Managers at SMX Clothing Manufacturer have decided to increase their wholesale prices to gain more revenue from Taylor's Tog Shop,an exclusive retailer for SMX clothing.To preserve the store's margins,the owner of Taylor's Tog Shop increases retail prices on SMX clothes,which leads to reduced demand.Which term best describes this situation?

Question

Quizplus · Accepted Answer

This situation is an example of double marginalization, which occurs when both the manufacturer and retailer add a markup to the price of a product, leading to higher prices and reduced demand. SMX Clothing Manufacturer had increased their wholesale prices, and in response, Taylor's Tog Shop increased their retail prices, resulting in double marginalization.

Managers at SMX Clothing Manufacturer Have Decided to Increase Their