Functions of the Wholesaler

len Alfred Ajibola - Wed, 12th February, 2020 @ 15:56: PM

Topics in Economics

Factors affecting population in economics Advantages of Inflation Disadvantages of Inflation Concept of Inflation in Economics Scheme of work for Economics, SS1, First Term Scheme of work for Economics, SS1, Second Term Scheme of Work for Economics, SS1, Third Term Functions of the Wholesaler Advantages and Disadvantages of the Wholesaler Wholesale Market: Who is a Wholesaler? Characteristics of the Wholesaler Retail Market: Who is a Retailer and Examples of Retailers Market: Types of Market Market - What is a Market in Economics? Elasticity of Supply: Types of Supply Elasticity Supply Elasticity: Elasticity of Supply explained Demand Schedule - Types of Demand Schedule Demand: What is Demand? Law of Demand Concept and Types of Cost Supply, Supply Curve and Law of Supply

Academic Questions in Economics

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A _____ market provides a platform whereby job seekers link up with employers in an attempt to be hired.

  • A. Wholesale market

  • B. Bond market

  • C. Physical market

  • D. Virtual market

  • E. Factor Market

  • F. Labor Market

Which of the following is not a type of market based on commodities bought and sold?

  • A. Wholesale market

  • B. Bond market

  • C. Physical market

  • D. Virtual market

  • E. Factor Market

  • F. Labor Market

According to economists, a market refers to a/an _____ comprising of various buyers and sellers carrying out business transactions.

  • A. Place

  • B. Location

  • C. Entire area

  • D. Online platform

  • E. Avenue

  • F. Axis

Primary market is a type of market based on _____.

  • A. Market structure

  • B. Demand

  • C. Supply

  • D. Commodities bought and sold

  • E. Channel of distribution

  • F. Internet and world wide web

Pice elasticity of supply - Len Academy

The above diagram on the quantity supplied against a change in price is _____.

  • A. Elastic

  • B. Inelastic

  • C. Perfectly Elastic

  • D. Perfectly Inelastic

  • E. Zero Elastic

  • F. Unitary Elastic

The rate at which an increase in the price of a product translate into the product's increased production and availability in the market is termed _____.

  • A. Demand

  • B. Supply

  • C. Demand Elasticity

  • D. Supply Elasticity

  • E. Demand Curve

  • F. Supply Curve

Concerning demand curve, which of the following statement is incorrect?

  • A. It is a graphical represention of a table showing the price of commodities and quantity demanded

  • B. It can be an individual demand curve

  • C. The x-axis shows the price of commodities

  • D. The price and quantity demanded are expressed on different axis of the graph

  • E. It can be a market demand curve

  • F. All the options are correct

A table that shows the price of a commodity and the quantity demanded is termed _____.

  • A. Price table

  • B. Demand table

  • C. Demanded-price table

  • D. Demand preference table

  • E. Demand graph

  • F. Demand schedule

Functions of the Wholesaler:

The wholesalers are traders that act as a link between the producers or manufacturers and the retailers. For this reason, they may also be referred to as the intermediary or middleman.

You can read on the Advantages and Disadvantages of the Wholesaler here.

By definition, the wholesaler is a trader that buys goods in large quantities from the producers (or manufacturers) and sells lesser quantities to the retailers.

Please read more on the Wholesaler here.

The wholesaler performs the following functions:

1. Storage Function

The wholesaler will typically own or rent a storage facility to preserve the goods which he/she buys (in large quantities) from the manufacturers.

The use of storage facility is crucial to the wholesaler's business because he/she may end up selling the goods purchased from the producer after some period of time. To this end, the wholesaler will need a storage facility to keep such goods intact.

You can read on the Problems of Agriculture in Nigeria here.

Note: The term wharehouse describes the place where the wholesalers keep large quantities of goods.

2. Distributive Function

The wholesalers buys goods from the manufacturers and distributes them to other locations. Through this process, they expand the market for such product.

Please read on the concept of Market in Economics here.

As an instance, one of the appliances in your home (or even your phone) may not be manufactured in your country or state. It is in fact the distributive function of the wholesaler that gets those products into your country or state.

Please read more on Foreign Trade here.

3. Transportation Function

It is the duty of the wholesalers to provide transport facilities in order to move goods from the producers' factory to various warehouses (owned or rented by the wholesaler) and from these warehouses to the retailers location.

The goods are transported in bulk quantities by the wholesaler in order to minimize the cost of transport.

Please read on the Advantages and Disadvantages of Road Transport here.

Note: In most cases, the wholesaler will own the transport facilities but sometimes, they may be rented.

4. Middleman

The wholesaler always function as a middleman between the producers and the retailers. He buys goods in large quantities from the producers and sells in smaller quantities to the retailers.

Please read on the Characteristics of the Wholesalers here.

5. Provides Useful Information

The wholesaler provides useful and valuable information to the producers and retailers.

  • To the producers, they provide details on the acceptance of their products and ways to bring about its improvement.
  • To the retailers, they provide information relating to the advantages and benefits of the product's usage. They also give clues to retailers on various reasons why the consumers should buy their product.

