Types of Trade: Exercise Solutions Guide
How to Use This Page
Read the Samacheer Kalvi textbook chapter first. Then use this page to revise: attempt the textbook questions on your own, then compare with the model answers below. Pay special attention to the Common Mistakes section and the Exam Checklist before your test.
Key Concepts (Quick Recap)
| Term | Definition |
|---|---|
| Trade | Buying and selling of goods and services conducted to earn a profit |
| Internal (Home) Trade | Buying and selling within a nation's boundaries |
| Wholesale Trade | Purchase of goods in bulk from manufacturers and selling in smaller quantities to retailers |
| Retail Trade | Distributing goods in small quantities directly to consumers |
| Foreign (External) Trade | Trade between buyers and sellers of different countries |
| Import Trade | Buying goods from a foreign country for domestic use |
| Export Trade | Selling domestic goods to foreign countries |
| Entrepot Trade | Importing goods from one country and exporting them to another (re-export trade) |
| Currency in Internal Trade | Indian Rupee (home currency) |
| Currency in Foreign Trade | Foreign currency (e.g., US Dollar, Euro) |
I. Choose the Correct Answer (MCQ) — Text Book Back
Q1. The purchase of goods from a foreign country is called
(a) Import ✓ (b) Export (c) Entrepot (d) Re-export
Q2. When goods are imported for the purpose of export it is called as
(a) Foreign Trade (b) Home Trade (c) Entrepot ✓ (d) Trade
Q3. …… acts as a connective link between the producer and the consumer.
(a) Trade ✓ (b) Industry (c) Commerce (d) Business
Q4. The aim of home trade is
(a) To raise the standard of living (b) To provide essential goods and services economically ✓ (c) To raise national income (d) To obtain all types of goods
Q5. Internal trade can be classified into …… categories
(a) Three (b) Four (c) Two ✓ (d) Five
I. Choose the Correct Answer (MCQ) — Additional Important
Q1. …… trade is a trade between a seller and buyer of different countries.
(a) Foreign ✓ (b) Export (c) Entrepot (d) Home
Q2. The internal trade is also called
(a) Wholesale Trade (b) Retail Trade (c) Entrepot Trade (d) Home Trade ✓
Q3. Selling of Tea from India to England — What type of trade is this?
(a) Export ✓ (b) Import (c) Entrepot (d) Home
Q4. India imports petroleum products from Gulf countries. This is an example for
(a) Wholesale Trade (b) Retail Trade (c) Entrepot Trade (d) Import Trade ✓
Q5. Hero pens produced in China and sold in India is an example for …… trade.
(a) Foreign ✓ (b) Home (c) Export (d) Entrepot
II. Fill in the Blanks
1. Trade is classified into internal trade and foreign trade. 2. Internal trade is also called home trade. 3. The currency used in internal trade in India is the Rupee. 4. Foreign trade is classified into import, export, and entrepot trade. 5. Entrepot trade is also called re-export trade. 6. Wholesale trade involves buying in bulk from manufacturers. 7. Retail trade deals in distributing goods in small quantities to consumers. 8. The aim of home trade is to provide essential goods and services economically. 9. Internal trade takes place within the national boundaries of a country. 10. Foreign trade uses foreign currency for transactions.
III. True or False (with corrections)
1. Entrepot trade means simply exporting goods to another country. False. Entrepot trade means importing goods from one country AND exporting them to another. It involves both import and re-export.
2. Internal trade and foreign trade use the same currency. False. Internal trade uses home currency (Indian Rupee), while foreign trade uses foreign currency.
3. Wholesale trade deals directly with consumers. False. Wholesale trade sells to retailers, not directly to consumers. Retail trade deals directly with consumers.
4. Customs duty is levied on goods traded internally between states. False. No customs duty is levied on goods traded internally. Customs duty applies only to foreign trade.
5. The aim of home trade is to raise the standard of living. False. The aim of home trade is to provide essential goods and services economically to the people of the country.
6. India importing petroleum from Gulf countries is an example of import trade. True.
IV. Match the Following
| Column A | Column B |
|---|---|
| 1. Import Trade | (d) Buying goods from a foreign country |
| 2. Export Trade | (e) Selling domestic goods to foreign countries |
| 3. Entrepot Trade | (a) Importing and re-exporting goods |
| 4. Wholesale Trade | (c) Buying in bulk and selling to retailers |
| 5. Retail Trade | (b) Selling small quantities directly to consumers |
V. Answer Briefly
Q1. Give the meaning of Trade?
