NCERT Solutions for Class 11 Business Studies Chapter 1: Business, Trade and Commerce (NCERT 2026–27)
These Class 11 Business Studies Chapter 1 solutions cover Business, Trade and Commerce, the opening chapter of the NCERT Business Studies textbook (Part I, Foundations of Business) for the 2026–27 session. The chapter traces the history of business and indigenous banking in the Indian subcontinent, defines business as an economic activity, distinguishes it from profession and employment, classifies business activities into industry and commerce, and explains business risk, profit and the factors to consider while starting a business. Below you get exam-ready, step-by-step answers to all NCERT exercise questions (Short and Long Answer Questions and the case study), plus key terms, extra practice, MCQs, Assertion–Reason questions and FAQs.
Class: 11Subject: Business StudiesBook: Business Studies (Part I)Chapter: 1Chapter Name: Business, Trade and CommerceSession: 2026–27
Chapter 1, Business, Trade and Commerce, begins by tracing how trade flourished in ancient India along the Silk Route and maritime routes, supported by an indigenous banking system that used instruments such as Hundi and Chitties. Major trade centres like Pataliputra, Taxila, Surat and Kaveripatta made the subcontinent so prosperous that travellers called it ‘Swaran Bhoomi’ and ‘Swaran Dweep’. The chapter then defines business as an economic activity involving the production and sale of goods and services with the motive of earning profit by satisfying human needs, and lists its characteristics. It compares business, profession and employment, classifies business activities into industry (primary, secondary, tertiary) and commerce (trade and auxiliaries to trade), and examines the role of profit and the wider objectives of business. Finally it explains business risk — its nature, types and causes — and the basic factors an entrepreneur must consider while starting a business.
Key Terms & Concepts
Business: an economic activity involving the production and sale of goods and services, undertaken regularly with the motive of earning profit by satisfying human needs in society.
Economic vs non-economic activity: economic activities are performed to earn a livelihood (a worker in a factory, a doctor in a clinic); non-economic activities are done out of love, sympathy, sentiment or patriotism (a housewife cooking for her family).
Profession & employment: a profession requires expertise and a certificate of practice and earns a professional fee (law, medicine, chartered accountancy); employment means working for others under a service contract for a salary or wages.
Industry: economic activities connected with the conversion of resources into useful goods — divided into primary (extractive and genetic), secondary (manufacturing and construction) and tertiary (service) industries.
Commerce: all activities necessary for facilitating the exchange of goods and services; it includes trade (buying and selling) and auxiliaries to trade (transport, banking, insurance, warehousing, advertising).
Auxiliaries / aids to trade: services that support trade by removing the hindrances of place (transport), time (warehousing), risk (insurance), finance (banking) and information (advertising).
Hundi: an indigenous credit instrument (the word literally means ‘to collect’) written in the vernacular and used to transfer money safely between parties for trade.
Business risk: the possibility of inadequate profits or even losses due to uncertainties or unexpected events — classified as speculative (chance of gain or loss) and pure (chance of loss only).
Profit: the excess of revenue over cost; the reward for risk-taking (‘no risk, no gain’) and an essential, though not the only, objective of business.
Entrepreneurship: the process of setting up one’s own business by identifying a need, mobilising resources and organising production to deliver value to customers and returns to investors.
NCERT Exercise Solutions
All questions below are reproduced verbatim from the NCERT textbook’s end-of-chapter Exercises. Answers are original, written in exam-ready style. (The open-ended ‘Activities’/project tasks are fieldwork and are not reproduced here; the answerable case-study questions are solved below.)
Short Answer Questions
1. Why is business considered as economic activity?
ANSWERBusiness is considered an economic activity because it is undertaken with the objective of earning money or a livelihood, and not out of love, affection, sympathy or any other emotion. It involves the production, purchase and sale of goods and services on a regular basis with a view to earning profit by satisfying human needs.Since people engage in business regularly to earn income that supports their lives — just as a worker, doctor or teacher earns a livelihood through their work — business clearly qualifies as an economic activity rather than a non-economic one.
2. How does business contribute to the economic development of a country?
ANSWERBusiness is regarded as the backbone of the economy. It contributes to economic development by producing and supplying the goods and services people need, generating income and surplus that can be reinvested, and creating employment as well as opportunities for profession and self-employment.Business activity promotes the growth of aids to trade such as transport, banking, finance and communication, encourages trade with foreign countries (improving the balance of trade), and channels money into further investment. Government initiatives like ‘Make in India’, ‘Skill India’ and ‘Digital India’ show how business activity drives exports, skill enhancement and overall growth and development of the nation.
