A Small Chain of Supermarkets in the Western United States

question 89

Multiple Choice

A small chain of supermarkets in the western United States sells only manufacturers' brands.Which of the following is one of the arguments you could have used to dissuade the supermarket chain owner from selling only manufacturers' brands?

• A) A well-known manufacturers' brand will not enhance the chain's image.
• B) Manufacturers rarely spend money advertising the brand name to consumers.
• C) Manufacturers typically offer a lower gross margin than could be earned on private label brands.
• D) Manufacturers force the chain to carry a large in-store inventory.
• E) Relying on the manufacturer or wholesaler to deliver a national brand quickly is optimistic at best.

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Definitions:

Purely Competitive

A market structure characterized by a large number of small firms, homogenous products, and no single firm having control over the market price.

Wage Rate

The amount of money paid to a worker per unit of time, often expressed as an hourly rate or annual salary.

Profit-Maximizing

The process of adjusting production and sale strategies to achieve the highest possible profit margin.

Purely Competitive

A market structure defined by a large number of sellers offering identical or very similar products, leading to a high level of competition and prices determined by supply and demand.