Home Trade

Question 1

Q.1 State briefly the definition and kinds of trade.

Answer 1

Ans. Trade, is an activity of buying and selling of goods for money or other goods.

(KINDS)
Home Trade:
In home trade, exchange of goods or business is conducted within the boundaries of a particular country. Seller and buyer relate to a same country.

Foreign Trade:
Trade or exchange of goods and services between two or more independent countries for their mutual advantages is described as foreign trade.

Question 2

Q.2 State the merits of home trade.

Answer 2

Ans.
(i) Creates more demand
(ii) No legal formalities

Employment Opportunities:

4. Nominal Taxes:
   In domestic trade the govemment charges only nominal taxes like sales tax etc. and the traders do not pay import and export duty.
5. Free Movement of Goods:
   There is no restriction on the movement of goods within the country, so the goods can be sent freely anywhere in the country which makes home trade easy.
6. Local Currency:
   In home trade, country’s own currency is used for receipt and payment. Hence, there is no problem of dealing with foreign exchange.
7. Easy Transportation:
   Since goods are transferred from one place to another within the boundaries of a particular country, so local transport can be easily availed for this purpose.
8. Availability of Goods:
   With the help of domestic trade, various commodities can be made available in different areas of the country. Due to this the people do not face any problem to get their required goods.
9. Price Stability:
   With the help of domestic trade, shortage of goods can be removed by transferring them from the area having surplus.
   With the smooth flow of supply of goods prices remain stable and equal throughout the country.
10. Equal Facilities and Restrictions:
    All the facilities provided and restrictions imposed by the govemment are the same for each trader in domestic trade. No one can have favourable advantage or undue disadvantage.

Medical Facilities:
11-Due to home trade, the supply or availability of medicines i medicine on clinics, health clubs, medical stores and even on s cay to mak linies, health clubs, medical storas and lability small shops is possible with the help of home trade.

12. Low Cost of Production:
    In the présence of home trade, producer can purchase raw material and other factors of production at low prices from that nea where these are available at cheaper rates. Having cheap raw materials and other means of production, the goods can be produced at lower cost to compete in the market.
13. Industrial Development:
    The growth of home trade provides better opportunities for industrial development. Industries are facilitated by consumption of their products, providing raw materials, machinery. etc.
14. Agricultural Development:
    In agricultural countries, domestic trade plays a vital role in agricultural development. Agricultural development is based on the availability of latest technology, seeds, fertilizers and pesticides etc. All these requirements are easily available in the whole county due to home trade.
15. High Standard of Living:
    Living standards can be improved with the help of domestic trade. Because more trade leads to → more business → more employment opportunities → more income + easy
    standard of living.
    availability of goods. All the above elements lead to high
16. Immediate Possession:
    In home trade, the buyer gets immediate possession of goods, which he can use according to his need. Due to this, the trade activities increase
17. National Resources
    Due to home trade, the best possible utilization of nailable resources of country is possible in the best interests of general public.
18. Mobility of Labour.
    The importance and demand for workers increase with the expansion of home trade and they can go to those places where employment opportanities arise.
19. Increase in Investment:
    Due to development in home trade, the local and foreign investors find viable investment opportunities to can huge profit.
20. Credit Facility:
    The goods can be bought or sold on credit basis withou any hesitation. Due to this, the exchange of goods and services is possible with less capital or without capital.

(iii) Source of employment
(iv) Free movement of goods
(v) Use of local currency
(vi) Price stability

Q.3

Question 3

State the demerits of home trade.

Answer 3

Ans.
(i) Drugs
(ii) Expansion of weapons
(iii) Black marketing
(iv) Monopoly
(v) Bad debts

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Q.4

Question 4

What is meant by invoice in home trade.

Answer 4

Ans. It is an important document of internal trade, which includes quantity, price and total value of the goods sold. It is sent to the buyer and payment is made according to the amount written on it.

Q.5

Question 5

What is meant by quotation letter.
Ans.

Answer 5

The reply of enquiry letter by the seller is known as quotation. It includes all the required information, terms and conditions regarding the sale of goods. Generally it contains:
(a) Quality of goods
(b) Price and discounts
(c) Means of transportation and expenses
(d) Time required for such delivery
(e) Mode of payment

Q.6

Question 6

Define consumer.

Answer 6

Ans. A person or group of persons or an institution purchases a particular commodity to consume is known as consumer. His aim is to satisfy his desires and not a resale for making profit.

Question 7

Q.7 What is an inquiry letter.

Answer 7

Ans. When a trader wants to buy goods then he gets necessary information with the help of this letter. It contains information like:
(i) Availability of goods
(ii) Quality of goods
(iii) Price and discount etc
4. Packing of goods
5. Terms of sale
6. Time required for delivering and transporting goods
7. Mode of payment.

Question 8

Define trader.

Answer 8

Ans. Trader is a person who buys goods from producers or other traders and sells these goods to consumers.

Q.9

Question 9

Define credit note.

Answer 9

Ans. If goods sold on credit are returned by the buyer, the seller credits the buyer’s account and informs the buyer through a note. This note is called Credit Note.

Q.10

Question 10

What is meant by tender.

Answer 10

Ans. Sometimes buyer calls tenders from many suppliers by advertising in magazines and newspapers. In response to this call, anybody interested in supplying goods can submit his tender. The order is placed to that person who quotes lowest price of goods or supplies goods at the most favourable terms.