3. State the different types of economic activities.
ANSWEREconomic activities are those by which people earn their livelihood. They are divided into three categories:(i) Business — an economic activity involving the production and sale of goods and services for profit (e.g. a shop or factory).(ii) Profession — rendering personalised, expert services for a fee, requiring qualification and a certificate of practice (e.g. law, medicine, chartered accountancy).(iii) Employment — working for an employer under a service contract for a salary or wages (e.g. jobs in banks, insurance companies or government departments).
4. State the meaning of business.
ANSWERThe word ‘business’ is derived from ‘busy’, so business literally means being busy. In a specific sense, business is an occupation in which people regularly engage in activities related to the purchase, production and/or sale of goods and services with a view to earning profit. In short, it is an economic activity involving the production and sale of goods and services undertaken to earn profit by satisfying human needs in society.
5. How would you classify business activities?
ANSWERBusiness activities are broadly classified into two categories:(i) Industry — activities concerned with the production or processing of goods and materials, i.e. the conversion of resources into useful goods (primary, secondary and tertiary industries).(ii) Commerce — all activities necessary for facilitating the exchange of goods and services; it includes trade (buying and selling) and auxiliaries to trade such as transport, banking, insurance, warehousing and advertising.
6. What are the various types of industries?
ANSWERIndustries are divided into three broad categories:(i) Primary industries — concerned with the extraction and production of natural resources and the development of living organisms. They include extractive industries (farming, mining, lumbering, hunting, fishing) and genetic industries (breeding of plants and animals, e.g. seed and nursery companies, poultry farms).(ii) Secondary industries — use materials already extracted at the primary stage. They include manufacturing industries (analytical, synthetical, processing and assembling) and construction industries (buildings, dams, bridges, roads).(iii) Tertiary industries — provide support services to primary and secondary industries and to trade, such as transport, banking, insurance, warehousing, communication, packaging and advertising.
7. Explain any two business activities which are auxiliaries to trade.
ANSWERAuxiliaries to trade are services that support trade by removing the hindrances in the exchange of goods. Two important ones are:(i) Transport and communication: goods are usually produced in particular locations but consumed elsewhere, so transport (road, rail, shipping) removes the hindrance of place by moving raw materials to factories and finished goods to markets. Communication facilities such as postal and telephone services let producers, traders and consumers exchange information.(ii) Banking and finance: business cannot be carried on without funds for buying assets, raw materials and meeting expenses. Banks remove the hindrance of finance by providing overdrafts, cash credit, loans and advances, collecting cheques, remitting funds and helping in foreign trade and in raising capital.
8. What is the role of profit in business?
ANSWERProfit is the excess of revenue over cost and is a leading (though not the only) objective of business. No business can survive for long without profit. Its role can be seen in several ways: (i) it is a source of income for business persons; (ii) it provides finance for meeting expansion requirements; (iii) it indicates the efficient working of the business; (iv) it reflects society’s approval of the utility of the business; and (v) it builds the reputation of the enterprise. Profit is also the reward for risk-taking, so it motivates entrepreneurs to invest and innovate.
9. What is meant by business risk?
ANSWERBusiness risk refers to the possibility of inadequate profits or even losses due to uncertainties or unexpected events. For example, demand for a product may fall because of a change in consumer tastes or increased competition, or the price of raw materials may rise, increasing the cost of production and reducing profit. Risk is the uncertainty associated with exposure to loss; it is an essential part of every business and can be minimised but never completely eliminated.
10. State the causes of risks involved in business?
ANSWERBusiness risks arise due to a variety of causes:(i) Natural causes: calamities over which humans have little control — floods, earthquakes, lightning, heavy rains and famine — that damage property and income.(ii) Human causes: unexpected events such as dishonesty, carelessness or negligence of employees, stoppage of work due to power failure, strikes, riots and management inefficiency.(iii) Economic causes: uncertainties relating to demand, competition, price, collection of dues, change of technology, and financial problems like a rise in interest rates or higher taxes.(iv) Other causes: unforeseen events such as political disturbances, mechanical failures (e.g. the bursting of a boiler) and fluctuations in exchange rates.
