Samacheer Kalvi Class 11 Commerce Solutions Chapter 22 Types of Trade

I. Choose the Correct Answer

Question 1. The purchase of goods from a foreign country is called .........................................
(a) Import
(b) Export
(c) Entrepot
(d) Re-export
Answer: (a) Import
In simple words: When a country buys goods from another country, it is called importing. This means bringing items into your own country from outside.

🎯 Exam Tip: Remember, import is "in" (bringing goods into the country) and export is "out" (sending goods out of the country).

Question 2. When goods are imported for the purpose of export it is called as .........................................
(a) Foreign Trade
(b) Home Trade
(c) Entrepot
(d) Trade
Answer: (c) Entrepot
In simple words: If a country brings in goods from one place just to sell them to another country, that special type of trade is called entrepot trade. It's like a middle step for goods.

🎯 Exam Tip: Distinguish entrepot trade from simple import/export; it involves a third country as the final destination for the re-exported goods.

Question 3. ......................................... acts as a connective link between the producer and the consumer.
(a) Trade
(b) Industry
(c) Commerce
(d) Business
Answer: (a) Trade
In simple words: Trade is the activity of buying and selling things. It connects the people who make goods (producers) with the people who use them (consumers).

🎯 Exam Tip: Understand that trade isn't just a transaction; it's a vital bridge that facilitates the movement of products and services in an economy.

Question 4. The aim of home trade is .........................................
(a) To raise the standard of living
(b) To provide the essential goods and services economically
(c) To raise the national income
(d) To obtain all types of goods.
Answer: (b) To provide the essential goods and services economically
In simple words: The main goal of trade inside a country is to make sure important goods and services are available to everyone at a reasonable price. This helps meet people's everyday needs efficiently.

🎯 Exam Tip: Remember that home trade focuses on internal economic stability and meeting the basic needs of a nation's citizens.

Question 5. Internal trade can be classified into ......................................... categories
(a) Three
(b) Four
(c) Two
(d) Five
Answer: (c) Two
In simple words: Trade that happens inside a single country can be split into two main kinds. These are wholesale trade and retail trade.

🎯 Exam Tip: Clearly know the two main types of internal trade: wholesale (selling in bulk to other businesses) and retail (selling in small quantities directly to consumers).

II. Very Short Answer Questions

Question 1. Give the meaning of Trade?
Answer: Trade involves the buying and selling of goods and services. It is done with the goal of making a profit. Trade is an important part of any economy, allowing resources to be exchanged.
In simple words: Trade is simply buying and selling things. People do it to earn money.

🎯 Exam Tip: Define trade by focusing on the core actions (buying and selling) and its primary motivation (profit).

Question 2. What is Internal Trade?
Answer: Internal trade is when goods and services are bought and sold within the borders of a single country. This trade can happen between people in the same area, village, town, or city, or even between different states, as long as it is all inside the same nation. This type of trade supports local economies.
In simple words: Internal trade means buying and selling things only within one country. It can happen anywhere inside that country.

🎯 Exam Tip: Emphasize "within the boundaries of a nation" as the key characteristic of internal trade.

Question 3. Mr.Vikram who runs a textile industry regularly procures cotton from Germany. Name the type of trade he is engaged in.
Answer: Mr. Vikram is engaged in import trade. This is because he is buying cotton from Germany, which is a foreign country, for use in his textile industry in his own country. Importing helps domestic industries get raw materials they might not have locally.
In simple words: Mr. Vikram is doing import trade because he buys cotton from Germany. This means he is bringing goods from a foreign country.

🎯 Exam Tip: Clearly state the type of trade and provide a concise reason based on the definition of import trade (buying from a foreign country).

Question 4. When Vikram of India sells cotton shirts to Amal of England, what type of trade he is engaged in?
Answer: Vikram is engaged in export trade. This is because he is selling goods (cotton shirts) from India to England, which is a foreign country. Export trade helps a country earn foreign money.
In simple words: Vikram is doing export trade. He is selling goods from India to someone in England.

🎯 Exam Tip: Identify export trade as selling goods to another country, confirming the outward movement of goods.

Question 5. How do you classify Trade?
Answer: Trade can be broadly classified into two main types based on where the buyers and sellers are located. These two categories are:
1. Internal trade
2. External trade
This simple classification helps us understand the scope and rules governing different types of commercial activities.
In simple words: Trade is divided into two main kinds: internal trade (inside one country) and external trade (between different countries). This depends on where the buyers and sellers are.