Trade involves buying and selling of goods and services, conducted to earn a profit.
Q2. What is Internal Trade?
Buying and selling within a nation's boundaries. It occurs between buyers and sellers in the same locality, village, town, city, or different states, but within the same country.
Q3. Mr. Vikram runs a textile industry and regularly procures cotton from Germany. Name the type of trade.
Import trade, since he purchases cotton from a foreign country for domestic use.
Q4. When Vikram of India sells cotton shirts to Amal of England, what type of trade is this?
Export Trade.
Q5. How do you classify Trade?
Based on geographical location of buyers and sellers, trade is classified into: (1) Internal trade, and (2) External trade.
Q6. What are the classifications of internal trade?
Internal trade is classified into Wholesale trade and Retail Trade.
Q7. What is import trade?
Import trade means buying goods from a foreign country for domestic use. Example: India imports petroleum products from Gulf Countries.
Q8. Explain the meaning of Entrepot trade.
Entrepot trade means importing goods from one country and exporting the same to foreign countries. It is also called "Re-export trade."
Q9. TVS is selling motorbikes in Europe. Under which type of trade can this be classified?
Foreign trade.
Q10. What is the currency used in India in internal trade?
RUPEE.
Q11. (Additional) Where does Internal Trade take place?
Internal trade takes place between buyers and sellers in the same locality, village, town, or city, or in different states but within the same country.
VI. Answer in Detail
Q1. What are the features of Internal trade?
The features of internal trade are:
1. Within national boundaries: Internal trade takes place within the political and geographical boundaries of a country. 2. Home currency: Payments are made or received in the home currency, i.e., Indian Rupee. 3. Same rules and regulations: All rules and regulations, taxes, and duties are the same for all traders within the country. 4. No customs duty: No customs duty or import duty is levied on goods traded internally. 5. Free movement: There are no restrictions on the free movement of goods from one state to another within the country. 6. Short distance: The distance between the trader and the consumer is relatively short. 7. Easy communication: It is easy to communicate with buyers and sellers within the country. 8. Lower transport cost: Transport cost is comparatively low since goods move within the country. 9. Common market: The entire country serves as a single market with common economic policies. 10. Aim: The main aim of internal trade is to provide essential goods and services to the people of the country economically. 11. No exchange risk: Since transactions are in the home currency, there is no risk of exchange rate fluctuations.
Q2. Explain briefly the different types of Foreign trade.
Foreign trade is classified into three types:
Common Mistakes to Avoid
1. Entrepot = Re-export trade, not just "export." Entrepot involves both importing and re-exporting goods, often with some processing. 2. Internal trade = Home trade. It has two types: wholesale and retail. Do not confuse internal trade with foreign trade. 3. Import = buying FROM a foreign country; Export = selling TO a foreign country. The direction of the transaction matters. 4. Internal trade uses home currency (rupee); foreign trade uses foreign currency. Currency is a key distinction. 5. Hero pens from China sold in India = Foreign trade. The question asks for the broad category, not just "import." The general classification is foreign trade. 6. Trade acts as a connective link between producer and consumer. Do not confuse trade with industry or commerce; trade is specifically about buying and selling.
Exam Checklist
- [ ] Can define trade and its classification (internal + foreign)
- [ ] Can explain import, export, and entrepot trade with examples
- [ ] Can list all 11 features of internal trade
- [ ] Can distinguish wholesale vs retail trade
- [ ] Know the Surat diamond example for entrepot trade
- [ ] Can classify any given trade scenario correctly (internal/foreign, import/export/entrepot)
- [ ] Understand that internal trade uses rupee and foreign trade uses foreign currency
- [ ] Can state the aim of home trade: to provide essential goods and services economically
- [ ] Can explain benefits of import trade (3 points) and export trade (5 points)
- [ ] Know the Surat diamond example for entrepot trade in detail
- [ ] Understand that trade connects producer and consumer (not industry or commerce)
- [ ] Can list features of wholesale trade and retail trade (4 features each)