Which of the Following Statements About the Choice of Distribution

question 6

Multiple Choice

Which of the following statements about the choice of distribution strategy is true?

• A) The longer a channel, the greater the aggregate markup, and the higher the price that consumers are charged for the final product.
• B) If price is an important competitive weapon and if the firm does not want to see its profit margins squeezed, other things being equal, the firm would prefer to use a longer channel.
• C) The shorter a channel, the greater the aggregate markup, and the higher the price that consumers are charged for the final product.
• D) An international business must use shorter channels in countries where the retail sector is fragmented and longer channels in countries where the retail sector is concentrated.

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Definitions:

Firm's Earnings

The net profit a company achieves in a given period, calculated as revenues minus costs and expenses before taxation.

Information Content Effect

A market phenomenon where stock prices adjust in response to the news contained in a company announcement, suggesting the news has value for investors’ decisions.

Dividend Payout

The segment of a company's income that is given to shareholders in dividends.

Residual Dividend

A policy whereby a company pays dividends to its shareholders from the residual or leftover equity once all operational and capital expenditure needs are met.