🎯 Exam Tip: Clearly list the two main classifications of trade and briefly explain the basis of this classification (geographical location).

Question 6. What are the classifications of internal trade?
Answer: Internal trade can be classified into two main types: Wholesale trade and Retail Trade. These two categories represent different stages in the distribution of goods from producers to consumers.
In simple words: Internal trade is divided into two parts: wholesale trade and retail trade.

🎯 Exam Tip: Remember that internal trade's subdivisions focus on the quantity and recipient of goods—bulk for wholesale, small for retail.

Question 7. What is import trade?
Answer: Import trade means buying goods from a foreign country for use within the home country. For example, India imports petroleum products from Gulf Countries. Importing allows a country to get products it cannot produce itself or produces in insufficient quantities.
In simple words: Import trade is when you buy goods from another country for your own country's use. For example, India buys oil from Gulf Countries.

🎯 Exam Tip: Define import trade as the act of purchasing foreign goods for domestic consumption and provide a relevant example.

Question 8. Explain the meaning of the Entrepot trade.
Answer: Entrepot trade involves importing goods from one country and then exporting those same goods to other foreign countries. It is also known as 'Re-export trade'. This type of trade is often seen in countries that serve as trading hubs, adding value to goods or simply facilitating their movement.
In simple words: Entrepot trade means bringing in goods from one country just to send them out again to another country. It's also called re-export trade.

🎯 Exam Tip: Highlight that entrepot trade involves both import and export, with the key being that the imported goods are not for domestic use but for re-export.

Question 9. TVS is selling motorbikes in Europe. Under which type of trade can this be classified?
Answer: When TVS sells motorbikes in Europe, this trade is classified as Foreign trade. Specifically, it is export trade, as goods are being sent from India to other countries. This expands the market for Indian-made products.
In simple words: TVS selling motorbikes in Europe is part of foreign trade. It is called export trade because products are leaving India to be sold in another continent.

🎯 Exam Tip: Explain that "Foreign trade" is the broad category and "Export trade" is the specific type when goods are sold to other countries.

Question 10. What is the currency used in India in internal trade?
Answer: The currency used in India for internal trade is RUPEE. Using a single national currency makes transactions simple and smooth across the country.
In simple words: In India, the money used for buying and selling within the country is the Rupee.

🎯 Exam Tip: State the national currency clearly and understand its role in facilitating internal commerce.

III. Short Answer Questions

Question 1. What is the classification of Foreign trade?
Answer: Foreign trade is classified into three main types:
1. Import Trade: This means buying goods from a foreign country for use in the home country.
2. Export Trade: This involves selling goods made in the home country to foreign countries.
3. Entrepot Trade: This is when goods are imported from one country with the purpose of exporting them to another foreign country.
These classifications help governments manage international economic relationships and policies.
In simple words: Foreign trade has three kinds: import (buying from abroad), export (selling abroad), and entrepot (buying from abroad to sell to another abroad).

🎯 Exam Tip: List all three types of foreign trade and provide a brief, clear definition for each, focusing on the direction and purpose of the goods' movement.

Question 2. Give two examples of Entrepot trade.
Answer: Here are two examples of entrepot trade:
1. Indian diamond merchants in Surat buy raw, uncut diamonds from South Africa. They then cut and polish these diamonds in India before selling them to the International Diamond Market in Amsterdam.
2. An Indian company might import rubber from Thailand and then sell it to Japan.
These examples show how goods can pass through an intermediate country before reaching their final consumer.
In simple words: One example is Indian diamond sellers buying raw diamonds from South Africa, polishing them in India, then selling them to Amsterdam. Another is an Indian company buying rubber from Thailand and then selling it to Japan.

🎯 Exam Tip: Provide clear, distinct examples that illustrate the three-country flow (origin -> intermediate -> final destination) characteristic of entrepot trade.

Question 3. What do you mean by Export trade?
Answer: Export trade means selling goods made in the home country to foreign countries. Export trade is important for several reasons: it helps sell surplus goods, makes better use of resources, earns foreign exchange, increases national income, creates jobs, and boosts government revenue. Exporting helps a country grow economically by reaching global markets.
In simple words: Export trade is selling things from our country to other countries. It helps us sell extra goods, make more money from other countries, and create jobs.

