Assume That a Manufacturer of New Handheld Computer Makes a Sales

question 82

Essay

Assume that a manufacturer of new handheld computer makes a sales pitch to a retailer in which he is willing to sell 5,000 at $10, 7,000 for $8, 9,000 for $7. But any orders above that amount will start costing the retailer more money on a per-unit basis. The president of the retailer asks why he can't get a discount if he orders more. Can you provide an answer that would help this president understand this apparent paradox?

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Definitions:

Import Demand Curves

Graphical representations that show the quantity of goods a country is willing to import at different price levels.

Upsloping

Describes a line or curve on a graph that moves higher as it goes from left to right, indicating an increase in the variable being measured.

Production Possibilities

A concept in economics that describes the different combinations of goods and services that can be produced given fixed resources and technology.

Specialize

To focus on a particular area of study, work, or production, often improving efficiency and quality in that domain.