NCERT Solutions for Class 11 Business Studies – Chapter 10 Internal Trade

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Class 11 NCERT Solutions Business Studies 

Access NCERT Solutions for Class 11 Business Studies Chapter 10 – Internal Trade

Experts prepare the NCERT Solutions after extensive research. The solutions help the students understand the concept of internal trade with clarity and allow them to perform better in the examinations. 

The answers in the NCERT Solutions for Class 11 Business Studies help students to acquire a deep understanding of the topic. Students can download the Class 11 NCERT Business Studies Chapter 10 solutions on Extramarks website or app

NCERT Solutions for Class 11 Business Studies – Chapter 10 Internal Trade

Internal Trade and Its Types

Internal Trade refers to the buying and selling processes that take place within a country. Buying and selling at the local stores, shops, supermarkets, shopping malls, exhibition programs, fairs, etc., come under internal trade. 

No traditional import duties are imposed on the services and products which are meant to be sold under Internal Trade. Here are the primary characteristics of internal trade:

  • The buying and selling of products and services are supposed to happen within the boundaries of a country.
  • The payments are offered and received in the country’s currency.
  • The internal traders have to go through some nominal formalities to continue their business.

Internal Trade has Two Divisions 

The concept of trade has been divided into two categories: wholesale and retail trade.

Wholesale trade

Wholesale trade refers to the business in which the products are supplied to the retail traders and vendors in bulk. The ones, who operate the entire wholesale trade system, are known as wholesalers. They are the mediators between manufacturers and retailers. 

The wholesalers benefit both the manufacturers and the retailers. The services include:

Services to Manufacturer

  • Assist a large scale production
  • Carry the risk factors
  • Provide the manufacturers with financial assistance
  • Offer suggestions and advice to the manufacturers 
  • Keep watch on the current market scenario
  • Help the manufacturers in understanding the marketing function 
  • Support production continuity
  • Help in storage 

Services to Retailers 

  • Keep products available
  • Provide marketing support
  • Grant credit to the retailers
  • Offer valuable suggestions and advice to the small vendors
  • Share the market risk with retailers 

Retail trade

Retail trade is the sale of products to the end customers. Retailers purchase a small amount of products from the wholesalers and sell them to the customers. The retailers remain in constant touch with the customers and understand the customer’s demands and preferences. 

Functions of Chambers of Commerce and Industry in the Development of Internal Trade

The Chamber of Commerce is a business holders’ organisation of various traders and industrial sectors. The core objective of the Chamber of Commerce is to circulate the business interest of every member and generate rapid expansion of business and economic growth in a specific region, community, or country. The functions of the Chambers of Commerce include:

  • Conduct studies, collect statistics and relevant information about the current business and economic status.
  • Arrange for education and training programmes for the members. A few members even conduct commercial examinations and award diplomas.
  • Provide the members with technical, legal, and other significant information and guidelines.
  • Advise the authority in matters that concern the financial and industrial advancement of the location.
  • Conduct industrial exhibitions or trade fairs to promote business.
  • Provide the exporters with the certificates of origin.
  • Function as a conciliator to solve conflicts and disputes between the members.
  • Create a forum to discuss and talk about the everyday problems of the business people and resolve the issues immediately. 

Why should one choose Extramarks NCERT Solutions?

NCERT Solutions for Class 11 Business Studies Chapter 10 by Extramarks are a go-to guide for students looking for accurate answers to NCERT textbook questions of this chapter. As these solutions are prepared by subject matter experts, students can rely on them for accuracy. Moreover, it is ensured that the solutions are made as per the latest guidelines by the CBSE. 

Q.1 What is meant by internal trade?


Internal trade means buying and selling of goods and services within the national boundaries of the country. Purchases of goods from a local shop, a mall or an exhibition are all examples of internal trade. Government does not levy any custom duty or import duty on these goods and services.

It can be classified into two broad categories –

  1. Wholesale trade
  2. Retailing trade

Q.2 Specify the characteristics of fixed shop retailers.


