Why do manufacturers place multiple items that are the same price on the shelf at retailers?

• A. To decrease competition between manufacturers.
• B. To encourage price discrimination among consumers.
• C. To reduce the overall consumer surplus by limiting choices.
• D. To allow consumers with different willingness to pay to choose among similar products, maximizing consumer surplus and sales.

Answer: (D)

Verified step by step guidance

1. Understand the concept of consumer surplus, which is the difference between what consumers are willing to pay and what they actually pay.
2. Recognize that when manufacturers place multiple items at the same price, they offer consumers a variety of choices that cater to different preferences and willingness to pay.
3. Analyze how this variety allows consumers to select products that best match their tastes and willingness to pay, effectively segmenting the market without changing the price.
4. Note that this strategy can increase total sales and consumer surplus because consumers feel they have more options that fit their preferences, even if prices are the same.
5. Conclude that this approach does not reduce competition or limit choices but rather maximizes consumer satisfaction and sales by accommodating diverse consumer preferences.