Question

Answer in brief.

State any four auxiliaries to trade.

Answer 1

Auxiliaries to trade are all those services which help in the smooth conduct of trade. There are different types of services which help trade. They are explained below.

1. Warehousing: Warehousing helps to store the goods safely. There is a gap between the time of production and the time of consumption. Warehousing fills up this gap by conveniently storing the goods until they are demanded in the market. Warehousing, thus, creates time utility. Care is taken that the goods do not get damaged in the warehouse.
2. Advertising: Advertising is an important tool in the hands of a businessman to communicate with potential buyers. In today’s world, producer/seller is situated in one place and consumers are spread over wider area. Through advertisement, producer or seller can contact the consumers. There are different mediums of advertisement. e.g. T.V., Radio, Hoardings, Print, etc.
3. Insurance: Business is exposed to many risks. A businessman has to be careful about the risks. Some risks can be avoided, some can be minimized and some can be transferred. Insurance is an auxiliary which helps the businessman to handle the risk. Businessmen can transfer some of the risks to insurance companies. Insurance company, by accepting premium from the businessman, assures him to pay compensation in case of loss.
4. Transport: Transport is an important auxiliary to trade. Transport carries raw materials and people to place of production and brings finished goods to markets. Thus transport creates place utility. Transport can be conducted by different modes e. g rail, road, water or air.