Fixed shop retailers are retailers who have permanent establishments. This means that they sell goods and services from fixed shops and do not move from place to place to serve customers.

Followings are the main features of fixed shop retailers:

  • These retailers have a permanent establishment to run their business activities. They do not move from place to place to serve their customers.
  • These retailers have greater credibility in the minds of customers due to permanent establishments.
  • These retailers may deal with different products, including consumer durables as well as non-durables.

Q.3 What purpose is served by wholesalers providing warehousing facilities?


  1. Wholesalers purchases goods in bulk from manufacturers, store them and distribute them to retailers in small quantities for further resale.
  2. Wholesalers take delivery of goods from the factory and keep them in godowns/warehouses. They reduce the burden of manufacturers by providing them with the storage facilities for the finished goods. By this service, wholesalers provide time utility.

Q.4 How does market information provided by the wholesalers benefit the manufacturers?


  • The wholesalers are in direct contact with the retailers, through which they get updated with the new trends of the market and demand of the consumers.
  • They are in a position to advise the manufacturers about various aspects including customer’s tastes and preferences, market conditions, competitive activities and the features preferred by the buyers.
  • They serve as an important source of market information on these and related aspects. It helps the manufacturers to take important decisions regarding products, prices etc.

Q.5 How does the wholesaler help the manufacturer in availing the economies of scale?


Wholesalers often purchase goods in bulk quantities from manufacturers. Once the purchase is made, the wholesalers distribute the goods in small quantities to retailers for further resale. During this stage, they provide manufacturers with a variety of warehousing facilities such as collection, storage, marketing and distribution of goods. These services reduce the burden on manufacturers by creating time and place utility thus enabling them to produce goods on large scale and benefit from economies of large scale.

Q.6 Distinguish between single line stores and speciality stores. Can you identify such stores in your locality?


Single line stores are small shops that deal in only one product – for example, garments or shoes. They offer a wide variety of products. For example, a single line store that deals in shoes will have shoes in all sizes for men, women and children.

On the other hand, speciality stores deal only in a particular type of product from a selected product line. For example women clothing. Such stores generally sell all the brands of the products in which they specialise. For example, if a store specialises in women’s clothing then it will have all the brands of women’s clothing.

Q.7 How would you differentiate between street traders and street shops?


Street Trader

Street Shops

Small retailers who generally sell low –priced consumer items on streets Shops situated on street sides or main roads
Do not have permanent shops These stores generally sell all the brands of the product in which they specialise.
Stationery items, eatables, newspaper etc Clothes, shoes, grocery items, bakery items.

Q.8 Explain the services offered by wholesalers to manufacturers?


The services provided by wholesalers to manufacturers are:

  • Facilitate Large Scale Production: Wholesalers collect small orders from several retailers & consequently make purchases in large quantities from manufacturers. Manufacturers can make use of economies of scale.
  • Bear Risk: Wholesalers take title & delivery of the goods and store them in their warehouses. They bear risk of- theft, pilferage, spoilage, etc.
  • Financial Assistance: They provide financial assistance by generally purchasing the goods on cash. Manufacturers need not block their capital in maintaining stocks.
  • Expert Advice: Wholesalers advise the manufacturers about various aspects of the consumer like tastes & preferences, as they are in direct contact with the retailers.
  • Storage: By taking delivery of goods from the factory & keeping them in godowns/warehouses, wholesalers reduce burden of manufacturers of providing for storage facilities for the finished goods.

Q.9 What are the services offered by retailers to wholesalers and customers?


The services offered by retailers to wholesalers are:

  • Help in Distribution of Goods: Provide place utility by helping in the distribution of products to the final consumers scattered over a wide geographical area.
  • Collecting Market Information: Act as a vital source of market information since they are in direct contact with consumers.
  • Help in Promotion: Manufacturers & wholesalers undertake sales promotion activities to increase the sale of their products. Retailers, by facilitating short term promotional activities like offering coupons, free gifts, sales contests, etc. help in the promotion of the products.

