Suppose a Chain of Convenience Stores Reorganized Its System of Supplying

question 145

Multiple Choice

Suppose a chain of convenience stores reorganized its system of supplying its stores with food. This led to a sharp reduction in the number of trucks that the company had to use and increased the amount of fresh food on store shelves. Which of the following statements best describes the chain stores' actions?

• A) The change implemented is not an example of technological change because it did not require the use of new machinery of equipment.
• B) Technological change refers only to the introduction of new products or improvements to existing product. As such, the scenario described in the question is not technological change.
• C) The firm is able to produce more output (increase its sales) using fewer inputs (less trucks). Therefore, the chain of convenience stores has implemented a positive technological change.
• D) The scenario described is an example of management efficiency and not technological change. Essentially, the chain changes its way of operating its business.

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Definitions:

Second-Degree Price Discrimination

Practice of charging different prices per unit for different quantities of the same good or service.

Two-Part Tariff

A pricing method that involves a fixed fee plus a variable charge based on the quantity of goods or services consumed.

Peak-Load Pricing

Peak-load pricing is a pricing strategy where prices are higher during periods of high demand and lower during periods of low demand to manage demand and maximize profits.

Intertemporal Price Discrimination

A pricing strategy where businesses charge different prices for the same product or service at different times to maximize profits.