Mark Believes He Has Found a Sure-Fire Way to Save

question 46

Multiple Choice

Mark believes he has found a sure-fire way to save money.He advises his friends,"Buy directly from the manufacturer.Any time intermediaries get involved,you'll pay a higher price.After all,every intermediary involved in the marketing process must charge enough to earn a profit." Mark's advice:

• A)is never true.Markets that make use of intermediaries can always provide goods at lower cost than those that rely on direct distribution.
• B)is not valid in many cases.Intermediaries do add costs to products,but they also create values by performing marketing functions efficiently.In many cases the values they create more than offset the costs.
• C)is impractical,because in most markets the distribution process is so complex that it is impossible to determine who the actual producer really is.
• D)is entirely correct.Intermediaries must charge a high enough price for the activities they perform to earn a profit,so using intermediaries must result in a higher price.

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Definitions:

Compromise

An agreement or settlement of a dispute that is reached by making concessions.

Electoral College

A body established by the Constitution of the United States to select the President and Vice President, where electors are allocated to each state.

Democracy

A form of government in which power is vested in the people, who rule either directly or through freely elected representatives.

Great Compromise

The agreement made during the Constitutional Convention of 1787 that created a two-house legislature, balancing the representation of small and large states in Congress.