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Anonymous asked in 商業及金融其他 - 商業及金融 · 7 years ago

Econ!!! 20pts

1. It is found that investors tend to buy more quantities of a stock if the price

of that stock goes up. Does it violate the law of demand? Explain.

2. Why is the PPF downward sloping? Is it possible to have an upward

sloping PPF? Why or Why not?

1 Answer

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    Wholesalers and distributors work in a similar way to agents, in that they will accept small orders from retail customers. The difference in those wholesalers actually takes ownership of the goods between the producer and the retailer. They therefore supply the retailer from their stock as opposed to the producer's stock, as in the case of the agent. They will apply a profit margin to the products they sell to the retailer, usually determined by themselves rather than the producer. There are advantages and disadvantages associated with the use of intermediaries such as wholesalers or distributors. A key advantage is that the retailer can buy goods in small quantities thereby reducing the financial investment in stock. Additionally, by purchasing small quantities frequently, the retailer uses less space for storage, allowing the conversion of such much of their premises as possible to selling space. Intermediaries allow small retailers access to leading brands and increased selection of supplier. Small retailer would not have the resources to such out these suppliers, nor would they individual orders be worthwhile for the larger manufacturer to supply. The mail disadvantage is the retailer pays the wholesaler’s profit margin on top of the cost price of the products. Cutting out intermediaries allow large retailer to sell at lower price whilst generating the same profit margin for themselves. Another disadvantage is that intermediaries are not normally able to guarantee exclusivity, apart from perhaps on a very small geographic scale.

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