Question

First-tier suppliers are those who ______?

1) charge the highest prices
2) depend on other suppliers for certain supplies or raw materials
3) charge the lowest prices
4) depend on the primary firm for certain supplies or raw materials

Answer 1

First-tier suppliers are those who directly provide products or services to a primary firm. They are closest in the supply chain to that firm, and their prices are influenced by the law of supply and demand and market competition.

Step-by-step explanation:

First-tier suppliers are those who directly provide products or services to a primary firm and are closest in the supply chain to that firm. They are not categorized by who charges the highest or lowest prices, nor primarily by their dependencies on the primary firm for supplies. Instead, they are important for they deliver essential inputs that are required for the primary firm to create its final product or service.

The relationship between supply and demand affects the pricing strategies of suppliers, including first-tier suppliers. Prices are often a result of competitive forces within the market. When demand exceeds supply, the scarcity drives prices up as consumers compete to purchase the goods, and when the supply exceeds demand, the surplus often leads to lower prices.