Which of the following functions of the wholesaler helps to stabilize prices

Assessment: JAMB UTME - Commerce - 2025 Subject: Commerce

Question 1 Report

Which of the following functions of the wholesaler helps to stabilize prices

 

Answer Details

A wholesaler buys goods in bulk from producers and stores them until retailers need them. This storage function, warehousing, lets the wholesaler buy large quantities when supply is plentiful and prices are low, and release the goods gradually to retailers over time, even during periods when the goods are scarce.

By holding stock in this way, the wholesaler evens out the gap between times of oversupply and times of shortage, which stops prices from swinging sharply up during scarce periods or crashing during gluts. This smoothing effect is exactly what stabilizing prices means.

Provision of credit helps retailers manage cash flow, advice to retailers passes on product knowledge, and financing supports retailers' purchases, but none of these functions directly controls how much of a good is available in the market at a given time, which is what actually keeps prices stable.

When a commerce question links a wholesaler's function to price stability, think first of warehousing, because storage is the mechanism that regulates supply over time.

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