Long Answer Questions
1. Discuss the development of indigenous banking system in Indian subcontinent.
ANSWERIn ancient India, the surplus income generated from internal and foreign trade was channelled into investment, which led to the dominant growth of an indigenous banking system to finance trading activities. As long-distance travel by land and sea carried the risk of theft and robbery, merchants developed an intangible form of money transfer.The most important instruments were the Hundi and the Chitties (used in the southern region). A Hundi (the word means ‘to collect’) was written in the vernacular language and facilitated the safe transfer of money between parties. As an instrument of exchange it involved a contract that (i) warranted the unconditional payment of money and (ii) was capable of transfer through valid negotiation. Different types of Hundis were practised by merchant communities — for example Dhani-jog, Sah-jog, Firman-jog, Dekhan-har (Darshani, payable on sight) and Jokhmi and Muddati varieties (payable after a fixed term).The emergence of credit transactions, loans and advances enhanced commercial operations. The favourable balance of trade gave the banking system additional capital, with which manufacturers, traders and merchants funded expansion. Over time, commercial and industrial banks evolved to finance trade and industry, and agricultural banks were set up to provide short- and long-term loans to farmers. Thus the indigenous banking system grew alongside trade and became central to the prosperity of the subcontinent.
2. Define business. Describe its important characteristics.
ANSWERDefinition: Business is an economic activity involving the production and sale of goods and services, undertaken regularly with the motive of earning profit by satisfying human needs in society.Important characteristics:(i) An economic activity: business is carried on to earn money or a livelihood, not out of emotion; it may be on a small individual level or a large organised level.(ii) Production or procurement of goods and services: every enterprise either manufactures the goods it deals in or procures them from producers for sale to consumers.(iii) Sale or exchange of goods and services: there must be transfer or exchange of goods and services for value; goods produced only for personal consumption do not amount to business.(iv) Dealings on a regular basis: business involves dealing in goods or services regularly; a single, isolated transaction is not business.(v) Profit earning: the main purpose is to earn profit; no business can survive long without it.(vi) Uncertainty of return: there is no certainty about the amount of profit that will be earned in a given period.(vii) Element of risk: business always carries the risk of loss due to changes in taste, methods, competition, fire, theft, accidents or natural calamities; risk cannot be entirely avoided.
3. Compare business with profession and employment.
ANSWERBusiness, profession and employment are the three categories of economic activity. They differ as shown below:
Basis
Business
Profession
Employment
Mode of establishment
Entrepreneur’s decision and legal formalities, if necessary
Membership of a professional body and certificate of practice
Appointment letter and service agreement
Nature of work
Provision of goods and services to the public
Rendering of personalised, expert services
Performing work as per service contract or rules of service
Qualification
No minimum qualification necessary
Qualifications, expertise and training prescribed by the professional body
Qualification and training prescribed by the employer
Reward / return
Profit earned
Professional fee
Salary or wages
Capital investment
Required as per size and nature of business
Limited capital needed for establishment
No capital required
Risk
Profits uncertain and irregular; risk is present
Fee generally regular and certain; some risk
Fixed and regular pay; no or little risk
Transfer of interest
Possible with some formalities
Not possible
Not possible
Code of conduct
No code of conduct prescribed
Professional code of conduct to be followed
Norms of behaviour laid down by the employer
Example
Shop, factory
Legal, medical profession, chartered accountancy
Jobs in banks, insurance companies, government departments
4. Define Industry. Explain various types of industries giving examples.
ANSWERDefinition: Industry refers to economic activities connected with the conversion of resources into useful goods, generally involving mechanical appliances and technical skills. The term is also used for groups of firms producing similar goods (e.g. cotton textile industry). Industries are of three types:(i) Primary industries: concerned with the extraction and production of natural resources and the development of living organisms. They include extractive industries (farming, mining, lumbering, hunting, fishing) which draw products from natural sources, and genetic industries (seed and nursery companies, cattle breeding farms, poultry farms, fish hatcheries) which breed plants and animals for further reproduction.(ii) Secondary industries: use materials already extracted at the primary stage. Manufacturing industries process raw materials into finished goods and are of four kinds — analytical (oil refinery), synthetical (cement), processing (sugar, paper) and assembling (television, car, computer). Construction industries build buildings, dams, bridges, roads, tunnels and canals.(iii) Tertiary industries: provide support services to primary and secondary industries and to trade. As auxiliaries to trade they include transport, banking, insurance, warehousing, communication, packaging and advertising.
