Meaning and importance of trade

Business studies study module

This is the buying and selling of goods and services with the aim of making a profit.

Importance of trade:

Trade plays a vital role in any economy. The various roles played trade in the economy include:

  1. Helps people to acquire what they cannot produce
  2. Avails a variety of goods and services thereimproving the peoples living standards
  3. Creates an outlet for goods thereenabling the producers to dispose of their surplus produce
  4. Creates employment opportunities
  5. Encourages specialization and division of labour
  6. Promotes peace, social relations and understanding the parties involved since they depend on one another
  7. Provides revenue to the business and the government in form of taxes and fees charged on the various trading activities
  8. Ensures steady supply of goods and services
  9. Exploitation of local resources as traders create goods and services using locally available resources
  10. Encourages economic growth and development



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