What is bargaining power of buyers?

• A. Powerful buyers can force prices down and may demand more service/quality.
• B. Suppliers set prices.
• C. Regulators set terms.
• D. Firms avoid buyer influence.

Answer: (A)

Bargaining power of buyers is the ability of buyers to influence the price and terms of a purchase. When buyers are powerful, they can push prices down and demand more service or higher quality, which can shape how much profit suppliers can take and what features or support the product must include. This power grows when there are few buyers relative to suppliers, buyers purchase in large volumes, the product is standardized or easily interchangeable, switching suppliers is easy, or buyers have good information and alternatives. In the given statement, capturing that buyers can force prices down and demand more service or quality accurately reflects this influence. The other ideas describe supplier power (owners of the product set prices) and regulatory influences, or an incorrect notion about avoiding buyer influence, which aren’t about what buyers can do to affect terms.