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CR OG 2nd Ed Q 68 - Please Explain

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CR OG 2nd Ed Q 68 - Please Explain

by ronnie1985 » Mon Apr 16, 2012 10:49 am
Please explain the logic behind the selection of option (D) as the official answer. the question is attached herewith for reference.
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Q-68
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by klmehta03 » Mon Apr 16, 2012 6:14 pm
Quesitons requires us to find a reason for why manufacturese shouldnt sell the products to retailers on discount. Option D is the only premise (as retailers buy the products in bulk and sell at regular price) that supports the reasoning.
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by pemdas » Mon Apr 16, 2012 7:09 pm
in this argument saying three agents are involved - producers, retailers and consumers

Producers advertise to consumers during promotion period and thus make retailers to decrease the price within this period. The producers would rip off their revenues and increase the profits if retailers were acting exactly as producers would like them to do. Alas, retailers are disobedient ( ;) ) and buy more stuff than needed for the consumers during the latter's consumption within promotion period. Retailers steal the off-promotion period profit from producers by charging higher sales prices and benefiting from the lower purchase costs. Option D says exactly the same when paired with the argument given.
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