5. Describe the activities relating to commerce.
ANSWERCommerce includes all activities necessary for facilitating the exchange of goods and services. It removes the hindrances of persons, place, time, risk, finance and information in the process of exchange. Commerce consists of two types of activities:(i) Trade: the buying and selling (sale, transfer or exchange) of goods, whether physical or virtual. Trade removes the hindrance of persons by making goods available to consumers from the producers who own them.(ii) Auxiliaries to trade: services that assist trade. Transport removes the hindrance of place; warehousing removes the hindrance of time and creates time utility; insurance covers the risk of loss or damage; banking and finance provide the necessary capital; and advertising and public relations remove the hindrance of information by informing customers about goods and services.Thus commerce provides the necessary link between producers and consumers and ensures a free flow of goods and services in the economy.
6. Explain any five objectives of business.
ANSWERBecause a business must balance several needs, it requires multiple objectives. Five important ones are:(i) Market standing: maintaining goodwill and reputation so that the business holds a strong position against its competitors by offering competitive products at reasonable prices and serving customers to their satisfaction.(ii) Innovation: introducing new ideas, products, methods or improvements; no enterprise can flourish in a competitive world without innovation.(iii) Productivity: ascertained by comparing the value of output with the value of inputs; greater productivity through the best use of resources ensures survival and progress.(iv) Earning profits: earning a reasonable profit on the capital employed, which is essential for the survival and growth of the business.(v) Social responsibility: contributing resources to solve social problems and working in a socially desirable manner towards customers, employees, investors and society at large.
7. Explain the concept of business risk and its causes.
ANSWERConcept: Business risk refers to the possibility of inadequate profits or even losses due to uncertainties or unexpected events — for example a fall in demand from changing tastes or competition, or a rise in raw-material prices that increases cost of production. Enterprises face two types of risk: speculative risk (involving the possibility of both gain and loss, arising from changes in market conditions, prices or fashion) and pure risk (involving only the possibility of loss, such as fire, theft or strike). Risk is an essential part of every business and can be minimised but not eliminated.Causes of business risk: (i) Natural causes — floods, earthquakes, lightning, heavy rains, famine; (ii) Human causes — dishonesty, carelessness or negligence of employees, power failure, strikes, riots, management inefficiency; (iii) Economic causes — uncertainties of demand, competition, price, collection of dues, technology, and financial problems like higher interest rates or taxes; and (iv) Other causes — political disturbances, mechanical failures and exchange-rate fluctuations.
8. What factors are to be considered while starting a business? Explain.
ANSWERSetting up one’s own business (entrepreneurship) requires careful consideration of several basic factors:(i) Selection of type of business: deciding the nature and type of business, choosing a branch of industry or commerce with good profit potential, matching customer requirements and the entrepreneur’s technical knowledge and interest.(ii) Size of business: deciding the scale of operation — whether MSME or large-scale, manufacturing or tertiary — based on expected demand and availability of capital.(iii) Location of business enterprise: choosing a place keeping in mind the availability of raw materials, labour, power supply and services like banking, transport, communication and warehousing, since a wrong choice raises costs.(iv) Financing the proposition: arranging the capital needed for fixed assets, current assets and day-to-day expenses, both for starting and for continuing the business.(v) Physical facilities: arranging machines, equipment, building and supportive services according to the nature and size of business and the process of production.(vi) Competent and committed workforce: identifying and arranging skilled and unskilled workers and managerial staff, and planning for their training and motivation.(vii) Tax planning: considering in advance the tax liability under various tax laws and its impact on business decisions.(viii) Launching the enterprise: after deciding the above, actually launching the business by mobilising resources, fulfilling legal formalities, beginning production and initiating sales promotion, with proper financial planning.
Case Study – Answer the Following Questions
Based on the textbook case of Dipak Bharali of Sualkuchi (Assam), who invented the eco-friendly silk-weaving device ‘Chaneki’.
1. Which objective of business is discussed in the above case?
ANSWERThe objective discussed is innovation (along with the closely linked objective of productivity). Dipak Bharali introduced a new method by inventing the device ‘Chaneki’ to automate weft insertion (buta weaving), which is an introduction of a new idea/method in the way work is done.
