Firms that buy inputs from suppliers have more bargaining power when: A. the costs of switching suppliers are low B. they purchase a relatively small quantity of product C. there are many other buyers in the market D. the suppliers sell highly differentiated products

Question

Business

Evelyn Frey

11 November, 07:57

Firms that buy inputs from suppliers have more bargaining power when: A. the costs of switching suppliers are low B. they purchase a relatively small quantity of product C. there are many other buyers in the market D. the suppliers sell highly differentiated products

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Answers (1)

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Kamari Juarez · Answer 1

Correct statement is A

Explanation:

Bargaining refers to the process where buyer approximately pays the price of a product which he desires by negotiating with the seller.

When there is bulk quantity purchased then bargaining power increases, also if there is a very low cost for change in supplier then the buyer will choose the supplier offering least rate.

If there are many buyers for reasonably less number of suppliers then bargaining power of buyers will be least.

If the products are different from each other sold by different suppliers then bargaining power cannot be exercised, as each product will be identical to each supplier.

Thus, the correct option is Statement A