Practicing Success

Target Exam

CUET

Subject

Business Studies

Chapter

Formation of a Company

Question:

'A project has a very little chance of being profitable.'

Which type of feasibility is conducted by promoters for knowing this?

Options:

Technical feasibility

Financial feasibility

Economic feasibility

None of these

Correct Answer:

Economic feasibility

Explanation:

The correct answer is option 3- Economic feasibility.

Technical feasibility: Sometimes an idea may be good but technically not possible to execute. It may be so because the required raw material or technology is not easily available.

Financial feasibility: Every business activity requires funds. The promoters have to estimate the fund requirements for the identified business opportunity. If the required outlay for the project is so large that it cannot easily be arranged within the available means, the project has to be given up.

Economic feasibility: Sometimes it so happens that a project is technically viable and financially feasible but the chance of it being profitable is very little. In such cases as well, the idea may have to be abondoned.