Home › Free notes › Class 11 Business Studies › Internal Trade

Internal Trade – Class 11 Business Studies notes, important questions and MCQs

NCERT Class 11 Business Studies, chapter 9. Notes, key terms, important questions with answers and MCQs.

Chapter overview

Internal trade is the buying and selling of goods and services within a country. It is divided into wholesale trade, buying in large quantities from producers and selling to retailers, and retail trade, selling in small quantities to consumers. Retailers may be itinerant or have fixed shops. The Goods and Services Tax (GST) has unified indirect taxes on internal trade.

Wholesale trade

Wholesalers buy in bulk from manufacturers and sell in smaller lots to retailers and industrial users.
Services to manufacturers: large orders, storage, financial support, market information and bearing risk.
Services to retailers: availability of goods, credit facility, specialised knowledge, risk sharing and introduction of new products.

Retail trade

Itinerant retailers have no fixed place: peddlers and hawkers, market traders, street traders and cheap jacks.
Small fixed-shop retailers: general stores, speciality shops, street stall holders and second-hand goods shops.
Large-scale retailers: departmental stores (many departments under one roof), chain stores or multiple shops (identical shops in different places run by one firm), mail order houses, consumer cooperative stores, supermarkets and vending machines.

GST and trade associations

GST, introduced on 1 July 2017, is a destination-based indirect tax that replaced many central and state taxes, creating a common national market.
It has CGST and SGST for intra-state supplies and IGST for inter-state supplies.
Chambers of commerce and trade associations promote trade, settle disputes and represent business to government.

Key terms

Internal trade: buying and selling of goods and services within the boundaries of a country
Wholesaler: a trader who buys in bulk from producers and sells in smaller lots to retailers
Itinerant retailer: a small trader who moves from place to place to sell goods
Departmental store: a large store with several departments selling a wide range of goods under one roof
Chain store: a network of identical retail shops in different places owned and run by one organisation

Important questions with answers

What is a departmental store?2 marks

A departmental store is a large retail establishment with a number of departments under one roof, each selling a different type of goods, such as clothing, cosmetics and electronics. It is usually in a central location and offers many services and a wide range of goods to customers.

What services does a wholesaler provide to retailers?3 marks

A wholesaler makes a variety of goods readily available to retailers, sells in small lots so they need not keep large stocks, gives credit, shares risk by holding stock, provides specialised knowledge about products and market trends, and introduces new products to them.

Explain the different types of retail trade.5 marks

Retail trade involves selling goods in small quantities to final consumers. Retailers are of two broad types. Itinerant retailers have no fixed place of business and move from place to place: peddlers and hawkers sell goods door to door or on streets; market traders sell at different weekly markets; street traders sell from footpaths at busy places; and cheap jacks have temporary shops in a locality. Fixed-shop retailers sell from permanent premises. Small fixed-shop retailers include general stores selling daily needs, speciality shops selling one type of product such as books or medicines, street stall holders, and second-hand goods shops. Large fixed-shop retailers include departmental stores, which sell a wide range of goods in different departments under one roof; chain stores or multiple shops, a network of identical shops in different locations run by one firm, with centralised buying and uniform prices; mail order houses, which sell through orders received by post or online; consumer cooperative stores, owned by consumers to get goods at fair prices; supermarkets, which are self-service stores selling mainly food and household items; and vending machines, which sell items automatically. These forms give consumers choice and convenience.

Quick revision

Wholesale: bulk buying, services to producers and retailers.
Itinerant retailers: hawkers, market traders, cheap jacks.
Large retailers: departmental, chain, mail order, supermarkets.
GST from 1 July 2017: CGST, SGST, IGST.

Exam tips

Draw a chart of retail types: itinerant and fixed shop (small and large).
Compare departmental stores and chain stores on location, range of goods and prices.

Practice MCQs

Buying and selling within a country is
1. foreign trade
2. internal trade
3. entrepot trade
4. export trade
Show answer
Answer: (b) internal trade. It needs no customs formalities.
A trader who sells goods by moving from street to street is a
1. departmental store
2. wholesaler
3. hawker
4. chain store
Show answer
Answer: (c) hawker. He is an itinerant retailer.
GST was introduced in India on
1. 1 April 2016
2. 1 July 2017
3. 1 January 2018
4. 15 August 2017
Show answer
Answer: (b) 1 July 2017. It replaced many indirect taxes.
A large store selling many types of goods in different departments under one roof is a
1. chain store
2. speciality shop
3. departmental store
4. mail order house
Show answer
Answer: (c) departmental store. It is usually in a central location.
Identical shops in different places owned by one company are
1. departmental stores
2. cooperative stores
3. chain stores
4. hawkers
Show answer
Answer: (c) chain stores. They are also called multiple shops.
For an inter-state supply of goods, the GST levied is
1. CGST only
2. IGST
3. SGST only
4. no tax
Show answer
Answer: (b) IGST. It is collected by the centre.
Which service is provided by a wholesaler to manufacturers
1. selling to consumers directly
2. giving discounts to consumers
3. storing goods and placing bulk orders
4. doing advertising for retailers only
Show answer
Answer: (c) storing goods and placing bulk orders. Manufacturers need not keep large stocks.
Why can chain stores often charge lower prices than small shops
1. they sell second-hand goods
2. they buy centrally in bulk and save on costs
3. they avoid taxes
4. they sell on credit only
Show answer
Answer: (b) they buy centrally in bulk and save on costs. Economies of scale.

All chapters of Class 11 Business Studies

Written by Kundali IQ from standard, well-established facts to help with revision. This is not an official NCERT publication; always read your textbook too.