2. How has the identified objective of business contributed to the growth of business unit? Give reasons.
ANSWERInnovation gave the business a competitive edge and allowed it to scale up. The ‘Chaneki’ device made the weaving machine run about 40 times faster than manual weft insertion, so productivity and quality both increased. This raised the output of weavers, pleased both owners and workers, and used recyclable, eco-friendly materials — reducing costs and waste. By solving a real production bottleneck, the innovation expanded the business beyond simply adding more looms.
3. Why does business require multiple objectives for its sustainable growth?
ANSWERA business has to balance a number of needs and goals, so it cannot follow only one objective (such as profit) and expect to achieve excellence. Objectives are needed in every area that affects survival and prosperity — market standing, innovation, productivity, physical and financial resources, earning profits and social responsibility. Multiple objectives let the business analyse its own performance, improve in future, satisfy customers, employees, investors and society, and thus grow in a balanced, sustainable way.
Extra Practice Questions
Short Answer Type Questions
Q1. Differentiate between economic and non-economic activities.
ANSWEREconomic activities are performed to earn a livelihood or income, such as a worker in a factory or a doctor in a clinic. Non-economic activities are performed out of love, sympathy, sentiment or patriotism, such as a housewife cooking for her family or a boy helping an old man cross the road. The key difference is the motive — income versus emotion.
Q2. What is a Hundi? Why was it used?
ANSWERA Hundi (literally ‘to collect’) was an indigenous credit instrument written in the vernacular language and used to transfer money safely between parties for trade. It was needed because travelling long distances by land or sea carried the risk of theft and robbery, so traders preferred this intangible, negotiable form of money transfer.
Q3. Distinguish between speculative and pure risk.
ANSWERSpeculative risk involves both the possibility of gain and of loss, arising from changes in market conditions such as demand, supply, prices or fashion. Pure risk involves only the possibility of loss with no chance of gain — for example fire, theft or strike, whose occurrence causes loss and non-occurrence merely means no loss.
Q4. Name the four types of manufacturing industries with one example each.
ANSWER(i) Analytical — oil refinery; (ii) Synthetical — cement; (iii) Processing — sugar or paper; (iv) Assembling — television, car or computer.
Q5. Why was India called ‘Swaran Bhoomi’ and ‘Swaran Dweep’?
ANSWERBecause of the great prosperity created by flourishing trade and merchant communities, many travellers — such as Megasthenes, Faxian, Xuanzang, Al Beruni and Ibn Batuta — referred to the Indian subcontinent as ‘Swaran Bhoomi’ (land of gold) and ‘Swaran Dweep’ (island of gold) in their writings, repeatedly noting the prosperity of the country.
Long Answer Type Questions
Q1. Explain how commerce removes the various hindrances in the exchange of goods and services.
ANSWERCommerce removes the obstacles that arise between producers and consumers. The hindrance of persons is removed by trade, which transfers goods from producers to consumers. The hindrance of place is removed by transport, which moves goods from the place of production to the markets. The hindrance of time is removed by storage and warehousing, which hold stocks until needed and create time utility. The hindrance of risk of loss or damage is removed by insurance. The hindrance of finance is removed by banking and financing institutions, which supply the capital required. The hindrance of information is removed by advertising, which informs consumers about available goods and services. Thus commerce ensures a free, continuous flow of goods and services.
Q2. Trace the role of business in the development of the Indian economy from ancient times to the present.
ANSWERFrom ancient times, trade through the Silk Route and maritime routes made India one of the largest economies of the ancient and medieval world, generating surplus income that funded farming, crafts, family karkhanas and an indigenous banking system. Great trade centres like Pataliputra, Taxila, Surat and Kaveripatta and a favourable balance of trade brought it the names ‘Swaran Bhoomi’ and ‘Swaran Dweep’. Under the British Empire, the East India Company turned India from an exporter of processed goods into an exporter of raw materials and a buyer of manufactured goods, damaging the economy. After independence, India followed planned development with public investment in basic and key industries, but weak capital formation, deficits and a precarious balance of payments led to economic liberalisation in 1991, which adopted stabilisation, restructuring and globalisation. Today India is among the fastest-growing economies and a preferred FDI destination, with initiatives like ‘Make in India’, ‘Skill India’ and ‘Digital India’ boosting trade and growth.
Q3. ‘Profit is the reward for risk-taking, but it cannot be the only objective of business.’ Discuss.