🎯 Exam Tip: Define export trade accurately and then list its key benefits, such as earning foreign exchange and increasing national income.

Question 4. What is Wholesale trade?
Answer: Wholesale trade involves buying goods in large amounts from manufacturers and then selling them in smaller quantities to other businesses or intermediaries. These intermediaries then sell to consumers. Wholesalers act as a link between producers and retailers.
In simple words: Wholesale trade is when businesses buy many goods directly from factories and then sell smaller amounts of those goods to other shops or sellers.

🎯 Exam Tip: Focus on the "bulk purchase from manufacturers" and "selling to other intermediaries" as the defining aspects of wholesale trade.

Question 5. State the meaning of Retail trade.
Answer: Retail trade involves selling goods in small quantities directly to the end consumers. This is the final step in the distribution chain, making products available for personal use. Retailers make products accessible and convenient for individuals.
In simple words: Retail trade means selling goods in small amounts directly to people who will use them.

🎯 Exam Tip: Emphasize that retail trade is about selling small quantities directly to the consumer, completing the product's journey.

Question 6. Name any three retail traders in your locality
Answer: Three examples of retail traders might include Sree Akshaya Traders, Hari Traders, and Thomas Traders. In real life, these would be local shops like grocery stores, clothing boutiques, or electronics shops that sell directly to customers.
In simple words: Examples of local retail shops are Sree Akshaya Traders, Hari Traders, and Thomas Traders.

🎯 Exam Tip: For this type of question, simply provide three plausible names for retail businesses, or describe common types of retail stores.

Question 7. State the main aim of trade.
Answer: The main goal of trade is to make goods and services available to people who need them and are ready to pay for them. Trade is always conducted to earn a profit. By facilitating exchange, trade helps to fulfill consumer demand and drive economic activity.
In simple words: The main aim of trade is to give people the goods and services they want and can pay for. It is always done to make a profit.

🎯 Exam Tip: Clearly state the dual purpose of trade: meeting consumer needs and earning profit for the businesses involved.

IV. Long Answer Questions

Question 1. What are the features of Internal trade?
Answer: Internal trade, also known as home trade, has several key features:
1. The buying and selling of goods and services happen only within the borders of the same country.
2. Payments for goods and services are made using the currency of the home country (e.g., Rupees in India).
3. It involves transactions among producers, consumers, and middlemen within the nation.
4. There is a distribution network of middlemen and agencies that help exchange goods and services.
5. The risk associated with transporting goods is much lower compared to foreign trade.
6. Only the laws of the country where the trade is happening need to be followed.
7. The main goal of internal trade is to provide goods and services to people economically.
8. The goods being traded must be produced within the country (domestic production).
9. Goods are usually bought from an individual or a business established inside the country.
10. Goods can be delivered using local transport methods.
11. Internal trade does not involve any customs or import duties, but buyers still need to pay taxes to the government.
These features highlight how internal trade focuses on national economic needs and simple transactions.
In simple words: Internal trade happens only inside one country, using its own money. It connects local producers, consumers, and sellers. The transport risk is low, and only national laws apply. Its goal is to provide goods affordably, using local products and transport. No customs duties are involved, only regular taxes.

🎯 Exam Tip: When listing features, categorize them (e.g., geographical scope, currency, regulations, risk) to ensure comprehensive coverage and easy recall.

Question 2. Explain briefly the different types of Foreign trade?
Answer: Foreign trade is commerce that takes place between a seller and a buyer located in different countries. It involves the exchange of goods and services between one country and another. This type of trade is crucial for global economic interaction.
The different types of Foreign Trade are:
A. Import Trade: This is when a country buys goods from a foreign country for its own domestic use. For instance, India imports petroleum products from Gulf Countries. India also imports machinery and equipment to help its industries grow, meet consumer demands, and improve living standards.
B. Export Trade: This means selling goods produced within the home country to foreign countries. Export trade allows a country to earn foreign currency and utilize its surplus production.
Examples:
1. Exporting iron ore from India to Japan.
2. Selling tea from India to England.
3. Exporting jasmine flowers from Madurai to Singapore.
These distinct types of foreign trade allow countries to specialize, gain access to diverse goods, and improve economic efficiency globally.
In simple words: Foreign trade is buying and selling between different countries. It has two main kinds:
A. Import Trade: This is when our country buys things from other countries for its own use, like India buying oil.
B. Export Trade: This is when our country sells things it makes to other countries, like India selling tea to England. Both help countries get what they need and sell what they have extra.

