Question

Mr. Sharma, a farmer, grows wheat and sells it to a local flour mill. The flour mill processes the wheat into flour and sells it to a grocery store. The store sells the flour to customers in the neighbourhood.

Discuss how trade creates utilities in this example.

Answer 1

Trade adds value to goods in the following ways:

1. Form utility: The flour mill converts raw wheat into flour, making it more useful for consumption.
2. Place utility: The grocery store brings the flour closer to consumers in the neighbourhood.
3. Time utility: Warehousing and stocking ensure flour is available when consumers need it.
4. Possession utility: By selling flour to consumers in exchange for money, trade facilitates ownership and consumption.