Worksheet Solutions: Internal Trade - Commerce PDF Download

Multiple Choice Questions

Q2: Who are the intermediaries that help in the distribution of goods to consumers?
(a) Manufacturers
(b) Retailers
(c) Wholesalers
(d) Both B and C
Ans: (d) Both B and C

Q3: What is the main objective of trade?
(a) To provide services
(b) To earn profits
(c) To create employment
(d) To support local businesses
Ans: (b) To earn profits

Q4: Which of the following is considered a type of retail trade?
(a) Wholesale trade
(b) Departmental store
(c) Internal trade
(d) External trade
Ans: (b) Departmental store

Q5: What does 'cash on delivery' mean?
(a) Payment made before delivery
(b) Payment made at the time of delivery
(c) Payment made after delivery
(d) None of the above
Ans: (b) Payment made at the time of delivery

Fill in the Blanks

Q2: The purchase and sale of goods in large quantities is referred to as __________ trade.
Ans: Wholesale

Q3: Retailers sell goods in __________ quantities.
Ans: Small

Q4: A __________ is a retail establishment that sells a variety of goods in separate departments.
Ans: Departmental store

Q5: The __________ is responsible for collecting market information beneficial to manufacturers.
Ans: Wholesaler

True or False

Q2: Wholesalers sell directly to the final consumers.
Ans: False

Q3: Retail trade is not necessary for the distribution of goods.
Ans: False

Q4: The Goods and Services Tax (GST) aims to simplify the tax structure across India.
Ans: True

Q5: All sales in multiple shops are made on credit.
Ans: False

Match the Following

Ans:

• 1 - A: Wholesaler - Consumer goods sold in bulk
• 2 - B: Retailer - Direct sale to consumers
• 3 - C: Departmental Store - Variety of goods under one roof
• 4 - D: Consumer Cooperative Store - Owned by consumers
• 5 - E: Chain Store - Multiple shops with similar appearance

Short Answer Questions

Q2: What are the two main types of internal trade?
Ans: The two main types of internal trade are wholesale trade and retail trade. Wholesale trade is when goods are sold in large amounts to retailers, while retail trade is when goods are sold in smaller amounts directly to the final customers.

Q3: How do wholesalers help retailers?
Ans: Wholesalers help retailers by buying large quantities of products from manufacturers and selling them in smaller amounts to stores. This makes it easier for retailers to have enough stock to sell to customers without having to buy everything directly from the makers.

Q4: What is a supermarket and what makes it special?
Ans: A supermarket is a large store that sells many different kinds of food and everyday items all in one place. It is special because customers can choose from a wide variety of products and pay for everything at once, making shopping quick and easy.

Q5: What is the role of chambers of commerce in trade?
Ans: Chambers of commerce are groups that help businesses work better together. They talk to the government about rules and laws that affect trade, help improve transportation, and support local businesses to make trading easier for everyone.

Long Answer Questions

• Facilitates Economic Activity: Internal trade plays a crucial role in facilitating economic activities. It allows goods produced in one region to be available in other regions, ensuring that consumers have access to a variety of products regardless of local production limitations. This interconnectedness helps boost the economy by promoting consumption and generating revenue for businesses.
• Supports Specialization: Different regions or states often specialize in certain products based on their resources, climate, and skills. Internal trade enables these specialized products to reach consumers who do not have access to them locally. For example, fruits from a farming region can be traded in urban centers where such produce is not cultivated, thus supporting agricultural producers and meeting consumer demand.
• Enhances Competition: A vibrant internal trade environment fosters competition among businesses. When consumers have multiple options for purchasing goods, it encourages businesses to improve quality, reduce prices, and innovate, ultimately benefiting the consumer. This competition stimulates further economic growth and efficiency.
• Job Creation: Internal trade encompasses various jobs in logistics, retail, and wholesale sectors. It requires a workforce for transporting goods, managing inventories, and selling products directly to consumers. This job creation is essential for economic stability and growth, as it provides livelihoods for many individuals in the country.
• Types of Internal Trade: Internal trade is broadly classified into wholesale and retail trade. Wholesale trade involves buying goods in large quantities from manufacturers and selling them to retailers or other businesses, which helps in distributing products widely. Retail trade, on the other hand, involves selling goods directly to consumers in smaller quantities, making products accessible to the public. Both types are critical as they ensure that goods flow smoothly from producers to end-users, fulfilling market needs.

Q2: Discuss the roles of wholesalers and retailers in the internal trade system. How do they contribute to the movement and availability of goods in the market?
Ans: Wholesalers and retailers are essential components of the internal trade system, acting as intermediaries between manufacturers and consumers. Their roles and contributions can be detailed as follows:

• Bridge Between Producers and Consumers: Wholesalers purchase goods in bulk from manufacturers and sell them in smaller lots to retailers. This bridging role is vital as it allows manufacturers to focus on production while wholesalers handle the distribution logistics. Retailers then sell these products to consumers, ensuring that a wide variety of goods is available in the market.
• Risk Management: Both wholesalers and retailers help manage risks associated with holding inventory. Wholesalers bear the risk of price fluctuations and unsold stock, while retailers absorb the risk of changes in consumer demand. This risk-sharing enables manufacturers to produce goods without worrying about immediate sales, supporting continuous production cycles.
• Market Information: Wholesalers and retailers play a significant role in gathering and relaying market information. Retailers, in particular, interact directly with consumers, providing feedback to wholesalers and manufacturers about consumer preferences and trends. This information is crucial for businesses to adapt their strategies, ensuring that they meet market demands effectively.
• Financial Support: Wholesalers often extend credit to retailers, allowing them to purchase inventory without immediate cash payment. This financial assistance is crucial for small retailers who may not have sufficient working capital. By facilitating credit, wholesalers enable retailers to stock a diverse range of products, enhancing consumer choice.
• Promotion of Goods: Retailers are responsible for the final promotion and sale of goods to consumers. They engage in marketing efforts, such as in-store promotions and advertising, to attract customers. This promotional activity increases product visibility and helps stimulate sales, ultimately benefiting the entire supply chain.