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Part III. 1. Demand. Effective demand is the quantity of a commodity that will be bought at a certain price
1. Demand. Effective demand is the quantity of a commodity that will be bought at a certain price. As a general rule, the lower the price of a commodity, the greater will be the quantity demanded.
2. Credit. Trade credit is monetary assistance that is given by the seller to the buyer. The buyer is allowed time (30 days, 60 days or more) to pay for the goods received. The receiver of the credit is being provided capital for the running of his business by the seller. The latter temporarily forgoes the use of the capital he has allowed the buyer to use. Retailers would have difficulty managing their business without credit from their wholesalers.
3. Middlemen. Wholesalers, merchants, brokers and agents can be described as middlemen. They assist in the distribution of goods between the place of their production and the retailer.
4. Latter refers to the second while former is the first of two things or people mentioned.
Jack and Jill went up the hill. The former fell down and the
latter came tumbling after.
When reference is made to the last of three or more people or things, the
description the last-named is appropriate in place of latter.
5. Means signifying money, property or other wealth takes a plural verb.
A man of your means can afford this holiday.
They are generous as they have private means.
Don’t live beyond your means.
6. Overdraft. This is an arrangement made by a customer with his bank. The former is given permission for a specified period of time to issue cheques for an agreed amount in excess of his balance. This is one way to borrow from the bank. Interest is charged only for the amount drawn in excess of the customer’s own balance.
I. Answer the following questions.
1. Who is the link between the producer and the retailer?
2. Why is the wholesaler able to buy goods cheaply?
3. How does a wholesaler help his retailers?
4. How does a wholesaler ensure that his goods are sold quickly?
5. What assistance is a wholesaler likely to get from a bank?
II. Give the meanings of the following words.
1. Grade. 2. Prompt. 3. Discount. 4. To concentrate. 5. Know-how.
III. Give the word that fits the description.
1. One who sells goods in large quantities to shopkeepers for resale to the public.
2. Goods available for sale.
3. A person who buys and sells for others.
4. A piece of paper, cloth or other material used for describing what something is.
5. Process of gaining knowledge.
6. High degree of goodness.
Conversation about wholesalers
Mrs Smith. What is a wholesaler, dear?
Mr Smith. He is one who buys goods in bulk and sells them to retailers in
Mrs Smith. Whom does he buy his goods from?
Mr Smith. He buys them from the manufacturer.
Mrs Smith. How does he benefit?
Mr Smith. He buys goods cheaply and sells them at a profit.
Mrs Smith. Why is he able to buy goods cheaply?
Mr Smith. Because he buys them in large quantities.
Mrs Smith. Why should retailers buy from him?
Mr Smith. Partly because they find his prices low.
Mrs Smith. Does the wholesaler assist the retailer in any other way?
Mr Smith. Yes, he often sells him goods on credit.
Mrs Smith. Do wholesalers operate in other ways?
Mr Smith. Yes, there are four types of wholesalers.
Mrs Smith. What are the four types?
Mr Smith. One type merely buys and stores the goods for sale.
Mrs Smith. What about the others?
Mr Smith. Another type buys the goods and processes them before sale.
Mrs Smith. How does the third type operate?
Mr Smith. He organises the distribution of the goods but doesn’t sell them
Mrs Smith. What does the fourth type do?
Mr Smith. This group consists of middlemen who serve wholesalers for a
Mrs Smith. In what way do middlemen serve the wholesalers?
Mr Smith. They buy or sell goods on behalf of other wholesalers.
Mrs Smith. Who assists the wholesalers?
Mr Smith. The wholesaler is often assisted financially by his bank.
Mrs Smith. How does the bank help him?
Mr Smith. It will offer him overdraft facilities and even store his goods.
Mrs Smith. How does the bank profit by offering these services?
Mr Smith. It will collect interest on the money borrowed by the wholesaler.
It will levy storage charges for storing goods.