How does the wholesaler help the manufacturer in availing the economies of scale?
Wholesalers help manufacturers in availing the economies of scale by facilitating large scale production. They collect small orders from a number of retailers and pass on the pool of such orders to the manufacturers. They then make purchases in bulk quantities from the producers.
This enables the manufacturers to undertake production on a large scale. When producers receive bulk orders aggregated from various retailers, they can produce goods in large quantities and take full advantage of economies of scale.
Thus, wholesalers act as intermediaries who consolidate scattered retail demand into substantial orders, making large-scale production both feasible and economical for manufacturers.
Explanation
The question specifically asks about economies of scale. The textbook context under 'Services to Manufacturers' point (i) clearly explains this mechanism. Wholesalers aggregate small orders from multiple retailers into bulk orders, which allows manufacturers to produce at scale and benefit from lower per-unit costs. This is a direct textbook concept that students should reproduce in exams.