METHOD 1
Subject: Commerce
Presented By:
Ms. Pooja Ashok Deshbhandari
UUCMS No: U02KT22E0032
Class: B.Ed 2nd Sem
College Name: Vishwadarshana
College of Education, Yellapur.
TRADE
MEANING
Trade is a commonly used term in the
world of business, finance and the
economy. It means an exchange of
goods or services between two
interested parties voluntarily. In
simpler terms, trade means the act of
buying or selling goods and services
between buyers and sellers for cash
or kind.
Trade is an exchange of goods and
services between two or more
parties. This exchange happens
voluntarily, i.e., the parties are not
mandated to buy or sell goods or
services to one another. They trade
with consent, without any force or
coercion.
Trade occurs between different
entities.
These include the following –
• People
• Countries
• Companies
• Other forms of businesses like
sole-Proprietorship,
partnership, etc.
• Other entities, like clubs, trusts, etc.
Types of trade
Domestic trade
Domestic trade means trading within
the borders of a country.
Under this type of trade, the buyer
and seller are located within the
same country. Domestic trade
includes local, regional, zonal and
national trading.
Domestic trade can be further
subdivided into two categories which are
as follows –
Wholesale trade
Wholesale trade, in simpler words, may be defined
as buying and selling in bulk. Usually, wholesale
traders directly buy in bulk from manufacturers or
producers of goods. Then, they sell the goods to
resellers engaged in retail trade. Thus, wholesale
traders act as a link between manufacturers and
retailers.
Retail trade
Retail trade could imply selling a few units of
goods to consumers. It usually involves selling the
goods to end users, called consumers. Retailers,
thus, act as a link between wholesalers and
International trade
International trade involves the
exchange of goods between two or
more countries. For instance, if India
sells its products to another country,
it would be called international trade.
Similarly, if India buys from another
country, it would also fall under
international or foreign trade.
Categories in International Trade
IMPORT
EXPORT
ENTREPOT
IMPORT TRADE
When a country or business buys
goods from another country or
business located in a foreign country,
it is called import trade. For example,
India imports crude oil, precious
stones and metals, fertilizers etc.,
from various countries.
EXPORT TRADE
The opposite of import is export.
Under export trade, goods are
produced in one country and sold in
another. For example, a business
located in India produces goods and
then sends them to the USA for sale.
ENTREPOT TRADE
Entrepot includes both import and export.
Under this trade, a business first imports
raw materials or semi-finished goods.
Then, the business assembles or produces
a new product using the imports. The
finished goods are then exported to
another country.
For example, if a business imports
semiconductors from another country, uses
them to manufacture mobile phones and
then exports them to another country, it
Advantages of Trade
For buyers/consumers
Buyers get access to goods and
services that they need to fulfill their
needs or wants. The prices can be
low if the competition is high. This, in
turn, benefits the buyers.
For sellers/businesses
Sellers can sell their products to
generate a profit that will act as their
income but also helps them grow
their business.
For the nation/economy
Countries can earn foreign income by
exporting goods that are easily produced
(domestically). On the other hand,
countries can give their consumers low-
cost products by importing goods that are
scarcely available domestically, countries
can give their consumers low-cost
products. Thus, economies engaged in free
trade can benefit from the law of
comparative advantage and trade in
suitable goods.
Criticisms of trade
While trade is beneficial, it has some
repercussions too. Have a look –
In the case of certain industries, lobbying and
Government regulation can hinder free trade. This
might impact the availability of low-cost
alternatives for consumers.
Restricting free trade might also result in
unemployment as job opportunities are lost.
Heavy reliance on free trade can make the nation
dependent on another country, which may be
counterproductive.
easily produced (domestically). On the other hand,
countries can give their consumers low-cost
products by importing goods that are scarcely
available domestically, countries can give their
THANK YOU
Presented by:
Pooja Ashok
Deshbhandari
