Podcast
Questions and Answers
Commerce is solely focused on the trading of goods and does not include services.
Commerce is solely focused on the trading of goods and does not include services.
False
Wholesale trade involves buying goods in small quantities from producers.
Wholesale trade involves buying goods in small quantities from producers.
False
Retail trade sells goods directly to final consumers.
Retail trade sells goods directly to final consumers.
True
International trade can only occur between two countries.
International trade can only occur between two countries.
Signup and view all the answers
Import trade refers to the selling of goods to other countries.
Import trade refers to the selling of goods to other countries.
Signup and view all the answers
Entrepot trade involves importing goods for further processing before exporting them.
Entrepot trade involves importing goods for further processing before exporting them.
Signup and view all the answers
Aids to trade include activities such as banking, insurance, and advertising.
Aids to trade include activities such as banking, insurance, and advertising.
Signup and view all the answers
Bilateral trade is trade carried out between more than two countries.
Bilateral trade is trade carried out between more than two countries.
Signup and view all the answers
The presence of buyers and sellers is an essential feature of a market.
The presence of buyers and sellers is an essential feature of a market.
Signup and view all the answers
Availability of a medium of exchange is not necessary for a market to function.
Availability of a medium of exchange is not necessary for a market to function.
Signup and view all the answers
Monopoly markets have features that completely eliminate competition.
Monopoly markets have features that completely eliminate competition.
Signup and view all the answers
The availability of commodities is irrelevant to the existence of a market.
The availability of commodities is irrelevant to the existence of a market.
Signup and view all the answers
Localization of industries refers to the desire of firms to cluster in specific areas.
Localization of industries refers to the desire of firms to cluster in specific areas.
Signup and view all the answers
Amalgamation is the process of separating firms to increase competition.
Amalgamation is the process of separating firms to increase competition.
Signup and view all the answers
Perfect competition markets can be easily achieved in any economic environment.
Perfect competition markets can be easily achieved in any economic environment.
Signup and view all the answers
A firm should be defined as a collection of different industries.
A firm should be defined as a collection of different industries.
Signup and view all the answers
Specialization by skill includes dividing activities and allocating tasks based on workers' abilities.
Specialization by skill includes dividing activities and allocating tasks based on workers' abilities.
Signup and view all the answers
Regional specialization refers to a country focusing on various unrelated commodities.
Regional specialization refers to a country focusing on various unrelated commodities.
Signup and view all the answers
One of the advantages of specialization is that it encourages investment and innovation.
One of the advantages of specialization is that it encourages investment and innovation.
Signup and view all the answers
An absence of a single specialist worker can halt the entire production process.
An absence of a single specialist worker can halt the entire production process.
Signup and view all the answers
Specialization primarily decreases dependence among countries.
Specialization primarily decreases dependence among countries.
Signup and view all the answers
One disadvantage of specialization is that it can lead to worker boredom due to repetitive tasks.
One disadvantage of specialization is that it can lead to worker boredom due to repetitive tasks.
Signup and view all the answers
Specialization always results in an increase in the quality of goods produced.
Specialization always results in an increase in the quality of goods produced.
Signup and view all the answers
International specialization means a country produces commodities it can make more efficiently than others.
International specialization means a country produces commodities it can make more efficiently than others.
Signup and view all the answers
A patent right ensures that the inventor's work can be duplicated by others.
A patent right ensures that the inventor's work can be duplicated by others.
Signup and view all the answers
Royalties are payments made to the original creator for each unit of a product sold.
Royalties are payments made to the original creator for each unit of a product sold.
Signup and view all the answers
Internal economies of scale can reduce production costs, leading to a potential monopoly.
Internal economies of scale can reduce production costs, leading to a potential monopoly.
Signup and view all the answers
The size of a market is best served by multiple firms competing with each other.
The size of a market is best served by multiple firms competing with each other.
Signup and view all the answers
Firms entering a market with high additional costs are at an advantage compared to existing firms.
Firms entering a market with high additional costs are at an advantage compared to existing firms.
Signup and view all the answers
In monopolistic competition, there are no barriers to entry or exit for firms.
In monopolistic competition, there are no barriers to entry or exit for firms.
Signup and view all the answers
Restrictive practices can include selling products at a low price to eliminate competition.
Restrictive practices can include selling products at a low price to eliminate competition.
Signup and view all the answers
Perfect knowledge of the market is a characteristic of monopolistic competition.
Perfect knowledge of the market is a characteristic of monopolistic competition.
Signup and view all the answers
A holding company must own at least 51% of the shares in a subsidiary company.
A holding company must own at least 51% of the shares in a subsidiary company.
Signup and view all the answers
Cartels are typically formed by monopolistic firms.