Please read on Outbound Marketing here.

6. Specialization Function

The wholesalers are usually associated with the bulk purchase of a specific type of a product from a manufacturer (or a few related products from one or more manufacturers).

The wholesalers are very knowledgeable on the products they sell and as such are able to deal with issues concerning such products.

Please read on the Concept of Business and Business Studies here.

7. Financing Function

The wholesalers are likely to pay in advance for the manufacturer's product since they buy in large quantities.

Note: Since the wholesaler make payments in advance, this will aid the producers to better understand the level of demand for their products.

Please read on Demand and Law of Demand here.

Conversely, the wholesalers will accept to sell their products on credit to the retailers. They do this in order to promote the product and its sales. Retailers who receive products on credit will make payments after sales have been made.

8. Price Stability Function

The wholesalers are known to sell goods at a stable price in accordance to what they had purchased from the manufacturers. They are able to achieve this because they buy goods in large quantities; and will therefore sell at similar prices to the retailers.

Please read on Supply Elasticity here.

If the cost of production increases from the ends of the producers, the wholesalers will buy at a higher price and sell at an increased but stable price to the retailers. The different retailers will therefore sell at a similar price to the final consumers since they all bought the specific goods from the wholesaler. For instance, sachet Peak Milk will sell at similar prices at various retail stores.

9. Risk Bearer and Shock Absorbers

Although the producers, wholesalers and retailers are also risk bearers with regards to the sale of a product, the wholesalers will in addition act as a shock absorber especially in the movement and distribution of goods.

Also, due to unforeseen circumstances, the demand of goods may change (negatively) and the wholesalers will have to bear this probable risk.

Note: The wholesaler takes upon himself or herself the risk of damage during the process of moving goods (in transit) and their storage.

Please read on the Characteristics of Business here.

Another instance of risk shouldered by the wholesalers will come in the form of bad debts, especially by the retailers who got goods on credits and are unable to pay.

Similarly, the wholesalers may get substandard goods from the producers after making payments in advance. That's also a form of bad debt.

You can read on the Disadvantages of Money here.

10. Packaging and Branding

Certain wholesalers will need to assemble and brand the goods purchased from the manufacturers.

  • For instance, a company may buy different parts of a car from another country; and may further the car's production by reassembling, branding and packaging them to the taste and standard of the consumers.
    Please read on the Concept of Marketing here.

The wholesalers may also put their trademark, logo or brand name after branding and packaging had been done.

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Amazing facts in Economics


Below are definitions of demand from the perspective of some notable professors:

The demand for goods is a schedule of the amounts that buyers would be willing to purchase at all possible prices at any one instant of a time.

Professor Mayers

Demand is the various quantities of goods that would be purchased per time period at different prices in a given market.

Professor Hibdon

The demand for anything, at a given price is the amount of it which will be bought per unit of time at the price.

Professor Benham

Generally, demand is defined as the willingness of a person, buyer or consumer to buy a specific quantity of goods or service at a given price and time.

From the above definitions, we can infer that the definition of demand is referenced to three major factors. These are:

  1. Quantity of Goods Demanded

  2. Price

  3. Time

Please read more on the concept of demand here.

In economics, we have various types of cost. These are:

  • Accounting cost

  • Economic cost

  • Outlay cost

  • Opportinity cost

  • Fixed cost

  • Variable cost

  • Direct cost

  • Indirect cost

  • Sunk cost

  • Incremental cost

  • Private cost

  • Social cost

Please read the explanations on the aforementioned types of cost here

A Black market is said to take place when there is illegal buying and selling of goods and services.

Black markets usually take place outside the government's rader and without government's knowledge so as to avoid tax or any other government regulations.

Black market presents the avenue for government prohibited goods like hard drugs, war weapons and firearms to be bought by criminals.

A black market can also occur on the web for cyber criminals or those who are involved in computer hacking. To achieve their malicious aim, these individuals will go into the dark web and purchase or rent their respective hacking tools for a fee. Normally, payments are made in crypto currencies.

However, a black market isn't generally considered as bad. Infact, it has its advantages and disadvantages.

Please read more on black market here

Below are some advantages of black market:

  • Goods and services are sold at a cheaper price.

  • It helps some people make plenty of money.

  • The illegal sales of human organs, for example, the sale of human kidneys have aided in saving some lives.

  • Some people actually depend on black market for their daily bread.

  • Some of the proceeds from black market may be utilized towards the economic growth of a nation. For instance, schools and hospitals had been built with money made from black market.

The law of supply states that:

The quantity of the supplied services or goods will increase as the price increases and they will decrease as the price decreases provided all other factors remain constant.

These constant factors are very important when stating the supply law. They include:

  • The price of input resources

  • The kind of technology used during production

  • The number of suppliers

  • The number of buyers; and so on.


A graph that shows the relationship between the price of a product or service, and its quantity supplied is the supply curve.

Supply curve can be defined as a graphical representation of the direct relationship between the prices of goods and services and the quantity supplied (of such goods and services) within a particular period of time provided all other factors remain constant.

Len Academy - Supply CurvePlease read more on the law of supply and supply curve here