Since the 1980s, Wal-Mart stores have appeared in almost every community in America. Wal-Mart buys their goods in large quantities and therefore at cheaper prices. Wal-Mart also locates its stores where land prices are low, usually outside of the community business district. Many customers shop at Wal-Mart because of low prices and free parking. Local retailers, like the neighborhood drug store, often go out of business because they lose customers. This story demonstrates that:

Question

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The story demonstrates that Wal-Mart benefits from economies of scale in retail sales, which allows them to buy goods in large quantities and sell them at cheaper prices. This puts pressure on local retailers who cannot match the prices and therefore may lose customers and go out of business.

Since the 1980s, Wal-Mart Stores Have Appeared in Almost Every