A Critic Claimed That a Business That Neither Manufactures nor Sells

question 97

Multiple Choice

A critic claimed that a business that neither manufactures nor sells directly is doomed because it is forced to compete exclusively on price.Which of the following is the BEST criticism of this argument?

• A) It ignores the fact that improvements in wholesaler efficiency are relatively easy to duplicate.
• B) It fails to demonstrate that traditional retailing businesses are also in jeopardy.
• C) It fails to recognize the possibility that wholesalers can add value to different partners in the supply chain.
• D) It does not specify how wholesalers can reduce costs most effectively.
• E) It does not account for the fact that wholesalers need to be large in order to take advantage of economies of scale.

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Definitions:

Understated

Describes an amount reported lower than it actually is, either in financial statements or any other reporting context.

Overstated

Refers to financial statements or figures being reported as more than their actual or true value.

Cost-to-retail Ratio

A method used to estimate the value of ending inventory and cost of goods sold by comparing the cost of goods available for sale to the retail price of the goods.