CBSE 2025, BS Set 1

Question

'KM Creations', a leading fashion brand, has been expanding its business into new markets. However, recently the company is facing challenges due to changes in inflation rates and disposable income of people. These factors have started affecting the company's pricing strategy and profitability. 'KM Creations' is now closely monitoring these changes to minimise their impact on its operations.

The component of business environment highlighted in the above para is:

The component of business environment highlighted in the above para is: A). Political Environment B). Technological Environment C). Economic Environment D). Social Environment

Edvaya · Accepted Answer

The correct answer is Economic Environment. **Economic Environment** is correct.

Inflation rates and disposable income of people are **economic factors** that directly affect pricing, purchasing power, and business profitability. The Economic Environment includes all forces related to the economy such as GDP, inflation, interest rates, income levels, etc.

- **Political Environment**: Relates to government policies, laws, stability.
- **Technological Environment**: Relates to innovations, R&D, technology changes.
- **Social Environment**: Relates to culture, demographics, lifestyle changes.

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Business Studies > Principles And Functions Of Management > Business Environment

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