension and Legal dimension
(d) Political dimension and Technological dimension

Question. Advance understanding of business environment will help in
(a) Planning and policy formulation
(b) Privatisation
(c) Developing new principles of management
(d) Liberalisation

Question. Advertisement of cigarettes carries the statutory warning. This is because of
(a) Legal environment
(b) Social environment
(c) Political environment
(d) None of the above

Question. refers to negative and unfavorable external factors that are likely to create hurdles for a firm:-
(a) Opportunities
(b) Warning
(c) Threats
(d) None of these

Question. Technological improvements and innovations results in ______
(a) Render existing products obsolete
(b) Increase in tax
(c) Reduction in profit margin
(d) none of the above

Question. Company image and brand loyalty is factor affecting business
(a) Externally
(b) Internally
(c) Government policy
(d) None of the above

Question. ___ feature of business environment states that various factors of business environment affect each other.
(a) Pervasive
(b) Continuous
(c) Dynamic
(d) Interrelatedness

Question. Which of the following is not a feature of Business environment
(a) Interrelated Elements
(b) Dynamics
(c) Complexity
(d) Continuous

Question. India’s population is expected to grow under 0.5 per cent during 2031-41 due to decline in fertility rate and increase in life expectancy. These changes in India’s demography will also have implications such as the proportion of elementary school-going children will witness significant declines, lack of hospital beds and increase in retirement age. The related feature of business environment being described in the above lines is
(a) Totality of external forces
(b) Dynamic nature
(c) Interrelatedness
(d) Relativity

Question. Legal rules and regulations relevant to business are included in ___ environment of business.
(a) Legal
(b) Political
(c) Economic
(d) Technological

Question. Factors which are beyond the control of a business are called…..
(a) Supply
(b) Demand
(c) Profit
(d) External factors

Question. Value system followed by the management of a firm as certain influence on its ……. environment.
(a) Internal
(b) External
(c) Macro
(d) None of the above

Question. The term business environment refers to …….. factors which impact functioning of a firm
(a) External factors
(b) Internal factors
(c) Management related factors
(d) Internal and External factors

Question. ‘Yo Tummy’ began its business by offering the classic combo of hamburgers and fries. But over time, their customers wanted healthier foods, so ‘Yo Tummy’ responded and began offering healthy alternatives such as salads, fruits, wraps and oatmeal. If ‘Yo Tummy’ hadn’t responded, they may have lost customers that wanted to eat healthier foods. The above case highlights one of the points related to the importance of business environment and its understanding by managers. Identify it.
(a) It helps in coping with rapid changes.
(b) It helps in improving performance.
(c) It helps the firm to identify threats and early warning signals.
(d) It enables the firm to identify opportunities and getting the first mover advantage.

Question.  Which one of the following is a part of economic environment?
(a) Public debt
(b) Lifestyle of people
(c) Technological changes
(d) Level of education

Question. Electric vehicles with zero tail pipe emission are emerging as a good alternative to ‘problems like climate change, surging pollution leading to ill health, crude import bill and energy security. Identify the related dimensions of business environment.
(a) Economic dimension, Legal dimension and Social dimension
(b) Social dimension, Political dimension and Economic dimension
(c) Economic dimension, Technological dimension and Social dimension
(d) Social dimension, Political dimension and Legal dimension

Question. …… is the process of analysing the environment for the identification of the factors which impact on the business.
(a) Environmental analysis
(b) Environment scanning
(c) Business analysis
(d) Factor analysis

Question. Which of the following best indicates features of business environment
(a) Identification
(b) Improvement in performance
(c) Coping with rapid changes
(d) All of them

Question. Which of the following is an example of social environment?
(a) Money supply in the economy
(b) Consumer protection act
(c) The constitution of India
(d) Composition of family

Question. Which of the following cases, would a continuous study of business environment help in : –
(a) Raw material supplying company increases the price of raw material 
(b) Handset mobile phone manufacturer losing its market due to failure to introduce android mobile phones.
(c) Information that labour union is going on strike
(d) All of the above