The services offered by retailers to customers are:

  • Regular Availability of Products: Maintain regular availability of various products produced by different manufacturers. This enables the buyers to choose from among a variety of products and buy them when needed.
  • New Products Information: Make arrangement for effective display of products & increase the sale by personal selling efforts. Through this, they provide vital information about new arrivals, special features, etc. of new products to the consumers.
  • Convenience in Buying: Sell goods in small quantities according to the requirements of their customers. Normally, they are situated near to the residential areas & remain open for long hours.

Q.10 Itinerant traders have been an integral part of internal trade in India. Analyse the reasons for their survival in spite of competition from large scale retailers.


Itinerant retailers are traders who do not have a fixed place for operating their business & keep on moving from place to place, with their wares in search of consumers.

The reasons that itinerant traders survive in spite of the tough competition from large scale retailers can be attributed to the following factors:

  • They normally deal in low price consumer products of daily use such as toiletry products, fruits and vegetables etc.
  • They deal directly with consumers and are therefore able to give more attention to them, better customer care services, having a proper feedback mechanism and passing the same to manufacturers.
  • They move from one place to another providing goods at customers doorstep.
  • These traders go to places where it is difficult for a shop to sustain due to poor demand from the customers for those goods.
  • They provide services in remote areas as well.

Q.11 Discuss the features of a departmental store. How are they different from multiple shops or chain stores.


The following are the features of departmental store:

  • Modern departmental store may provide all the facilities like restaurant, telephone booth, restrooms etc.
  • These stores are located at the central place of a city.
  • As the size of the stores are very large, they are formed as Joint Stock Company managed by a board of directors. There is a managing director assisted by general manager and many department managers.
  • A departmental store combines both the functions of retailing and warehousing. They purchase directly from manufacturers and hence eliminate middlemen between producers and consumers.
  • All the purchases in a department store are made centrally by the purchase department of the store.

The following are the differences between the departmental store and multiple shops or chain stores.

Basis of Distinction

Departmental Stores

Multiple Shops

Location Located at central place for attracting a large number of buyers Located at number of places, not necessary at central location
Range of Products Aim at satisfying all the needs of customers as they carry a variety of products of different types under one roof Aim to satisfying the needs of the customers relating to a specified range of their products only
Services Offered Emphasis on providing maximum service to their customers like restaurant, restrooms, etc Provide very limited service confined to guarantees & repairs of defective goods
Pricing Do not follow any fixed or uniform pricing policy, instead provide discounts on merchandise to clear stocks Follow fixed prices of goods & uniform pricing policy for all the shops
Class of Customers Cater to the high income group of customers who give importance to services provided more than prices Cater to different types of customers, including lower income groups, who value quality at reasonable prices
Credit Facilities May provide credit facilities to some of their regular customers Sales are made strictly on a cash basis

Q.12 Why are consumer cooperative stores considered to be less expensive? What are its relative advantages over large scale retailers?


A consumer cooperative store is an association organised by consumers to obtain their requirement by purchasing in bulk and selling through their stores owned, managed and controlled by themselves. It is a retail trading organisation formed by private consumers to purchase products or services at favourable prices. Consumer cooperative stores generally buys in large quantity directly from manufacturer or wholesalers and sell them to the consumers at reasonable prices. Since there is no middleman, the members get products at a cheaper rate and better quality.

Its advantages over large scale retailers are:

  • Ease information: It is easy to form a consumer cooperative society. Any ten people can come together to form a voluntary association and get themselves registered with the Registrar of Cooperative Societies by completing certain formalities.
  • Limited Liability: The liability of the members in a cooperative store is limited to the extent of the capital contributed by them.
  • Democratic Management: Cooperative societies are democratically managed through management committees which are elected by the members. Each member has one vote.
  • Lower Prices: A cooperative store purchases goods directly from the manufacturers or wholesalers, the role of middlemen is eliminated which results in better quality of product at a lesser price.
  • Cash sales: The consumer cooperative stores sell goods on cash basis. As a result, the requirement of working capital is reduced.
  • Convenient location: The consumer cooperative stores are generally opened at convenient public places where the members can buy the products easily.

