MVM JUNIOR COLLEGE
SUB: OCM, CLASS: 11-COM
JUSTIFY QTS AND ANS (CH 1 TO 8)
Chapter 1 Introduction of Commerce and Business:
Justify the following statements.
Question 1.
Retailer is in direct contact with ultimate consumers.
Answer:
1. Retailer in a trader operating in the chain of distribution.
2. He deals with the ultimate consumer.
3. Retailer is the last link in the chain of distribution.
4. Goods flow from the producer to consumer in the following way:
Producer → Wholesaler → Retailer → Consumer
5. Thus, retailer comes into direct contact with the ultimate consumer.
Question 2.
Commerce is a wider term than trade.
Answer:
1. Commerce is a part of business. Business is divided into two parts;
industry and commerce,
2. Commerce is concerned with the distribution of goods.
3. Commerce is divided into two parts. One is trade and the other is
auxiliaries to trade.
4. Trade is concerned with buying and selling of goods and services.
5. Trade is’a part of commerce.
6. Along with trade, commerce also includes auxiliaries or services to trade.
7. These services help in the smooth running of trade.
Thus, it clearly indicates that commerce is a wider term than trade.
Question 3.
Risk is inevitable in business activities.
Answer:
, 1. Every business is exposed to various risks. A businessman cannot avoid
risks in the business.
2. These risks include goods remaining unsold due to changes in fashions,
risks of losses due to fire or theft, damage to goods during transportation
or warehousing, risks of bad debts, etc.
3. A businessman has to be prepared to handle these risks.
4. These risks cannot be totally eliminated. But they can be minimized or
transferred to insurance company.
5. A businessman must be ready for the risks as they are inevitable.
6. Thus, risk is inevitable in business activities.
Question 4.
Combination of import-export trade is entrepot trade.
Answer:
1. Import, export and entrepot trade are the parts of foreign trade.
2. When the goods are purchased from other countries it is called import
trade.
3. When the goods are sold to other countries it is called export trade.
4. A combination of import and export trade is called entrepot trade.
5. In case of entrepot trade goods are first purchased from one country i.e.
imported and then sold to or exported to other country.
6. E.g. Indian trader purchased some computers from Japan and sold them to
Sri Lanka will be included in entrepot trade.
7. Thus, entrepot trade is a combination of import and export trade.
Question 5.
Transport creates place utility.
Answer:
1. Transport is one of the important auxiliaries to trade.
2. Transport brings raw materials and people to the place of production and
carries finished products to markets.
3. There are different modes of transport through it carries goods and people
from one place to another. They are rail, road, water and air.
4. If goods are produced at one place, it may not have demand at that place
only.
5. Transport carries them to other place where they are demanded and
create place utility.
6. Thus, we can say that transport creates place utility.
, Question 6.
Industrial activities take place before commerce starts its role.
Answer:
1. Industry and commerce are the two parts of business.
2. Both the parts are complimentary to each other.
3. One cannot function without other.
4. Industries look after the production of goods and services and commerce
takes care of the distribution of the goods produced.
5. Obviously production of goods comes first and it is followed by distribution
or selling of goods.
6. Thus, industrial activities take place before commerce starts its role.
Question 7.
Available resources should be used to its maximum.
Answer:
1. Resources are always scarce. The demand for resources is more and the
availability of resources is less.
2. Similarly, resources belong to the society but the businesses use them for
production and provide the finished products to the society.
3. So it is necessary to use the resources carefully.
4. Wastage of resources should be avoided.
5. Wherever possible, recycling and reusing the resources should be
considered by the businesses.
6. Thus, whatever resources available should be used to its maximum.
Question 8.
Wholesalers is a link between retailer and manufacturer.
Answer:
1. Wholesaler and retailer are the important intermediaries in trade.
2. They help to bring the goods from the manufacturer to ultimate consumer.
3. Wholesaler is a trader who deals in large quantities i.e. the wholesaler
purchases the goods in bulk from the manufacturer and sells it to retailer
in small quantities.
4. Both the wholesalers and retailers are the part of chain of distribution,
which is shown below.
Producer → Wholesaler → Retailer → Consumer
5. Thus, it is true that wholesaler is the link between the manufacturer and
retailer.
