Eddie’s bookstore currently buys books from a wholesaler using asimple wholesale price contract. Following the shift inindustry practices, the wholesaler starts offering the bookstore anoption to return books at a partial refund (70% of the wholesaleprice, which is higher than retailer’s current salvage value) whilekeeping the wholesale price the same. Suppose shippingcosts are negligible. What effects will this newcontract have for sure?

I. The bookstore’s order quantity willincrease.
II. Bookstore’s profit will increase.
III. Wholesaler’s profit will increase.

Question 20 options:

	I, II and III
	II only
	III only
	I only
	I and II only
	I and III only