Question

Write short answers of the following

State the role of auxiliaries to trade in Trading activities.

Answer 1

‘Auxiliaries to trade’ refer to all those activities that aid/ support trading of goods and services in a business. These activities overcome the hindrances that arise during the production and distribution of goods by providing various infrastructural activities such as transport, banking, insurance, warehousing and advertising, which in turn promote smooth conduct of trade. Some of the auxiliaries to trade are explained below.

i. Transportation: It provides place utility. With the help of transport, goods are transported from one place to another.
ii. Warehousing: It provides storage utility. In warehouses goods are stored after production till the time they are sold in the market.
iii. Insurance: Insurance protects the trader against any risk of loss, theft, damage, etc, to the product.
iv. Advertising: Advertisement enables the trader to reach out to the large number of potential buyers spreading awareness about the product.
v. Banking: Banking provides finance to the manufacturer to ensure continuity in business operations.