🎯 Exam Tip: Define foreign trade first, then clearly explain import and export trade with simple examples for each to show practical application.

11th Commerce Guide Types of Trade Additional Important Questions and Answers

I. Choose the Correct Answer :

Question 1. ......................................... trade is a trade between a seller and buyer of different countries.
(a) Foreign
(b) Export
(c) Entrepot
(d) Home
Answer: (a) Foreign
In simple words: Trade that happens between people from different countries is called foreign trade. This means goods cross national borders.

🎯 Exam Tip: Understand that "foreign trade" is the broad term for any trade between different nations, encompassing both import and export.

Question 2. The internal trade is also called.........................................
(a) Wholesale Trade
(b) Retail Trade
(c) Entrepot Trade
(d) Home Trade
Answer: (d) Home Trade
In simple words: Trade that happens inside one country is also known as home trade. It's the opposite of foreign trade.

🎯 Exam Tip: Remember "internal trade" and "home trade" are synonyms, referring to commerce within a single country.

Question 3. Selling of Tea from India to England – What type of trade is this?
(a) Export
(b) Import
(c) Entrepot
(d) Home
Answer: (a) Export
In simple words: When India sells tea to England, it means goods are going out of India to another country. This is called export trade.

🎯 Exam Tip: Selling goods *from* your country *to* another country is always export trade.

Question 4. India imports petroleum products from Gulf countries. This is the example for .........................................
(a) Wholesale Trade
(b) Retail Trade
(c) Entrepot Trade
(d) Import Trade
Answer: (d) Import Trade
In simple words: When India buys oil from Gulf countries, it is bringing goods into the country from abroad. This is an example of import trade.

🎯 Exam Tip: Buying goods *from* another country *into* your own is import trade.

Question 5. Hero pens produced in China and sold in India is an example for ......................................... trade.
(a) Foreign
(b) Home
(c) Export
(d) Entrepot
Answer: (a) Foreign
In simple words: Since the pens are made in China and sold in India, it involves two different countries. Therefore, this is an example of foreign trade.

🎯 Exam Tip: Any transaction involving two different countries, whether buying or selling, falls under the umbrella of foreign trade.

II. Very Short Answer Questions:

Question 1. Where does Internal Trade take place?
Answer: Internal trade takes place between buyers and sellers within the same locality, village, town, or city. It can also happen between different states, but it must always be within the same country. This localized trade helps distribute goods effectively within a nation.
In simple words: Internal trade happens inside one country. It can be in the same village, city, or even between different states, but always within the country's borders.

🎯 Exam Tip: The key point for internal trade is its occurrence strictly within national geographical limits.

III. Short Answer Questions:

Question 1. Write a short note on Entrepot Trade:
Answer: Entrepot trade involves importing goods from one country with the specific intention of exporting them to another foreign country. It is also known as 'Re-export trade'. For example, Indian diamond merchants in Surat import raw diamonds from South Africa. They then cut and polish these diamonds in India and re-export them to the International Diamond Market in Amsterdam. This process adds value or simply facilitates the movement of goods between distant markets.
In simple words: Entrepot trade is when a country buys goods from one foreign country and then sells them to another foreign country. For instance, Indian diamond traders buy raw diamonds from South Africa, process them in India, then sell them to Amsterdam.

🎯 Exam Tip: Remember to include the definition, the alternative name ('Re-export trade'), and a clear example to fully explain entrepot trade.

IV. Long Answer Questions

Question 1. Explain the types of Internal Trade
Answer: Home trade, which is another name for internal trade, is divided into two main categories:
1. Wholesale trade: This involves purchasing goods in large quantities from manufacturers. These goods are then sold in smaller amounts to other intermediaries, such as retailers. Wholesalers act as a bridge between manufacturers and retail stores.
2. Retail Trade: This deals with distributing goods in small quantities directly to the end consumers. Retailers are the final point of sale where individuals buy products for personal use.
These two types ensure a smooth flow of goods from factories to individual buyers within a country.
In simple words: Internal trade has two types. First, wholesale trade means buying many goods from factories and selling them to other shops. Second, retail trade means selling small amounts of goods directly to people who will use them.

🎯 Exam Tip: Clearly define both wholesale and retail trade, highlighting the key differences in quantity purchased and the type of customer served.