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Question

Difficulty: MediumMeaning and Classification of Trade

An enterprise operating in Port Harcourt purchases bulk palm oil from agricultural producers in Abia State for distribution to manufacturing firms in Lagos. Simultaneously, the firm purchases specialized processing equipment from Germany and resells the machinery directly to a mining company in Cameroon without clearing the goods into the Nigerian domestic market. Which pair of terms accurately categorizes these two commercial transactions respectively?

  1. A
    Retail home trade and import foreign trade
  2. B
    Direct service occupation and export foreign trade
  3. Wholesale home trade and entrepôt foreign tradeAnswer
  4. D
    Auxiliary to trade and bilateral export trade

Answer

Wholesale home trade and entrepôt foreign trade
The transaction within Nigeria involves purchasing in bulk from primary producers to supply industrial buyers, which is wholesale home trade. The international transaction involves importing goods from one foreign country solely to re-export them to another destination country without domestic processing or consumption, which defines entrepôt foreign trade.

Step-by-Step Solution

1
Analyze the domestic transaction within Nigeria
Purchasing palm oil in bulk from local farmers in Abia State for resale to industrial manufacturers in Lagos occurs entirely within national boundaries and involves bulk buying, which defines wholesale home trade.
Home trade encompasses commercial activities conducted within a country, split into wholesale (bulk dealing) and retail trade.
2
Analyze the international transaction involving foreign countries
Buying equipment from Germany and reselling it directly to Cameroon without entering domestic consumption channels constitutes entrepôt foreign trade.
Entrepôt trade is a branch of foreign trade where imported goods are re-exported to another country without being cleared for domestic use.

Key Concept

Classification of Trade into Home Trade (Wholesale) and Foreign Trade (Entrepôt)
Estimated Time:1m 0s
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Topics

Meaning and Classification of Trade

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