Many clothing stores purchased new fashions from clothing manufacturers back in the Fall, expecting to sell new fashions to consumers this Spring. Because of the pandemic, however, people are not shopping for new clothing fashions as much as the clothing retailers had expected. So these stores have on hand lots of new clothing, just sitting on their shelves, going unsold. The question for these retailers is what to do with this clothing. One option is to hang on to it and hope to sell it to consumers next year. Another option is to sell the clothing now to so-called “deep discount retailers” such as Beall’s, Marshall’s, T.J. Maxx, and Ross Dress for Less. The problem with selling to deep discount stores is that the clothing retailers will probably receive less money than they paid to get the clothing from the manufacturers. Explain whether it makes good economic sense for clothing retailers to sell their unsold clothing to deep discounters for less than they paid for it. Identify the concept that your explanation is based on, define that concept, and then apply that concept to this situation.
Many clothing stores purchased new fashions from clothing manufacturers back in the Fall, expecting to sell new fashions to consumers this Spring. Because of the pandemic, however, people are not shopping for new clothing fashions as much as the clothing retailers had expected. So these stores have on hand lots of new clothing, just sitting on their shelves, going unsold. The question for these retailers is what to do with this clothing. One option is to hang on to it and hope to sell it to consumers next year. Another option is to sell the clothing now to so-called “deep discount retailers” such as Beall’s, Marshall’s, T.J. Maxx, and Ross Dress for Less. The problem with selling to deep discount stores is that the clothing retailers will probably receive less money than they paid to get the clothing from the manufacturers.
Explain whether it makes good economic sense for clothing retailers to sell their unsold clothing to deep discounters for less than they paid for it. Identify the concept that your explanation is based on, define that concept, and then apply that concept to this situation.
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