Question

What do you mean by commerce?
explain its components

Answer 1

Commerce refers to all the activity which is necessary to bring goods from the place of their production to the place of their consumption. The process which fills the gap between producer and consumer is called commerce.

Acc. to Thomas,” commercial occupation deals with buying and selling of goods, the exchange of commodity, the distribution of finished products.”

 

Components of commerce:  

It includes:

   Trade  

     Aids to trade  

•   Trade: Trade means sale and purchased of goods. It can be further classified into two categories like home trade and foreign trade. Home trade means when sale and purchased of goods within boundaries of country. Foreign trade is a trade between two or more than two countries. Home trade can also further classified into two categories like wholesaler and retailer. Wholesaler means when goods are purchased from producer in large quantity and are sold in small quantity. Retailer means goods are purchased from wholesaler and are sold to consumer in a very small quantity. Foreign trade is classified into three categories like import, export, and interport. Import means when goods are sold to foreign countries. Export means when goods are purchased from foreign countries. Interpot means import of raw material for the purpose of re-exporting after convert into finished products.

 

• Aids to trade: there are certain agency which facilitates trade is called aids to trade.  

1.      Transport

2.      Warehousing

3.      Insurance

4.      Banking

5.      Advertisement  

6.      Communication  

•  Transport: generally, in the modern setup place of production is far wide for the place of production. The gap between the production and consumption is removed by transport. Transport removes the difficulty of placed.

• Warehousing: generally, in the modern setup place of production is far wide for the place of production. So we can store the goods in the ware house. E.g.: sugar, wheat is produced in a particular season but their demand is throughout year. So with the help of ware house we can easily store the goods and satisfy our consumer demand.  

• Insurance: when goods are properly insured by the insurance company then any loss occurred like theft, fire and natural calamity then insurance company provides compensation for all types of losses.