Question. ………are generally considered as controllable factors.
(a) Internal factors
(b) External factors
(c) Cost of production
(d) None of these

Question. The Economic Survey, 2019 suggests that the psychological biases can be used in the realm of tax compliance. It is in favour of using religious norms such “dying in debt is a sin” to improve tax compliance. Identify the related dimensions of business environment.
(a) Legal dimension and Social dimension
(b) Social dimension and Economic dimension
(c) Technological dimension and Political dimension
(d) Political dimension and Economic dimension

Question. The entry of multinational companies in the Indian markets has created
(a) Huge demand
(b) Huge supply
(c) Tough competition
(d) Huge demand and supply

Question. Given that the Business environment is relative even within the same industry , Negative impact on one company ; –
(a) Would be negative for another
(b) Would be positive for another
(c) Can be either negative for positive for another
(d) None of the above

Question. Proper understanding of business environment is not a prerequisite for
(a) tapping of useful resources.
(b) identification of opportunities and threats.
(c) formulation of strategies.
(d) better coordination of employee efforts.

Question. Increase in price of petrol can increase the sale of diesel cars. This is an example of business environment being : –
(a) Inter-related
(b) Unrelated
(c) Perfect correlation
(d) None of the above

Question. India continues to be a lower-middle-income country along with 46 others, while Sri Lanka has climbed to the upper-middle-income group for the fiscal year (FY) 2020, according to the World Bank’s classification of countries by income levels, released on July 1, 2019. Identify the related dimensions of business environment.
(a) Social dimension
(b) Technological dimension
(c) Economic dimension
(d) Political dimension

Question. Identification of opportunities to get first more advantage is one of the importance of business environment
(a) True
(b) False
(c) Cannot say
(d) Partially correct

Question. …………….. is a part of economic policy of a country
(a) Industrial policy
(b) Import policy
(c) Export policy
(d) All the above

Question.  Read the following statements: Assertion and Reason. Choose one of the correct alternatives given below:
Assertion (A) : Economic environment refers to all the forces and factors which directly influence the economy of your country.
Reason (R): Economic environment consist of gross domestic product, national income at national level and per capita level, profit earning rate, productivity and employment rate, monetary and fiscal policy of the government, etc.
Alternatives:
(a) Both Assertion (A) and Reason (R) are True and Reason (R) is the correct explanation of Assertion (A) .
(b) both assertion (A) and reason(R) are true and assertion (R) is not the correct explanation of assertion(A)
(c) Assertion (A) is True but Reason (R) is False.
(d) Assertion (A) False but Reason (R) is True.

Question. Read the following statements: Assertion and Reason. Choose one of the correct alternatives given below:
Assertion (A) : Social, political, legal and technological conditions are the specific forces of business environment.
Reason (R): They have impact on all business enterprises and. thus may affect an individual firm only indirectly.
Alternatives:
(a) Both Assertion (A) and Reason (R) are True and Reason (R) is the correct explanation of Assertion (A) .
(b) both assertion (A) and reason(R) are true and assertion (R) is not the correct explanation of assertion(A)
(c) Assertion (A) is True but Reason (R) is False.
(d) Assertion (A) False but Reason (R) is True.

Question. Read the following statements: Assertion and Reason. Choose one of the correct alternatives given below:
Assertion (A) : Management is required to remain highly cautious, alert and adaptable.
Reason (R): The business environment is dynamic in nature.
Alternatives:
(a) Both Assertion (A) and Reason (R) are True and Reason (R) is the correct explanation of Assertion (A) .
(b) both assertion (A) and reason(R) are true and assertion (R) is not the correct explanation of assertion(A)
(c) Assertion (A) is True but Reason (R) is False.
(d) Assertion (A) False but Reason (R) is True.

Question. Read the following statements: Assertion and Reason. Choose one of the correct alternatives given below:
Assertion (A) : Social environment consist of the customs and traditions of the society in which business is existing.
Reason (R): High inflation rate set as constraint as they increase the cost of production.
Alternatives:
(a) Both Assertion (A) and Reason (R) are True and Reason (R) is the correct explanation of Assertion (A)
(b) Both Assertion (A) and Reason (R) are True and Reason (R) is not the correct explanation of Assertion (A) .
(c) Assertion (A) is True but Reason (R) is False.
(d) Assertion (A) is False but Reason (R) is True.

