Multiple Choice
Which of the following statements is correct about the roles of economists in relation to the factors of production?
78
views
0. Basic Principles of Economics
Factors of Production
Multiple Choice
Which of the following factors can increase the bargaining power of buyers in a market?
A
High switching costs for buyers
B
Availability of substitute products
C
Limited information about products
D
Few buyers relative to sellers
Verified step by step guidance1
Step 1: Understand the concept of bargaining power of buyers. It refers to the ability of buyers to influence the price and terms of purchase in a market. Higher bargaining power means buyers can demand lower prices or better quality.
Step 2: Analyze the effect of high switching costs for buyers. High switching costs make it expensive or difficult for buyers to change suppliers, which typically decreases their bargaining power because they are 'locked in' to a seller.
Step 3: Consider the availability of substitute products. When many substitutes are available, buyers can easily switch to alternative products, increasing their bargaining power because sellers must compete more aggressively to retain customers.
Step 4: Evaluate the impact of limited information about products. Limited information usually weakens buyers' bargaining power because they cannot make fully informed decisions or negotiate effectively.
Step 5: Assess the market structure in terms of the number of buyers relative to sellers. If there are few buyers and many sellers, buyers have more bargaining power since sellers compete for their business. Conversely, many buyers and few sellers reduce buyer power.
Related Videos
Related Practice
