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Q. Explain the importance of the firms and industries.
- Goods and services for consumption: These days human wants are growing at a faster rate. In order to satisfy these wants various types of goods and services are required for our daily consumption. All these goods and services are provided by firms and industries.
- Goods for investment: We require various types of goods for investment. We require machines, plants, transport vehicles likes buses, trucks, railways and aeroplanes, ships etc. and various other things for investment. All these things are produced by firms and industries.
- Employment to many persons: Firms and industries are the source of employment to the people. Most of the people get employment in firms and industries by which they get income for the satisfaction of their wants. We cannot live without employment. So the importance of firms and industries can easily be understood.
- Infrastructure for the development of the country: They provide us energy, transport, communication, health, education and housing which is the basic requirement to provide infrastructure for the country. Without the development of infrastructure the all round development of the country is not possible. So we cannot deny the role and importance of firms and industries.
Q. Distinguish between multinational and
collaboration.
- Multinationals: These are firms which have their main office in one country but have their business activities spread in many countries. These are called Multinational Corporations (MNC) because they operate in more than one country other than the country of their origin. Some examples of MNCs in India are- Coca Cola, Pepsi Cola, Johnson & Johnson, Microsoft, Nokia, Sony, Samsung, International Business Machine (IBM).
- Collaborations: These are production units in which foreigners and domestic entrepreneurs participate jointly. Such production units are partly indigenous and partly foreign. These are treated as foreign production units in terms of ownership if more than 50% of its total capital is contributed by the foreigners or nonresidents. A good example of collaboration of Indian company with foreign company is -Maruti- Suzuki Limited.
Q. Why does the supply curve slope upwards?
- A rise in price of the commodity causes rise in profits, as a result firms are induced to supply more quantity of the commodity to increase profit.
- A rise in price of the commodity induces the seller to dispose of at least a part of his stock. The reverse happens when there is a fall in price of the commodity.
- An increase in the price of the commodity causing higher profit attracts the new firms to enter the market and this adds to the supply of the commodity leading to more quantity supplied at a higher price.
Q. Difference between Wholesale Markets and Retail
Markets.
- Wholesale Markets: A wholesaler is a distributor or middleman who sells mainly to retailers and institutions, rather than consumers. When in a market goods are transacted in big lots it is called a wholesale market. Wholesalers usually do not sell goods in small lots. They usually sell to the retailers. The wholesaler is the essential link between manufacturers and end consumers.
- Retail Markets: Retail consists of the sale of physical goods or merchandise from a fixed location, such as a departmental store, shopkeeper in small or individual lots for direct consumption by the purchaser. In retail markets, goods are sold in small lots. Retailers normally sell to the ultimate consumers
Manufacturer →
Wholesaler → Retailer →Consumers
In the channel of distribution of goods and services the position of a retailer is most
important as it is indirect contact with the final consumers. So the location of the retail shop or outlet is very important as compared to wholesale business.
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