Question. Read the following statements: Assertion and Reason. Choose one of the correct alternatives given below:
Assertion (A) : Timely understanding of Business Environment helps to make suitable changes in the organisation.
Reason (R): A firm gets various resources or inputs from its business environment.
Alternatives:
(a) Both Assertion (A) and Reason (R) are True and Reason (R) is the correct explanation of Assertion (A) .
(b) both assertion (A) and reason(R) are true and assertion (R) is not the correct explanation of assertion(A)
(c) Assertion (A) is True but Reason (R) is False.
(d) Assertion (A) False but Reason (R) is True.

Question. Read the following statements: Assertion and Reason. Choose one of the correct alternatives given below:
Assertion (A) : Business environment is aggregative in nature.
Reason (R): Business environment is the sum total of all things external to business firms (Totality of external forces)
Alternatives:
(a) Both Assertion (A) and Reason (R) are True and Reason (R) is the correct explanation of Assertion (A) .
(b) both assertion (A) and reason(R) are true and assertion (R) is not the correct explanation of assertion(A)
(c) Assertion (A) is True but Reason (R) is False.
(d) Assertion (A) False but Reason (R) is True.

Question. Read the following statements: Assertion and Reason. Choose one of the correct alternatives given below:
Assertion (A) : Business environment differs from country to country and even region to region.
Reason (R): Business environment consists of numerous interrelated and dynamic forces.
Alternatives:
(a) Both Assertion (A) and Reason (R) are True and Reason (R) is the correct explanation of Assertion (A) .
(b) both assertion (A) and reason(R) are true and assertion (R) is not the correct explanation of assertion(A)
(c) Assertion (A) is True but Reason (R) is False.
(d) Assertion (A) False but Reason (R) is True.

Question. Read the following statements: Assertion and Reason. Choose one of the correct
Assertion (A) : Business environment is dynamic.
Reason (R): It becomes easy to comprehend at once what exactly constitutes a given environment.
Alternatives:
(a) Both Assertion (A) and Reason (R) are True and Reason (R) is the correct explanation of Assertion (A) .
(b) both assertion (A) and reason(R) are true and assertion (R) is not the correct explanation of assertion(A)
(c) Assertion (A) is True but Reason (R) is False.
(d) Assertion (A) False but Reason (R) is True.

Question. Read the following statements: Assertion and Reason. Choose one of the correct alternatives given below:
Assertion (A) : Equal pay to male and female workers for equal work is an example of social environment.
Reason (R): Analysis and understanding of social environment is important as it determines the products, services and standards of conduct that are acceptable to society.
Alternatives:
(a) Both Assertion (A) and Reason (R) are True and Reason (R) is the correct explanation of Assertion (A) .
(b) both assertion (A) and reason(R) are true and assertion (R) is not the correct explanation of assertion(A)
(c) Assertion (A) is True but Reason (R) is False.
(d) Assertion (A) False but Reason (R) is True.

Question. Read the following statements: Assertion and Reason. Choose one of the correct alternatives given below:
Assertion (A) : Each business firm is not an island unto itself; it exists, survives and grows within the context of the element and forces of its environment.
Reason (R): A good understanding of environment by business managers enables them not only to identify and evaluate, but also to react to the forces external to their firms.
Alternatives:
(a) Both Assertion (A) and Reason (R) are True and Reason (R) is the correct explanation of Assertion (A) .
(b) both assertion (A) and reason(R) are true and assertion (R) is not the correct explanation of assertion(A)
(c) Assertion (A) is True but Reason (R) is False.
(d) Assertion (A) False but Reason (R) is True.

Question. Business environment consists of factors which are certain by nature.

Question. Investors and customers are the two components of specific forces of business environment.

Question. Dynamic nature of business environment suggests that it is pervasive.

Question. Political environment consists of political system and its working.

Question. Privatisation involves freedom of doing business.