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Practice each question, then open the answer or worked solution.
What is meant by internal trade?
The buying and selling of goods and services within the nation’s boundaries are termed internal trade. No customs duty or import duty is levied upon them, as they are domestically produced and are meant for domestic consumption. There are two kinds of internal trade, wholesale trade and retail trade
Specify the characteristics of fixed shop retailers.
Fixed shop retailers are those who maintain a permanent establishment and conduct their business from there. They do not need to move from one place to another in order to sell their service and goods.
Here are some of the characteristics:
1. They have a greater resource base and operate on a larger scale as compared to other traders.
2. They deal in more than one category of products, and it includes consumer durables and non-durables.
3. They can provide additional services such as home delivery and goods supplied on credit.
4. Being fixed in one place, they have more credibility in the eyes of the consumer.
What purpose is served by wholesalers providing warehousing facilities?
Wholesalers providing warehousing facilities serve the following purpose:
1. They purchase goods in bulk from manufacturers. Store and distribute the purchased goods to retailers in small quantities.
2. Being situated near the centre of the distribution, they are known as places of utility.
3. The bulk purchasing done by distributors helps manufacturers undertake large-scale production without worrying about storage issues.
How does market information provided by wholesalers benefit the manufacturers?
Market information provided by the wholesaler benefits the manufacturer in the following ways:
1. Information on the preferences of customers and their tastes.
2. Prevailing market conditions.
3. Goods that are in demand among consumers.
4. Level of competition in the market.
Using such information, manufacturers can produce products that suit the customers’ needs.
How do the wholesalers help the manufacturer in availing of the economies of scale?
Wholesalers help manufacturers in avail economics of scale in the following ways:
1. Purchase goods in bulk quantities from manufacturers and distribute them to retailers in small quantities.
1. By providing manufacturers with warehousing facilities, they reduce the burden of storage.
2. Create time and place utility and enable manufacturers to produce goods on a large scale.
Distinguish between single-line stores and speciality stores. Can you identify such stores in your locality?
| Basis of Comparison | Single Line Stores | Speciality stores |
| Meaning | Stores dealing with only one type of product. | Stores dealing with one particular product line a product. |
| Location | It can be located at any place in the market. | Located in the central place of the market. |
| Examples | A sweet shop selling all varieties of sweets. | A sweet shop producing only besan ladoos. |
How would you differentiate between street traders and street shops?
| Basis of difference | Street traders | Street shops |
| Definition | Small traders who sell low-cost items on the street. | Traders who have shops situated in the street side and selling goods. |
| Shops/establishments | No permanent shops. | They possess permanent shops. |
| Products | Newspapers, vegetable hawkers, etc. | Grocery items, Xerox shops, etc. |
Explain the services offered by the wholesalers to the manufacturers.
The following services are offered by wholesalers:
1. Purchasing goods in bulk from manufacturers, storing and distributing them to retailers in small quantities.
2. Manufacturers are encouraged to undertake large-scale production based on bulk purchases by wholesalers.
3. Reduces the burden on manufacturers for storing the produced goods.
4. Helps manufacturers with market information and customer preferences
What are the services offered by retailers to wholesalers and consumers?
The following services are offered by retailers:
1. By providing information to customers about the new products that are available in the market, they help consumers in deciding the product to buy.
2. They also provide information to wholesalers about the tastes and preferences of consumers, prevailing conditions of the market and existing competitors.
3. By storing a wide variety of goods based on customer tastes, they help customers in choosing the best product.
4. Retailers also promote goods as they are in direct touch with customers and hence in the best position to recommend and thus help in sales for manufacturers and wholesalers.
5. They also help in facilitating the distribution of goods to the customers for consumption.