Distributors, Wholesalers, and Retailers

question 16

Multiple Choice

Distributors, wholesalers, and retailers:

• A) never add enough value to a buyer to make it worth doing business with them.
• B) may be able to deliver at a lower cost than the manufacturer.
• C) may provide valuable services such as prompt delivery and filling emergency orders, but they cannot offer a better price than the manufacturer.
• D) have an indefensible value proposition in the typical modern supply chain.
• E) typically carry a very limited supply in an effort to keep inventory costs low.

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Definitions:

Profit Per Unit

The difference between the selling price and the cost of producing or purchasing one unit of a good or service.

Optimal Output

The level of production that maximizes a firm's profit or minimizes its costs, determined by where marginal cost equals marginal revenue.

Price to Clear

The market price at which the quantity supplied equals the quantity demanded, ensuring all goods in the market are sold.

Profit-Maximizing Output

The optimal production stage for a business, where the highest profit is realized at the point where marginal cost equals marginal revenue.