Which statement about brokers' overheads compared to distributors is correct?

• A. Brokers have very low overheads and charge smaller fees than distributors.
• B. Brokers have higher overheads and charge larger fees.
• C. Brokers’ overheads are the same as distributors.
• D. Brokers have no overheads.

Answer: (A)

Think about how brokers operate. They don’t own stock or run warehouses or fleets; their value comes from connecting buyers with sellers and arranging deals. That lean model keeps fixed costs and overheads relatively low, so the fees they charge tend to be smaller than those of distributors who carry inventory, run warehouses, manage logistics, and support a sales and marketing infrastructure. So the statement that brokers have very low overheads and charge smaller fees than distributors best reflects how these roles function in practice. The other possibilities imply higher or equal overheads or no overheads, which doesn’t fit the broker’s position as a lean intermediary.