SUB: OCM, CLASS: 11-COM
JUSTIFY QTS AND ANS (CH 1 TO 8)
Chapter 1 Introduction of Commerce and Business:
Justify the following statements.
Question 1.
Retailer is in direct contact with ultimate consumers.
Answer:
1. Retailer in a trader operating in the chain of distribution.
2. He deals with the ultimate consumer.
3. Retailer is the last link in the chain of distribution.
4. Goods flow from the producer to consumer in the following way:
Producer → Wholesaler → Retailer → Consumer
5. Thus, retailer comes into direct contact with the ultimate consumer.
Question 2.
Commerce is a wider term than trade.
Answer:
1. Commerce is a part of business. Business is divided into two parts;
industry and commerce,
2. Commerce is concerned with the distribution of goods.
3. Commerce is divided into two parts. One is trade and the other is
auxiliaries to trade.
4. Trade is concerned with buying and selling of goods and services.
5. Trade is’a part of commerce.
6. Along with trade, commerce also includes auxiliaries or services to trade.
7. These services help in the smooth running of trade.
Thus, it clearly indicates that commerce is a wider term than trade.
Question 3.
Risk is inevitable in business activities.
Answer:
, 1. Every business is exposed to various risks. A businessman cannot avoid
risks in the business.
2. These risks include goods remaining unsold due to changes in fashions,
risks of losses due to fire or theft, damage to goods during transportation
or warehousing, risks of bad debts, etc.
3. A businessman has to be prepared to handle these risks.
4. These risks cannot be totally eliminated. But they can be minimized or
transferred to insurance company.
5. A businessman must be ready for the risks as they are inevitable.
6. Thus, risk is inevitable in business activities.
Question 4.
Combination of import-export trade is entrepot trade.
Answer:
1. Import, export and entrepot trade are the parts of foreign trade.
2. When the goods are purchased from other countries it is called import
trade.
3. When the goods are sold to other countries it is called export trade.
4. A combination of import and export trade is called entrepot trade.
5. In case of entrepot trade goods are first purchased from one country i.e.
imported and then sold to or exported to other country.
6. E.g. Indian trader purchased some computers from Japan and sold them to
Sri Lanka will be included in entrepot trade.
7. Thus, entrepot trade is a combination of import and export trade.
Question 5.
Transport creates place utility.
Answer:
1. Transport is one of the important auxiliaries to trade.
2. Transport brings raw materials and people to the place of production and
carries finished products to markets.
3. There are different modes of transport through it carries goods and people
from one place to another. They are rail, road, water and air.
4. If goods are produced at one place, it may not have demand at that place
only.
5. Transport carries them to other place where they are demanded and
create place utility.
6. Thus, we can say that transport creates place utility.
, Question 6.
Industrial activities take place before commerce starts its role.
Answer:
1. Industry and commerce are the two parts of business.
2. Both the parts are complimentary to each other.
3. One cannot function without other.
4. Industries look after the production of goods and services and commerce
takes care of the distribution of the goods produced.
5. Obviously production of goods comes first and it is followed by distribution
or selling of goods.
6. Thus, industrial activities take place before commerce starts its role.
Question 7.
Available resources should be used to its maximum.
Answer:
1. Resources are always scarce. The demand for resources is more and the
availability of resources is less.
2. Similarly, resources belong to the society but the businesses use them for
production and provide the finished products to the society.
3. So it is necessary to use the resources carefully.
4. Wastage of resources should be avoided.
5. Wherever possible, recycling and reusing the resources should be
considered by the businesses.
6. Thus, whatever resources available should be used to its maximum.
Question 8.
Wholesalers is a link between retailer and manufacturer.
Answer:
1. Wholesaler and retailer are the important intermediaries in trade.
2. They help to bring the goods from the manufacturer to ultimate consumer.
3. Wholesaler is a trader who deals in large quantities i.e. the wholesaler
purchases the goods in bulk from the manufacturer and sells it to retailer
in small quantities.
4. Both the wholesalers and retailers are the part of chain of distribution,
which is shown below.
Producer → Wholesaler → Retailer → Consumer
5. Thus, it is true that wholesaler is the link between the manufacturer and
retailer.