ANSWERProfit is the excess of revenue over cost and is the reward for risk-taking — ‘no risk, no gain’ means that the greater the risk an entrepreneur accepts, the higher the chance of profit. Profit is essential because it is a source of income and finance for expansion, indicates efficiency, reflects society’s approval and builds reputation. However, too much emphasis on profit alone can be dangerous: obsessed managers may neglect customers, employees, investors and society, and even exploit them for immediate gain, inviting opposition and eventual loss of business. Since a business is part of society, it must also pursue objectives like market standing, innovation, productivity, proper use of resources and social responsibility. Hence profit is a leading objective, but not the only one needed for sustainable survival and prosperity.
MCQs & Assertion–Reason
1. The word ‘business’ is derived from the word:
(a) busy (b) bus (c) buyer (d) bargain
2. Which of the following is NOT a characteristic of business?
(a) Profit earning (b) Dealings on a regular basis (c) Performed out of love and sympathy (d) Element of risk
3. An indigenous instrument used to transfer money in ancient India was the:
(a) cheque (b) Hundi (c) demand draft (d) bond
4. Mining and fishing are examples of which type of industry?
(a) Genetic (b) Manufacturing (c) Extractive (d) Construction
5. A cement plant that combines ingredients into a new product is an example of which manufacturing industry?
For each Assertion–Reason question, choose: (A) Both true and the Reason correctly explains the Assertion; (B) Both true but the Reason is not the correct explanation; (C) Assertion true, Reason false; (D) Assertion false, Reason true.
A-R 1. Assertion: Cooking food at home for one’s family is not a business activity.
Reason: Business requires the sale or exchange of goods and services for value, not personal consumption.
A-R 2. Assertion: A single transaction of sale at a profit makes a person a businessman.
Reason: Business involves dealings in goods or services on a regular basis.
A-R 3. Assertion: Risk can be completely eliminated from business.
Reason: Every business faces uncertainties about future events whose outcomes are not known.
A-R 4. Assertion: Profit is the reward for risk-taking.
Reason: ‘No risk, no gain’ means the greater the risk involved, the higher the chance of profit.
A-R 5. Assertion: Auxiliaries to trade support not only trade but also industry and the entire business activity.
Reason: Auxiliaries such as transport, banking, insurance, warehousing and advertising help remove the hindrances of place, finance, risk, time and information.
Answer key: 1-(A), 2-(D), 3-(D), 4-(A), 5-(A).
Exam Tips & Common Mistakes
How to score full marks in this chapter
Memorise the seven characteristics of business and the nine-point comparison of business, profession and employment — comparison questions are best answered in a clear table. Keep the classification chart (industry → primary/secondary/tertiary, with sub-types and examples; commerce → trade and auxiliaries) ready, as it answers several questions. For risk questions, separate the nature, types (speculative vs pure) and causes (natural, human, economic, other). Use the textbook’s own examples — Hundi and Chitties, the Silk Route, oil refinery/cement/sugar/assembling, ‘Make in India’, the 1991 liberalisation — to show depth. State the marks-appropriate length: short answers in 3–4 sentences, long answers with headings and examples.
Common mistakes to avoid
Confusing business (regular, profit-motive) with isolated transactions — one sale is not business.
Mixing up profession (fee, certificate of practice) with employment (salary, service contract).
Treating industry and commerce as the same — industry produces goods, commerce facilitates their exchange.
Forgetting that tertiary industries (services) double as auxiliaries to trade.
Writing that risk can be ‘eliminated’ — it can only be minimised.
Saying profit is the only objective of business — it is a leading objective among several.
Confusing speculative risk (gain or loss) with pure risk (loss only).
Frequently Asked Questions
What is Chapter 1 of Class 11 Business Studies about?
Chapter 1, Business, Trade and Commerce, traces the history of business and indigenous banking in India, defines business as an economic activity, compares business with profession and employment, classifies business activities into industry and commerce, and explains the objectives of business, business risk and the factors to consider while starting a business.
What is the difference between trade and commerce?
Trade is simply the buying and selling (sale, transfer or exchange) of goods. Commerce is wider: it includes trade plus the auxiliaries to trade — transport, banking, insurance, warehousing and advertising — that remove the hindrances of place, finance, risk, time and information in the exchange of goods and services.
What are the two types of business risk?
Business risks are of two types: speculative risk, which involves both the possibility of gain and of loss (arising from changes in market conditions, prices or fashion), and pure risk, which involves only the possibility of loss (such as fire, theft or strike).
