Why do we need intermediaries? Illustrate how intermediaries create exchange efficiency.
Answer: We need intermediaries perform certain task such as, transporting, storing, selling, advertising, and relationship building-faster and more cheaply than most manufacturers could. An illustration of how intermediaries crate exchange efficiency is when a wholesaler enters the system. If there are five manufacturers then each contact the wholesaler, establishing five exchange relationships. The wholesaler then establishes contact with the five retailers, creating five more exchange relationships. Thus the wholesaler's existence reduces the number of exchange from 25 to only 10.