A Commonly Used Indirect Channel Moves Product from Producer to Retailer

question 39

Multiple Choice

A commonly used indirect channel moves product from producer to retailer to consumer. Companies like Target and The Home Depot buy directly from manufacturers rather than wholesalers. This channel is used when

• A) the retail outlets are regionally located.
• B) the cost of maintaining inventory is low.
• C) there is little if any seasonal demand.
• D) the risk lies solely with the manufacturer.
• E) the retailer is large and can buy in large quantities from a producer.

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Definitions:

Negative Externalities

Unintended adverse effects on third parties not involved in an economic transaction, like pollution.

Monopolistic Competition

A market structure in which there are many competing producers in an industry, each producer sells a differentiated product, and there is free entry and exit into and from the industry in the long run.

Barriers To Entry

Factors that prevent or hinder new competitors from easily entering an industry or area of business.

Product Differentiation

The attempt by firms to convince buyers that their products are different from those of other firms in the industry. If firms can so convince buyers, they can charge a higher price.