Trade and Classification of Trade:

Trade means buying and selling. Producers are few in numbers and they cannot sell directly to the ultimate consumers that are scattered far and wide. Therefore, a trader acts as an intermediary between producers and consumers. Trade eliminates the hindrance of persons.

Classification of Trade:

Trade can be classified as either home trade (internal trade or domestic trade) or foreign trade (external trade or international trade).

1) Home Trade:

Home trade refers to buying and selling of commodities within the boundaries of one country. Home trade may be subdivided into wholesale and retail trade. A wholesaler is one who deals in the limited range of goods, purchases them on large scale from producers for the purpose to sell to retail trader who ultimately sells them to final consumers. Whereas a retailer deals in variety of goods, keeps stock of goods in small quantities and enables consumers to purchase goods of their choice.

2) Foreign Trade:

Foreign trade refers to buying and selling between the countries of the world. Foreign trade may be subdivided into import trade and export trade. Import trade means purchasing goods form foreign countries and export refers to the forwarding of goods to other countries of the world.