Question

State with reasons whether the following statements are true of false.
1.Wholesaler is in direct contact with ultimate consumers.
2.Commerce is a wider term than business.
3. Risk is inevitable in business activities.
4.Tertiary industry depends upon primary and secondary industry.
5.Internal Trade handle import and export.
6. Business can be expanded with the help of mercantile agents.
7.Transport creates place utility.
8. Industrial activities take place after commerce finishes his role.
9.Changing fashions is one of the important cause of business risk.
10. Available resources should be used to its maximum.

Answer 1

1. Wholesaler is in direct contact with ultimate consumers- False

Explanation:
A wholesaler is not in direct contact with ultimate consumers. Rather, a retailer is in direct contact with ultimate consumers. A wholesaler is in direct contact with producers as he/she buys and sells goods in large quantities for the purpose of resale or intermediate usage. These goods are purchased in bulk from the manufacturers and are later sold to retailers in relatively small quantities.

2. Commerce is a wider term than business-False

Explanation:
The above statement is incorrect. In fact, business is a wider term than commerce. This is because business has two branches; these are industry and commerce. As commerce forms a part of business, its scope is narrower than business.

3. Risk is inevitable in business activities-True

Explanation: Risk cannot be avoided in a business because individuals cannot foresee each and every situation. Also, factors like natural calamities are beyond anyone’s control.

4. Tertiary industry depends upon primary and secondary industry-True

Explanation:
A tertiary industry is the one that includes activities like transport and banking, whereas primary industry and secondary industry includes activities related to extraction and processing of natural resources to convert them into consumable forms. Thus, we can say that tertiary industry depends on primary industry as unless the goods are produced, the tertiary activities are of no use. Infact, transport or banking activities can be carried out only when primary and secondary industries produce goods.

5. Internal Trade handle import and export-False

Explanation:
The above statement is incorrect. Internal trade refers to the trade that happens within the geographical boundaries of a country and thus, handles only wholesale and retail trade. External trade on the other hand, handles import and export as it includes trade outside the geographical boundaries of a country.

6. Business can be expanded with the help of mercantile agents-True

Explanation:
Mercantile agents are the people who act as a bridge between buyers and sellers. As sellers have a limited reach, they need people who can help them expand their coverage. Thus, it is correct to say that business can be expanded with the help of mercantile agents.

7. Transport creates place utility-True

Explanation:
Transport solves the problem of place. That is, it enables a movement of raw materials and labour from one place to another. It also takes finished products from the place of production to the final consumer. Thus, transport creates place utility.

8. Industrial activities take place after commerce finishes his role -False

Explanation:
Commerce comes into picture only after industry has done its work. This is because industry deals in production of goods and services, while commerce helps in delivering those produced goods and services to the ultimate consumers.

9. Changing fashions is one of the important cause of business risk -True

Explanation:
The above statement is correct. Change in fashion can lead to huge loss. For instance, if an enterprise has produced goods according to the ongoing trends and suddenly there is a change in fashion, it would lead to large amount of unsold stock, causing business risk. Hence, change in fashion adds to business risk.

10. Available resources should be used to its maximum -True

Explanation:
Available resources should be used to their maximum, as resources are scarce and have alternative uses. It is important for an organisation to use available resources fully to minimise wastage and reduce production costs, which would lead to higher profits.