Which of the following features about a buyer indicates that the buyer has high bargaining power?

• A. The buyer has many alternative sellers to choose from.
• B. The buyer's purchase represents a small portion of the seller's total sales.
• C. The buyer is willing to pay any price set by the seller.
• D. The buyer faces a perfectly inelastic demand curve.

Answer: (A)

Verified step by step guidance

1. Understand the concept of buyer bargaining power: It refers to the ability of buyers to influence the price and terms of purchase in their favor when negotiating with sellers.
2. Analyze the impact of having many alternative sellers: If a buyer can choose from many sellers, the buyer can easily switch to another seller if the price or terms are unfavorable, increasing the buyer's bargaining power.
3. Consider the buyer's purchase size relative to the seller's total sales: If the buyer's purchase is a small portion of the seller's total sales, the buyer has less influence over the seller, indicating lower bargaining power.
4. Evaluate the buyer's willingness to pay any price: A buyer willing to pay any price has low bargaining power because they do not resist price changes or negotiate for better terms.
5. Examine the demand elasticity faced by the buyer: A perfectly inelastic demand curve means the buyer must purchase the same quantity regardless of price, which reduces the buyer's bargaining power.