Internal trade is a crucial chapter in Class 11 Business Studies. To help students prepare effectively, we have compiled important questions along with their answers. These questions cover different mark distributions: 1-mark, 3/4-mark, and 6-mark questions.
Topics Discussed
1-Mark Questions
Q1: What is internal trade?
Answer: Internal trade refers to the buying and selling of goods and services within the geographical boundaries of a country.
Q2: Name the two types of internal trade.
Answer: The two types of internal trade are:
- Wholesale trade
- Retail trade
Q3: What is the main difference between wholesale and retail trade?
Answer: Wholesale trade involves selling goods in large quantities to retailers, while retail trade involves selling goods directly to consumers in smaller quantities.
Q4: Which document is issued when goods are sent on approval basis?
Answer: Proforma invoice.
Q5: What is meant by ‘cash on delivery’ (COD)?
Answer: Cash on delivery means the buyer pays for the goods when they are delivered.
3/4-Mark Questions
Q6: Explain any three differences between wholesale trade and retail trade.
Answer:
| Basis | Wholesale Trade | Retail Trade |
|---|---|---|
| Quantity Sold | Sells in bulk | Sells in small quantities |
| Buyers | Retailers | Consumers |
| Capital Investment | Requires large capital | Requires less capital |
Q7: What are the services provided by retailers to consumers?
Answer: Retailers provide the following services to consumers:
- Availability of Goods: They keep stock of goods required by consumers.
- Credit Facilities: Some retailers offer credit purchases.
- Home Delivery: Many retailers deliver goods to consumers’ homes.
- After-Sales Service: Some retailers provide services like installation and repairs.
Q8: Discuss the importance of internal trade in an economy.
Answer: Internal trade is essential for an economy because:
- Encourages Industrial Growth: Manufacturers get a steady demand for their goods.
- Creates Employment: It generates jobs for wholesalers, retailers, transporters, etc.
- Enhances Standard of Living: It provides access to diverse products and services.
- Contributes to GDP: Internal trade significantly impacts national income.
Q9: Explain the role of wholesalers in the distribution of goods.
Answer: Wholesalers play a key role by:
- Bulk Buying and Selling: They buy in bulk from producers and sell in smaller lots to retailers.
- Risk Bearing: They take risks related to storage, price fluctuations, and damage.
- Financing Retailers: Wholesalers often offer credit to retailers.
- Market Information: They provide manufacturers with customer preferences and market trends.
6-Mark Questions
Q10: Describe the different types of retail trade.
Answer: Retail trade can be classified into the following types:
1. Itinerant Retailers
These retailers move from one place to another and do not have a fixed place of business. Examples include:
- Hawkers and Peddlers: Sell goods by moving in residential areas.
- Market Traders: Operate in weekly markets.
- Street Vendors: Sell goods on footpaths and busy streets.
2. Fixed-Shop Retailers
These retailers have a permanent shop and can be further classified into:
- General Stores: Sell a variety of goods required for daily use.
- Single-Line Stores: Specialize in one type of product (e.g., clothing store).
- Specialty Stores: Focus on a specific range of products (e.g., electronics store).
- Departmental Stores: Large establishments selling multiple categories under one roof.
- Supermarkets: Self-service stores offering groceries and household goods.
- Malls and Online Retailers: Large shopping centers and e-commerce platforms.
Internal Trade Class 11 Notes Business Studies
Q11: Explain the documents used in internal trade.
Answer: The main documents used in internal trade include:
- Invoice or Bill: A document stating details of the transaction, including price and quantity.
- Proforma Invoice: A preliminary bill sent before delivery for approval.
- Debit Note: Issued when a buyer returns goods to the seller, reducing the amount payable.
- Credit Note: Issued when a seller receives returned goods from the buyer.
- Cash Memo: A receipt given when a transaction is done in cash.
- Quotations: Given by sellers to inform buyers about product prices and terms.
Q12: Discuss the role and importance of chambers of commerce in internal trade.
Answer: Chambers of commerce are organizations that promote business interests. Their roles include:
- Representing Business Interests: They voice the concerns of businesses to the government.
- Policy Advocacy: They suggest policies to improve trade and commerce.
- Market Research: Conduct studies on trade trends and opportunities.
- Resolving Disputes: Provide arbitration services for business disputes.
- Promoting Trade Fairs: Organize fairs to help businesses showcase products.
- Training and Development: Conduct workshops and seminars for entrepreneurs.
Q13: What are the challenges faced by retailers in India?
Answer: Retailers in India face several challenges, such as:
- Competition from E-commerce: Online platforms offer convenience and discounts.
- High Operational Costs: Rent, labor, and electricity expenses are significant.
- Regulatory Issues: Compliance with taxes and government regulations can be complex.
- Changing Consumer Preferences: Customers now prefer online shopping and branded goods.
- Supply Chain Issues: Retailers may face delays in stock replenishment.
- Credit Sales and Bad Debts: Some retailers struggle with recovering dues from customers.
Conclusion
Internal trade is the backbone of the Indian economy, connecting producers, wholesalers, and consumers. Understanding its concepts, types, and significance is crucial for students preparing for their Class 11 Business Studies exam. These questions and answers provide a strong foundation for exam success.