Internal Trade

NCERT Solution

Short Answer Type

Question 1: What is meant by internal trade?

Answer: Buying and selling of goods and services within the boundaries of a country is called internal trade. Since goods and services; in this case; are produced and consumed within the country, no custom duty is levied on these goods and services. Internal trade can be broadly categorized into two types, viz. wholesale trade and retailing trade.

Question 2: Specify the characteristics of fixed shop retailers.

Answer: Following are the characteristics of fixed shop retailers:

• They have greater resources than itinerant retailers and they sell a wider variety compared to itinerant retailers.
• They deal in different types of products.
• These retailers usually have good credibility in the minds of consumers.

Question 3: What purpose is served by wholesalers providing warehousing facilities?

Answer: Wholesalers usually provide warehousing facilities. By doing so, they reduce the burden on manufacturers and ensure availability of product in the market. Thus, the wholesalers provide time utility.

Question 4: How does market information provided by the wholesalers benefit the manufacturers?

Answer: Wholesalers are in direct contact with the retailers and thus they have relevant information regarding the market trend. Wholesalers also know about competitors’ activities because of their routine interaction with retailers. Such information can be very useful for the manufacturers. A manufacturer can mould its production and marketing plans according to the insight provided by the wholesaler.

Question 5: How does the wholesaler help the manufacturer in availing the economies of scale?

Answer: A wholesaler collects order from various retailers and passes on this pool of order to the manufacturer. Thus, it becomes possible for the manufacturer to produce on large scale. Large scale production ensures economies of scale to the manufacturer.

Question 6: Distinguish between single line stores and speciality stores. Can you identify such stores in your locality?

Answer: A single line store sells a single product line, while speciality shop sells a specific product line. For example; a shop selling kid’s wear is an example of speciality store. On the other hand, a shop selling undergarments only is an example of single line store. Usually, both the types of shops are located at prime locations only. There is one speciality store near my house. This store sells pet food.

Question 7: How would you differentiate between street traders and street shops?

Answer: Street traders are usually seen at places where a there is a huge gathering on a regular basis; such as on bus stops, railway stations, office areas, etc. Street shops are fixed shops which are found at busy intersections. While street traders are itinerant traders, street shops are fixed shops. Both of them work on low capital and usually sell cheap goods which can be used on a daily basis.

Question 8: Explain the services offered by wholesalers to manufacturers.

Answer: Wholesalers provide following services to manufacturers:

• Facilitating large scale production: By pooling the orders from retailers, wholesalers pass on bulk order to manufacturer. Thus, they enable a manufacturer to go for large scale production. This helps the manufacturer in attaining economies of scale.
• Bearing risk: After buying from the manufacturer, wholesaler takes the risk of protecting the goods from pilferage, damage, theft, etc. Thus, wholesaler helps in reducing the risk for manufacturer.
• Providing financial assistance: Wholesalers often pay in advance from manufacturer. Thus, the producer does not have to worry about bad debt. This also helps the producer in recovering its investment in less time.
• Expert advice: Wholesalers are in direct contact with the market and have better knowhow about the local market. Thus, wholesalers are in a better position to give useful advice to manufacturer.
• Help in marketing function: Wholesalers help in various marketing functions; like promotion and supply of products.
• Facilitating continuity: By keeping the inventory of a particular product, wholesalers ensure continuity of product in the market.
• Storage: Many wholesalers also provide warehouse and thus store products. This reduces the burden on manufacturer as warehousing has its own issues and problems.

Question 9: What are the services offered by retailers to wholesalers and consumers?

Answer: Retailers offer following services to wholesalers:

1. Help in distribution of goods
2. Personal selling
3. Enabling large scale operations
4. Collecting market information
5. Help in promotion of goods and services

Retailers offer following services to consumers:

1. Regular availability of products
2. New product information
3. Convenience of buying
4. Trade selection
5. After sales service
6. Credit facilities

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