Class 9 Trade Mock Test (ICSE)

Topics in Trade

• Home trade: wholesale and retail
• Foreign trade: import and export
• Documents used in trade
• Role of middlemen

Trade practice questions with answers

1. Q1Multiple choice·1 mark
   Which document is prepared by the transport company or its agent as a receipt for goods accepted for carriage and acts as a document of title?

   1. (a)Certificate of Origin
   2. (b)Bill of Lading
   3. (c)Letter of Credit
   4. (d)Proforma invoice
   Show answer and step marks

   1. Correct option: (b)+1

   Answer: (b)
2. Q2Multiple choice·1 mark
   How do merchant middlemen differ from agent middlemen?

   1. (a)Merchant middlemen take title to the goods, whereas agent middlemen do not.
   2. (b)Merchant middlemen only operate in foreign trade, whereas agent middlemen operate only in home trade.
   3. (c)Agent middlemen assume all risks of price fluctuation, whereas merchant middlemen do not.
   4. (d)Agent middlemen buy goods for resale, whereas merchant middlemen operate on a commission basis.
   Show answer and step marks

   1. Correct option: (a)+1

   Answer: (a)
3. Q3Multiple choice·1 mark
   Which of the following best describes the primary function of a wholesaler in home trade?

   1. (a)Importing goods from foreign countries and paying custom duties
   2. (b)Buying goods in large quantities from manufacturers and selling in smaller lots to retailers
   3. (c)Selling goods directly to the final consumer in small quantities
   4. (d)Providing doorstep delivery exclusively to online buyers
   Show answer and step marks

   1. Correct option: (b)+1

   Answer: (b)
4. Q4Short answer·2 marks
   State any two differences between wholesale trade and retail trade.
   Show answer and step marks

   1. First difference, any one of: quantity (wholesalers buy and sell in bulk, retailers in small quantities); buyers (wholesalers sell to retailers, retailers sell to final consumers); capital (wholesale trade needs large capital, retail trade less); variety (a wholesaler deals in a few lines of goods in large quantities, a retailer in many kinds of goods); price (wholesale prices are lower, retail prices higher); credit (wholesalers give credit to retailers, retailers sell mostly for cash); location (wholesalers are in central markets, retailers near consumers); or any other valid difference.+1
   2. Second difference, a different one from the same list.+1

   Answer: Any two of: wholesalers deal in bulk, retailers in small quantities; wholesalers sell to retailers, retailers to consumers; wholesale needs more capital; wholesalers deal in fewer lines of goods; wholesale prices are lower; wholesalers give credit; wholesalers are in central markets, retailers near consumers.
5. Q5Long answer·4 marks
   Foreign trade is an essential component of a nation's commercial activity. In this context, answer the following: (a) Differentiate between import trade and export trade on the basis of: (i) Flow of foreign exchange (ii) Primary objective (b) Explain any two ways in which foreign trade benefits domestic consumers.
   Show answer and step marks

   1. (a)(i) Flow of foreign exchange: Import trade results in an outflow of foreign exchange from the country, whereas export trade results in an inflow of foreign exchange.+1
   2. (a)(ii) Primary objective: The objective of import trade is to procure goods and services not available locally or in insufficient quantities, while the objective of export trade is to sell surplus domestic goods to foreign markets to earn revenue.+1
   3. (b) First benefit, explained, any one of: consumers get goods that are not produced in the country; a wider variety of goods to choose from; better quality goods because of international competition; lower prices as domestic producers face competition; essential goods (such as food grains or medicines) remain available during shortages; access to the latest technology and products; or any other valid benefit to domestic consumers.+1
   4. (b) Second benefit, a different one from the same list, explained.+1

   Answer: (a)(i) Import trade causes an outflow and export trade an inflow of foreign exchange. (ii) Imports obtain goods not available or scarce at home; exports sell surplus goods abroad to earn foreign exchange. (b) Any two of: goods not produced at home; wider variety; better quality; lower prices through competition; essential goods during shortages; latest products and technology.
6. Q6Long answer·4 marks
   Foreign trade plays a vital role in the economic growth and development of a country by connecting domestic markets to the global economy. (a) Explain any two economic benefits of import trade to a domestic economy. [2] (b) Differentiate between export trade and import trade with reference to the direction of payment and the role of the indent (order for goods). [2]
   Show answer and step marks

   1. (a) First benefit, any one of: it provides raw materials, machinery and technology not available at home, which helps industrialisation; it makes better-quality and more varied consumer goods available at competitive prices, raising the standard of living; it meets shortages of essential goods such as food grains and crude oil; competition from imports makes domestic producers more efficient; or any other valid benefit.+1
   2. (a) Second benefit, a different one from the same list.+1
   3. (b) Direction of payment: in export trade, payment (foreign exchange) is received from the foreign buyer and flows into the country; in import trade, payment is made to the foreign supplier and flows out of the country.+1
   4. (b) Indent: in import trade, the domestic importer sends the indent (order) to the foreign supplier; in export trade, the domestic exporter receives the indent from the foreign buyer.+1

   Answer: (a) Any two of: supplies raw materials, machinery and technology not available at home; better and more varied consumer goods at competitive prices; meets shortages of essential goods such as food and oil; competition makes domestic producers efficient. (b) Export trade brings payment into the country, import trade sends payment out; the importer sends the indent, while the exporter receives it.

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