Cartels are typically formed by monopolistic firms.
Signup and view all the answers
Horizontal merging occurs when firms at different production stages combine.
Horizontal merging occurs when firms at different production stages combine.
Signup and view all the answers
A conglomerate merger involves firms that produce completely unrelated products.
A conglomerate merger involves firms that produce completely unrelated products.
Signup and view all the answers
Franchising allows firms to produce goods using their own brand without any restrictions.
Franchising allows firms to produce goods using their own brand without any restrictions.
Signup and view all the answers
A lateral merger involves companies that produce related products which compete with each other.
A lateral merger involves companies that produce related products which compete with each other.
Signup and view all the answers
Amalgamation helps in reducing the cost of advertising for the involved firms.
Amalgamation helps in reducing the cost of advertising for the involved firms.
Signup and view all the answers
Consortiums are permanent mergers between two or more firms.
Consortiums are permanent mergers between two or more firms.
Signup and view all the answers
Study Notes
Definition of Commerce
- Commerce involves organizing the exchange and distribution of goods and services to meet human needs effectively.
- It encompasses trade and aids to trade.
Branches of Commerce
- Two primary branches:
- Trade
- Aids to trade
Trade
- Trade pertains to the buying and selling of goods.
- Divided into home trade and international trade.
Home Trade (Local Trade)
- Conducted within a country's borders.
- Subdivided into:
- Wholesale Trade: Purchase of goods in bulk from producers to sell to retailers.
- Retail Trade: Buying goods in smaller quantities from wholesalers to sell to consumers.
International Trade (Foreign Trade)
- Involves trade between countries and can be bilateral or multilateral.
- Types include:
- Import Trade: Buying goods from other countries.
- Export Trade: Selling goods to other countries.
- Entrepot Trade: Importing goods to re-export them, possibly after processing.
Aids to Trade
- Services that facilitate trade, such as:
- Transport
- Insurance
- Banking
- Warehousing
- Communication
- Advertising
- Market Research
Specialization
- Improves efficiency in production through various forms:
- By Process: Focusing on specific stages of production, e.g., weaving in textiles.
- By Profession: Concentrating on a specific field of expertise, e.g., teaching.
- By Region: Geographic focus on specific commodities, e.g., oil in South Sudan.
- Internationally: Countries specialize in what they produce best, enhancing comparative advantages.
Advantages of Specialization
- Increases production and improves product quality.
- Promotes innovation and saves time during production.
- Enhances workers' skills, boosting productivity.
- Creates trade based on surplus and facilitates the use of specialized tools.
- Raises living standards through better availability of goods.
- Fosters interdependence among nations, contributing to global peace.
- Maximizes resource utilization.
Disadvantages of Specialization
- Can lead to monotony and boredom from repetitive tasks.
- Risk of overproduction leading to waste.
- Potential depletion of natural resources.
- Absence of a specialized worker may halt the production process.
- Machines breaking down can disrupt entire operations.
- Reduced job variety may lead to dependency on a single trade.
- Can create unemployment due to increased mechanization.
- Nations may become overly reliant on others for goods.
- Large concentrations of people may lead to social issues.
Intellectual Property Rights
- Patent Right: Protects an inventor's work from duplication.
- Copyright: Grants exclusive rights to creators of intellectual property.
- Royalties: Payments made to creators based on sales of their works.
Market Structures
- Monopolistic Competition: A blend of perfect competition and monopoly, characterized by many buyers and sellers, product variations, and no entry barriers.
- Essential market elements include: buyers and sellers, commodities for exchange, and a medium of exchange.
Factors Affecting Demand and Supply
- Recognize essential factors that influence market demand and supply dynamics.
Functions of a Market
- Highlight the roles markets play within an economy.
Localization and Delocalization of Industries
- Understand location factors, including advantages and disadvantages of industry localization.
Merging and Integration of Firms
- Horizontal Merging: Firms at the same production stage combine for large-scale production.
- Vertical Merging: Firms at different production stages join to enhance efficiency.
- Conglomerate Merger: Unrelated firms merge to diversify risks.
- Lateral Merger: Related but non-competing firms join forces.
- Franchising: Sharing brand and production methods to expand market reach.
- Consortium: Joint task completion by multiple firms with a temporary partnership.
Merits of Amalgamation
- Reduces competition and increases production capacity.
- Minimizes duplication of products and eases access to financing.
- Lowers advertising costs by pooling resources.
Studying That Suits You
Use AI to generate personalized quizzes and flashcards to suit your learning preferences.
Related Documents
Description
This quiz covers the definition of commerce, its primary branches, and the distinctions between home and international trade. Understand the basics of trade, including wholesale and retail sectors, as well as aids to trade that facilitate commerce.
