Discussion
Which among the following is a correct statement about merchants and central marketplaces?
Answer: C
Correct answer: They reduce the total number of transactions and increase the total amount of exchange
Count the transactions. With \(n\) buyers and \(m\) sellers dealing directly, \(n \times m\) contacts are needed; with a merchant in the middle, only \(n + m\). The intermediary therefore cuts the number of transactions sharply, and because trading becomes so much cheaper and easier, the volume of exchange rises. That efficiency is the economic justification for wholesalers, retailers and marketplaces.
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