The fact that supermarkets,a land-intensive form of organization,have become the dominant form of grocery store in the United States suggests that:
A)there is little or no potential for input substitution in the grocery store business.
B)transportation costs are insignificant in the grocery store business.
C)land is a relatively inexpensive input in the grocery store business.
D)labor is relatively inexpensive in the grocery store business.

Question

Quizplus · Accepted Answer

The fact that supermarkets, which require a large amount of land, have become dominant in the grocery store industry suggests that land is a relatively inexpensive input. If land were expensive, we would expect to see alternative store formats that use less land and therefore incur lower costs. This is supported by the fact that smaller-scale grocery stores, such as convenience stores and farmer's markets, continue to exist, but are not dominant in the industry. Therefore, choice (C) is the best option.

The Fact That Supermarkets,a Land-Intensive Form of Organization,have Become the Dominant