Asked by Tsahai Martin on Sep 24, 2024
Verified
In the problem of double marginalization,the resulting price is ______than if the manufacturer were to sell directly to the consumer
A) Higher
B) Lower
C) The same
D) None of the above
Directly to Consumer
A business strategy where products are sold directly from the manufacturer or producer to the consumer without intermediary retailers.
Double Marginalization
A phenomenon in vertical supply chains where each layer of production adds its own markup, leading to higher prices for end consumers.
Resulting Price
The price that emerges in the market as a consequence of supply and demand forces.
- Identify the triggers and aftereffects of double marginalization.
Verified Answer
JH
Juliannie Hoare2 days ago
Final Answer :
A
Explanation :
In the problem of double marginalization, both the manufacturer and the retailer add their own margins to the product, leading to a higher final price for the consumer. If the manufacturer were to sell directly to the consumer, only one margin would be added, resulting in a lower price. Thus, the resulting price in double marginalization is higher than if the manufacturer were to sell directly to the consumer.
Learning Objectives
- Identify the triggers and aftereffects of double marginalization.