Q.13 Imagine life without your local market. What difficulties would a consumer face if there is no retail shop?


Life without a retail shop would be very difficult for the consumers as these shops act as a link between manufacturer/ wholesalers and consumers. If there is a retail shop nearby we can buy the products as and when we require very easily. On the other hand, if there is no retail shop nearby then we will have to travel a lot of distance for buying even a daily use simple product.

Retailers help consumers in the following ways:

  • Regular availability of products: Retailers maintain regular availability of various products produced by different manufacturers, which enables the buyers to choose from among a variety of products and buy them when needed.
  • Convenience in buying: Retailers sell goods in small quantities. They are situated near the residential areas and remain open for long hours.
  • New products information: Retailers arrange effective display of products and increase the sale by personal selling efforts. They provide vital information about new arrivals, special features, etc. of new products to the consumers.
  • After sale services: Retailers provide important after sale services like home delivery, supplying spare parts.

Q.14 Explain the usefulness of mail orders houses. What type of products are generally handled by them? Specify.


Mail order houses are retail outlets that sell their merchandise through mail. There is generally no direct personal contact between buyers and the sellers in this type of trading.

The following are the usefulness of mail order houses:

  • Limited capital requirement: Mail order business does not require heavy expenditure on building and other infrastructural facilities. Hence it can be started with low capital.
  • Elimination of middlemen: Mail order house eliminate the role of middlemen as they directly deal with the consumers.
  • Absence of bad debt: Since mail order houses do not extend any credit facilities to the consumers there is no question of bad debt.
  • Wide reach: As the goods are sent through mail, the sellers can pass on the information about their product to the entire country.
  • Convenience: As the goods are delivered at the doorstep of the consumers, it is very convenient for the customers buying these products.

Types of products handled by mail-order houses are:

  • Graded and standardised products.
  • Goods which can be easily transported at low cost.
  • Goods which have ready demand in the market.
  • Goods which can be easily described through pictures.
  • Goods that are readily available in bulk quantities throughout the year.
  • Goods that involve least competition in the market.

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FAQs (Frequently Asked Questions)

1. What is trade?

Trade refers to the commercial activities of buying and selling products or services within or outside the country. Finance is a crucial aspect of business as the core purpose of trading is to offer the best quality product or service in return for money. There are two kinds of trade: Internal Trade and External Trade.

2. What is it called when businesses buy products from a foreign land?

When businesses purchase products from foreign lands, it is called import.

3. What are the primary documents needed for internal trade?

The primary documents required for internal trade are: 

  • Invoice – The seller supplies a statement to the buyers mentioning the relevant details of the product or service after the purchase. It is called invoice. The information includes quantity, quality, total value, tax, discount, etc. The statement is also called a bill or cash memo. 
  • Pro-Forma Invoice – A Pro-forma invoice is sent to the consignee from the consigner. It has the same information that is present in the invoice.

4. What is it called when products are imported for export purposes?

When products are imported by  a nation for export purposes, the process is called Entrepot.

5. Mention a few terms associated with business?

A few terms associated with the business are cash on delivery, free on rail, etc.

6. What are the types of internal trade?

Internal trade is of two types: wholesale and retail.

7. Who is a wholesaler?

Wholesalers connect the manufacturers with the retailers. Wholesalers buy products from the manufacturers in bulk and sell the products to different retailers/vendors.

8. What purpose do the wholesalers serve by providing warehouse facilities?

Wholesalers buy products from manufacturers and also provide warehouse facilities for distribution purposes. Wholesalers take the unknown risks of storage and products. The participation of the wholesalers encourages the manufacturer to enhance their production capability and let them face a lesser burden on storage facilities.