Some smaller retailers often go out of business when Walmart opens a new store.The MOST likely reason for this development is that:
A)Walmart practices unfair pricing methods that reduce consumer surplus over time.
B)consumers in those areas receive no consumer surplus from Walmart.
C)consumers in those areas receive a larger consumer surplus from shopping at Walmart than from the smaller stores.
D)smaller stores increase prices to compete.

Question

Quizplus · Accepted Answer

Walmart is often able to offer lower prices due to their large scale and ability to negotiate better deals with suppliers. This means that consumers in the area may receive a larger consumer surplus from shopping at Walmart than from the smaller stores. As a result, smaller retailers may struggle to compete and may ultimately go out of business. It is not necessarily that Walmart practices unfair pricing methods or that consumers receive no consumer surplus from Walmart, but rather that the larger store is able to offer more value to customers in terms of price and variety.

Some Smaller Retailers Often Go Out of Business When Walmart