Final answer:
A manufacturer's branch is used by producers for better control over distribution, especially important in bulk reducing industries where products are manufactured close to raw material sources. Economies of scale are achieved when production increases, leading to lower costs, more competition, and a greater variety of products in the market.
Step-by-step explanation:
The reason that a producer would use a manufacturer's branch to perform wholesaling activities is Better Control over Distribution. When goods are manufactured, the company can choose between various strategies to optimize the distribution of their products. A manufacturer's branch allows a company to maintain closer oversight of sales and inventory, which can enhance coordination between production and distribution.
In the context of reducing costs, if a manufacturer participates in bulk reducing activities, they would locate production closer to the source of raw materials to minimize the cost and complexity of transportation. This is because the finished product is more economical to transport than the raw materials. In contrast, bulk gaining industries often have a market orientation and make goods that become heavier and more expensive to transport as they are manufactured, which is why they locate production closer to consumers.
Concerning economies of scale, these are achieved when the cost per unit decreases as production scales up. International trade allows even small economies to reach these economies of scale, providing lower costs and enabling competition and variety in the market, which benefits consumers through more choices and lower prices.