Introduction to Commerce 1

Commerce
Commerce is concerned with the distribution of goods and services from the producer (point of
production) to the consumer (point of consumption). Commerce may also be described as trade and
the aids to trade or as trade and ancillaries to trade.

Trade
Refers to the buying and selling of goods and services to make a profit.

Types of trade: there are two types of trade:

(a) Home trade: Home trade refers to the buying and selling of goods and services within a
country. Home trade include

(i) Wholesale trade: wholesale trade is concerned with buying from producers and
manufacturers, usually in bulk. Wholesalers break that bulk into smaller quantities and then
sell to retailers. Wholesaler is an intermediary distributor.
(ii) Retail trade: Retail trade involves the purchase of goods from the wholesalers or even
directly from producers and manufacturers and then selling these goods (usually in small
quantities) and services to consumers who make use of them for their own purposes.

(b) Foreign Trade or Overseas Trade: Foreign trade is concerned with buying and selling of goods
and services across the globe. It involves the buying and selling between countries with buyers
living in different countries from the sellers. Foreign trade includes;

(i) Export trade: is the sale of goods and services to buyers in other countries to earn foreign
currency and to dispose of surpluses.
(ii) Import trade: is the buying of goods and services from sellers in other countries.

Aids to Trade
are commercial services which assist the functioning of the trade. There are six aids to trade.

(i) Banking and finance: is concerned with methods by which payments are made. Banking
allows sellers to receive their payments into their bank accounts and deposits are stored
safely. Banks also provide finance for trade and commercial activities in the form of loans,
overdrafts and mortgages and offer services for savers to earn interest.
(ii) Communications: enable people to contact one another both at home and abroad and to
transmit and receive commercial information.
(iii) Advertising: it may be used to introduce new products and services, to inform people of the
new changes in products or to persuade them to buy.
(iv) Transport: is the movement of goods, raw materials, equipment and people from one place
to another. It may be between primary producers and manufacturers. It may be from
manufacturers to wholesalers or from wholesalers to retailers.
(v) Warehousing: provides storage of goods after processing or manufacturing and after
purchase. It enables goods to be stored until they are required.
(vi) Insurance: is the method by which people obtain protection by payment of premiums
against losses which result from risks.
 Introduction to Commerce 2

Multiple Choice Questions

MCQ1. What part does commerce play in production?

A. Changes the form of products

B. Distributes goods
C. Extracts raw materials from the earth
D. Provides information on goods and services

MCQ2. Commerce can be described as

A. Exports and imports

B. Foreign and home trade
C. Retailing and whole selling
D. Trade and services to trade

MCQ3. Which of the following descriptions of trade is the most accurate?

A. Adding value to goods

B. Buying and selling for profit
C. Making goods to sell
D. Satisfying human needs and wants

MCQ4. Which of the following is NOT a matching pair?

A. Advertising - media
B. Banking – methods of payment
C. Insurance – risk
D. Transport – postal services

MCQ5. Which of the following groups consists of aids to trade?

A. Banking, advertising, warehousing, retailing

B. Banking, advertising, communication. Warehousing
C. Retailing, transport, warehousing, insurance
D. Wholesaling, communication, advertising warehousing

MCQ6. Which of the following is a commercial occupation?

A. Bank clerk
B. Bricklayer
C. Oil driller
D. Painter