Why Does It Make Sense to Sell High-Priced and Exclusive

question 31

Multiple Choice

Why does it make sense to sell high-priced and exclusive merchandise such as diamonds,rare Cognac,or Waterford Crystal,through warehouse club channels?

• A) The warehouse clubs attract thousands of customers each year.
• B) Companies can sell last year's style/model easily at the warehouse club.
• C) Two-thirds of the shoppers at a warehouse club are business owners, many of whom are successful and affluent.
• D) These types of manufacturers are changing their distribution channels to include mass merchandisers, discount stores, and warehouse clubs in order to reach more potential buyers.
• E) It makes no sense for these manufacturers to sell products at a warehouse club and diminish the image of their brand or product name.

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Definitions:

Consumer Surplus

The variance between the amount consumers are ready to pay for a good or service compared to the actual price they pay.

International Trade

the exchange of goods and services across international borders or territories.

Autarky

An economic system where a region or country is self-sufficient and does not engage in international trade.

Consumer Surplus

The discrepancy between what buyers are willing to offer for an item or service and the price they actually pay.