one of the argument against the presence of middlemen in the distribution chain is that they

  • A cause increase in the price of commodities
  • B are commissioned agents
  • C helps in keeping price stable
  • D grade and blend goods
  • E can be found almost everywhere

The correct answer is A. cause increase in the price of commodities

The argument that middlemen cause an increase in the price of commodities is based on the economic principle of cost addition.

Middlemen, such as wholesalers, distributors, and retailers, perform various functions in the distribution chain.

They transport, store, and market goods produced.

All these activities incur costs which are added to the price of the goods. 

Each middleman in the chain adds their own margin to cover these costs and to make a profit.

This cumulative addition of margins by multiple middlemen from the point of production to the point of sale leads to an increase in the final price of commodities. 

Previous question Next question