Characteristics of trade

Characteristics of trade

1. Buying for resale. The aim must be buying for resale.

2. Product: There must be goods or services to be bought and sold.

3. More than one party: Exchange involves at least two parties — seller and buyer — who have interests in a particular product to be exchanged.

4. Profit motive: Trade aims at making profit.

5. Price: Trade involves distribution of goods or services for a consideration and price.

6. Possession utility: Trader allows creation of possession utility and therefore obtains effective satisfaction.

7. Ownership utility.

8. Series of transactions: There must be continuous buying and selling to constitute trading.

9. Area: There should be an area (physical or non-physical) for a commodity to be transacted.

Role of trade

1. Trade enables goods produced in a particular area to be used by the consumers in the whole country or other countries.

2. Trade promotes social, economic, and political relations between nations' peoples through trading operations conducted by traders, which can result in international peace and harmony.

3. Trade provides employment both in public and private sector leading to social and economic welfare.

4. Trade encourages mass production by providing ready and profitable markets for their products.