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Question

Difficulty: MediumMeaning and Classification of Trade

A commercial firm based in Aba purchases crude palm oil in bulk from local producers in Imo State and resells it to soap manufacturing companies in Kaduna State. Which classification of trade best describes this firm's primary activity?

  1. A
    Export foreign trade
  2. Wholesale home tradeAnswer
  3. C
    Direct service trade
  4. D
    Entrepôt foreign trade

Answer

Wholesale home trade
Wholesale home trade is correct because the transaction involves purchasing goods in large quantities from local primary producers and distributing them to industrial users within the borders of the same country.

Step-by-Step Solution

1
Analyze the geographical scope of the trade transaction
The trade occurs between Aba (Abia State), Imo State, and Kaduna State, all within Nigeria.
Trade conducted entirely within the boundaries of a single nation is classified as home (domestic) trade.
2
Determine the scale and stage of distribution
The firm purchases in bulk from primary producers and sells to industrial manufacturers.
Buying in bulk from producers and reselling to manufacturers or retailers defines wholesale trade rather than retail trade.
3
Synthesize the trade classification
Combining domestic scope and bulk distribution yields wholesale home trade.
Home trade is divided into wholesale trade and retail trade; bulk distribution internally falls under wholesale home trade.

Key Concept

Classification of Home Trade into Wholesale and Retail Trade
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Topics

Meaning and Classification of Trade

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