UNIT І

Read and translate.*

Text I: Trade

Trade is buying and selling goods and services. Trade occurs because people need and want things that others produce or services others perform.

People must have such necessities as food, clothing, and shelter. They also want many other things that make life convenient and pleasant. They want such goods as cars, books, and television sets. They want such services as haircuts, cinemas and theatres, and bus rides. As individuals, people cannot produce all the goods and services they want. Instead, they receive money for the goods and services they produce for others. They use the money to buy the things they want but do not produce.

Trade that takes place within a single country is called domestic trade. International trade is the exchange of goods and services between nations. It is also called world trade or foreign trade. Trade has contributed greatly to the advance of civilization. As merchants travelled from region to region, they helped spread civilized ways of life. These traders carried the ideas and inventions of various cultures over the routes of commerce. The mixing of civilized cultures was an important development in world history.

Text II: Trade and Specialization

Trade is vital both in industrial and in developing nations. The economic systems established in most countries have a high degree of specialization, or division of labour.

Specialization means that each worker concentrates on one job, such as being a farmer, mechanic, or doctor. Factories concentrate on making one product, such as washing machines, canned soup, or shirts. Countries, cities, and regions also concentrate on producing certain goods and services. For example, Australia specializes in raising livestock and Japan in manufacturing industrial products.

Specialization makes trade necessary. Because people do not produce everything they need themselves, they become dependent on others. They sell their labour or products for money, and use the money to buy other goods and services that they need.

Trade helps people enjoy a higher standard of living. People can obtain more goods and services at lower cost through specialization and exchange. If workers concentrate on the job they are best fitted to perform, they can produce more than if they try to do several different jobs. If factories specialize, they can use mass production methods and complicated machines and tools to produce more. If regions specialize in what they produce, they can use their most plentiful resources. They can build up a supply of skilled labour and specialized capital (goods used to produce other goods).

Text III: Carrying on Trade The use of money. To make trading easier, people have developed monetary systems. Large-scale trade is simplest if money is used as a medium of exchange.

Without money, people have to exchange certain goods and services directly for other goods and services. This system of trade is called barter. Using barter, a banana grower who wanted a horse would have to find a horse owner who wanted some bananas. The two traders would then have to agree on how many bananas a horse was worth.

People accept money for things they want to sell because they know it will be accepted by others in exchange for the things they want to buy. The amount of money exchanged for a particular product is the price of that product.

The use of markets. Trade takes place in markets. In earlier days, it was usual for buyers and sellers to meet and bargain with one another in markets. For example, farmers came to town with their produce on market day. The townspeople shopped around the market and negotiated directly with the seller. This still happens in some countries, but today most trade is more complicated.

Often, producers and consumers do not deal directly with one another. Instead, goods are passed on from producers to consumers through people called middlemen.

Two kinds of middlemen are wholesalers and retailers. Wholesalers buy goods from producers and sell them mainly to other business firms. For example, a wholesaler of vegetables buys large amounts of vegetables from the growers and then sells them in bulk to grocers. This kind of trade is called wholesale trade. The grocers sell the vegetables to customers who eat them. This type of trade in which merchants sell goods mainly to the final consumer is called retail trade.

It is no longer necessary for buyers and sellers to meet face-to-face. Goods and services can be bought and sold by mail, telephone, or electronic means. Often, buyers and sellers do not even see the product being traded. They transact their business on the basis of description or sample. For example, a buyer of fabrics will usually examine a small swatch (sample) of cloth before making a purchase. Cotton, wheat, and many other farm products are classified by grade. Buyers know exactly what they will get if they specify a particular grade, such as “Number 2 hard ordinary wheat”. Agricultural goods are often traded at organized markets called commodity exchanges.