Respuesta :

barnuts

Effectiveness:

1. greater freedom for trading money for goods since the trader can bargain as they desire

2. an informal trader does not need to provide for any employees

3. informal traders can reposition effortlessly since they do not do business in government owned buildings 

4. No tax involved

Ineffectiveness:

1. informal traders can modify prices whenever and all the time as they need it

2. informal traders frequently lie or trick more conveniently for their business    

Evadin2019

Answer:

Effectiveness of Informal trading

  1. No fixed place or location: the trading takes place on the public streets or  designated area
  2. No government tax or administrative fees: with limited source and planning
  3. Source of family income: informal trading to creates more jobs and income  
  4. Minimal capital to start: It's easy to start even with minimal capital

Non-effectiveness of informal trading

  1. Flexible goods prices: sometimes the seller can change the market price
  2. No access to capital: because the trade happens on the street, no planning so it is hard for this kind of trading to borrow money from the bank
  3. No guarantee whatsoever for the consumer: high risk of scam trading
  4. Minimum planning or no planning

Further Explanation

Informal trading is a business activity or practices with no fixed place and no government regulation, such as paying tax and another administration fee.  In the other hand, formal trading means all business activities monitored, protected and taxed by the government and every aspect is decided in advance. Informal trading plays an important role in the economy because it creates jobs, reduces poverty and increases family income.  

 

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Keywords: informal trading, formal trading

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