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 smaller stores.
D) smaller stores increase prices to compete.

Question

Quizplus · Accepted Answer

Walmart is able to offer lower prices due to their economies of scale and efficient supply chain management. This means that consumers in the area are able to receive a larger consumer surplus from shopping at Walmart compared to smaller stores. As a result, smaller retailers may struggle to compete and end up going out of business.

Some Smaller Retailers Often Go Out of Business When Walmart