A Producer Has a Few Territories Where Many Big Customers

question 155

Multiple Choice

A producer has a few territories where many big customers are concentrated, but most of its target customers are spread all over the country.

• A) The company should use manufacturers' agents in the best territories and sales branches in the others, since good agents won't work in the smaller territories.
• B) The company should use sales branches everywhere, since it will cost more to use manufacturers' agents.
• C) The company will probably have to rely only on manufacturers' agents, since they will only be willing to take the widely scattered markets if they can have the good territories too.
• D) The company should use sales branches in the concentrated territories and manufacturers' agents in the others-assuming the concentrated territories are large enough to support sales branches.
• E) All of these are good alternatives.

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Definitions:

Labor

The effort by humans to produce goods or provide services in the economy.

Profit-Maximizing Quantity

The level of output at which a company can achieve the highest possible profit, where marginal revenue equals marginal cost.

Market Wage Rate

The prevailing rate of pay for specific jobs in the labor market, typically influenced by supply and demand.

Wage Rate

The amount of remuneration offered to labor for their service per unit time.