Question

Independents of medicine might be more willing to negotiate prices because they have more discretion over costs than do other types of store. Earlier studies by consumer reports suggest that prices at independent pharmacies may be much higher or much lower than those at chains or big box stores.

True or False

Answer 1

Independent pharmacies may negotiate more flexible prices compared to chains, as they have more control over costs, leading to variability in pricing. Large chains and insurance companies can often secure lower rates due to their significant client base.

Step-by-step explanation:

It is true that independent pharmacies might be more willing to negotiate prices because they can have more discretion over costs than larger chain stores. The information provided suggests that independent operators, such as truckers or pharmacies, can exhibit characteristics of perfect competition due to their smaller size and the relatively easy entry and exit into the market.

However, the variability in pricing at independent pharmacies, as reported by consumer studies, indicates that while some may offer lower costs due to their ability to manage expenses flexibly, others may have higher prices compared to big chain stores. This can be attributed to volume discounts and negotiation power that larger chains and insurance companies have due to their vast number of clients, which allows them to secure lower rates from healthcare providers.