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Question

Difficulty: EasyMeaning and Classification of Trade

A merchant based in Enugu purchases footwear in bulk directly from manufacturers in Abia State and resells them in smaller quantities to local shopkeepers in Anambra State. Under the classification of trade, how is this merchant's commercial activity categorized?

  1. Wholesale tradeAnswer
  2. B
    Entrepôt trade
  3. C
    Direct service
  4. D
    Foreign trade

Answer

Wholesale trade
The correct answer is wholesale trade. Trade is broadly divided into home trade and foreign trade. Home trade occurs within the boundaries of a single country and is further classified into wholesale trade and retail trade. Wholesale trade specifically involves purchasing goods in large quantities from producers and selling them in smaller quantities to retailers.

Step-by-Step Solution

1
Identify the geographical scope of the trade transaction.
The transactions occur between Enugu, Abia, and Anambra states, which are all within Nigeria. Thus, this is home (domestic) trade.
Trade within a single country's legal boundaries is classified as home trade rather than foreign trade.
2
Determine the position of the trader in the distribution channel.
The merchant buys in bulk from producers and sells in smaller units to retailers.
Connecting producers/manufacturers with retailers by purchasing in bulk and breaking bulk defines wholesale trade.

Key Concept

Classification of Home Trade into Wholesale and Retail
Estimated Time:45s
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Topics

Meaning and Classification of Trade

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