NCERT Solutions for Class 11 Business Studies Chapter 10 - Internal Trade

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    Short Answer Questions:

    1. What is meant by internal trade?

    Ans. The selling and buying of goods and services within national boundaries are termed as internal trade. No customs or import duty is levied upon them as they are domestically produced and meant for domestic consumption. There are two types of internal trade wholesale trade and retail trade.

    2. Specify the characteristics of fixed shop retailers.

    Ans. Fixed shop retailers are small retail stores with a steady location where they provide their goods. As a result, they do not move from one place to another to serve their customers. Here are some of the characteristics:

    1. These stores offer additional services like home delivery and products supplied on credit.
    2. Being stable in one location, they have more trustworthiness and reliability in the eyes of the customer.
    3. They deal in more than one product category, including both consumer durables and non-durables products. 

    3. What purpose is served by wholesalers providing warehousing facilities?


    1. Distributing bulk purchasing helps producers undertake large-scale production without worrying about storage issues.
    2. They are situated near the centre of the distribution and are known as a place utility.
    3. They purchase products in bulk from producers. Then, store and distribute the purchased products to retailers in small quantities.

    4. How does market information provided by wholesalers benefit the manufacturers?

    Ans. Wholesalers serve as valuable source of information for both manufacturers and customers. They gather and share insights on customer preferences, market conditions, competitive landscapes, and the demand for different types of goods and features. This information empowers manufactures to adapt their offerings to meet the evolving needs of consumers.

    5. How does the wholesalers help the manufacturer in availing the economies of scale?

    Ans. Wholesalers serve as a link between retailers and the manufactures. They purchase products in bulk quantities from the producer and distribute them to retailers in small quantities.
    This enables the producers to undertake production on a large scale and thus take advantage of the economies of scale.
    It provides producers with warehousing facilities, thus reducing the burden of storage.

    6. Distinguish between single line stores and speciality stores. Can you identify such stores in your locality?


    Basis of Comparison Single Line Stores Speciality stores
    Meaning These stores deal with one kind of product. These stores deal with one particular product line of a product.
    Location It can be located at any place. It is located in the centre of the market.
    Examples A sweet shop producing all varieties of sweets. A sweet shop producing only Kaju barfi.

    7. How would you differentiate between street traders and street shops?


    Basis of difference Street traders Street shops
    Definition Small traders who sell low-cost products in the street. Traders have shops located on the roadside and sell products.
    Shops/establishments No permanent shops Permanent shops
    Products Vegetable hawkers, Newspaper vendor Xerox shops, Grocery items shop

    8. Explain the services offered by the wholesalers to the manufacturers.

    Ans. Entrepreneurship is an individual or group of persons exploiting a business opportunity by creating a new and innovative product or substantially enhancing an existing production method, product, or service.

    1. Manufacturers are encouraged to undertake large-scale production based on bulk purchases by wholesalers.
    2. Purchasing goods bulk from manufacturers, storing and distributing them to retailers in small quantities.
    3. Helps producers with market information and buyer tastes and preferences.
    4. Lowers the burden on manufacturers for storing the produced items.

    9. What are the services offered by retailers to wholesalers and consumers?


    1. Storing various items based on consumer tastes helps consumers to choose the best product.
    2. They also help facilitate the distribution of goods to consumers for consumption.
    3. By providing information to buyers about the new products available in the market, they help buyers decide on the item to purchase.
    4. Retailers also promote products as they are in direct touch with consumers and hence in the best position to suggest and thus help boost sales for both wholesalers and manufacturers.
    5. They also notify wholesalers about customers' tastes and preferences, existing competitors, and prevailing market conditions.

    Long Answer Questions:

    1. Itinerant traders have been an integral part of internal trade in India. Analyse the reasons for their survival in spite of competition from large scale retailers.

    Ans. Itinerant retailers do not have a fixed place for doing business; they always move from one place to another to persuade people to buy their products. Here are some reasons:

    1. Itinerant traders are available at short notice as they keep travelling, while large-scale traders need to stick to a specific area as they have a fixed setup.
    2. The itinerant retailer offers more attention to the consumer and gives doorstep services.
    3. Itinerant retailers have low chances of loss as compared to large-scale traders as they do not have to keep stock.
    4. Customers seem to be more comfortable receiving service from small retailers.
    5. Itinerant retailers provide lower prices than large scale traders as they do not need to spend on storage.
    6. Itinerant retailers deal with the items such as vegetables, fruits, newspapers and many more, whose price does not fall instantly.

    2. Discuss the features of a departmental store. How are they different from multiple shops or chain stores?

    Ans. Departmental stores are large retail stores that look towards fulfilling buyers' needs under one roof. The store has distinct departments, each dealing with various products like medicines, groceries, electronics, furniture, toys etc.

    The following are characteristics of departmental stores:

    1. A departmental store performs the dual functions of warehouses and retail stores. Producers directly make all purchases.
    2. These stores are centrally located to attract a large number of buyers.
    3. A departmental store offers various facilities such as grocery shops, restaurants, restrooms, etc., which gives great customer service.

    Many chain stores with similar layouts and appearances have sprouted up in several locations all over the country, whereas departmental stores are established in the city's central location. Chain stores generally sell standardised and branded consumer items with high sales turnover. In addition, these stores are controlled by the same company, use the same merchandising strategies, and display products.

    3. Why are consumer cooperative stores considered to be less expensive? What are its relative advantages over other large-scale retailers?

    Ans. Consumer cooperative stores are owned, controlled and managed by a group of consumers their main aim is to make products available at reasonable prices to the members of society. The best part is that the unnecessary middlemen are removed. The intention is not profit-making; hence the price of products is lower than the products available at retail shops. Capital investment is also very less as compared to large-scale businesses.

    The following are the advantages of a consumer cooperative store:

    1. Removing middlemen leads to lower prices for members' consumption items.
    2. A cooperative society is simple and easy to create, and the liability of members is limited to the number of funds they invest.
    3. Consumer cooperative stores are usually in public settings where members and others can easily buy the products.
    4. Most of the goods are sold in cash only. Thus, the chances of bad debt reduces.
    5. Members of a cooperative society have one vote to choose their representative.

    4. Imagine a life without your local markets. What difficulties would a consumer face if there is no retail shop?

    Ans. Retail shops serve as the ultimate step in the distribution channel. It bridges the gap between manufacturers or wholesalers and customers. It purchases goods from wholesalers and sells them to customers. They are significant because:

    1. Consumers get a wide variety of choices of products in a retail shop.
    2. Retail stores ensure the availability of goods on time, thus keeping consumers happy.
    3. Retail shops are suitably located near residential areas helping consumers easily access products.
    4. Retailers provide information about new products arrival, quality, prices, and features. Consumers use this information to decide on goods that can be bought.
    5. Retailers offer additional facilities like credit facilities to regular customers, after-sales service etc.

    5. Explain the usefulness of mail order houses. What types of products are generally handled by them? Specify.

    Ans. Mail order houses are retail stores that are specialised in selling goods through the mail. There is no immediate contact between the customer and the supplier. Instead, the mail order houses use advertisements in magazines, newspapers, etc., to attract potential consumers. The product details like quality, mode of payment, features, and price are stated in the advertisement. Once the order is taken, the goods are prepared as per the specification.

    The effectiveness of mail order is:

    1. Low capital: It may be established with low capital.
    2. Eliminates middlemen: It eliminates the unnecessary intermediaries between consumers and merchants.
    3. No bad debts: As all the transactions are done in cash only, thus the chances of bad-debts decrease.
    4. Availability of goods: Goods are made available at the consumers' doorstep.

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