10. Questionable business practices according to antitrust agencies Complete the

Question

10. Questionable business practices according to antitrust agencies Complete the following table by indicating whether each of the scenarios describes the concept of tying, resale price maintenance, or predatory Resale Price Predatory Tying Maintenance Pricing Scenario Rhythm is a firm that produces mp3 players. Suppose Rhythm sells its mp3 players to retail stores for $159 each and requires those retailers to charge customers at least $179 for each mp3 player. Snackyville sells a wide variety of snacks to retail grocery stores. Snackyville recently released two nevw snacks: a popular trail mix and a much less popular granola bar. Snackyville requires grocery stores to buy 15 cases of the granola bar for every 140 cases of the trail mix ordered. Coolaire is the only firm producing refrigerators. It costs $1,000 to produce a refrigerator, and Coolaire sells each refrigerator for $1,200. After Chillbox, a new firm with the same costs as Coolaire, enters the market for refrigerators, Coolaire starts selling its refrigerators for a price of $550. True or False: The only reason for Rhythm to require retailers to sell mp3 players at a certain price is to reduce competition and extend its market power to the retail market. Therefore, this practice is always economically inefficient. O True O False

Explanation / Answer

Tying: An arrangement where a consumer has to buy one product so as to ensure efficient working of other product

Resale price maintenance: Agreement between producer and retailer or seller to not charge a price lower than a predetermined price

Predatory pricing: Pricing the product too low so as to drive competitors out of market

1. Rythm: Resale price maintenance

2. Snackyville: Tying

3. Coolaire: Predatory pricing

1. False

Reason: The intention behind such a pricing strategy is to make minimum profits on the mentioned price and is thus not inefficient

Related Questions

Navigate

• Browse (All)
• Browse 1
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.