8. Questionable business practices Complete the following table by indicating wh

Question

8. Questionable business practices Complete the following table by indicating whether each of the scenarios describes the concept of tying, resale price maintenance, or predatory pricing. Resale Price Predatory Scenario Book Bound sells a wide variety of books to retail bookstores. Book Bound recently published two new books: a popular mystery novel and a much less popular history book. Book Bound requires bookstores to buy 15 copies of the history book for every 120 copies of the mystery novel ordered. Heat-Em-Up is the only firm producing grills. It costs $430 to produce a grill, and Heat-Em-Up sells each grill for $950. After Well Done, a new firm with the same costs as Heat-Em-Up, enters the market for grills, Heat-Em-Up starts selling its grills for a price of $330. Televix is a firm that produces televisions. Suppose Televix sells its televisions to retail stores for $810 each and requires those retailers to charge customers at least $840 for each television. Tying Maintenance Pricing True or False: The only reason for Televix to require retailers to sell televisions at a certain price is to reduce competition and extend its market power to the retail market. Therefore, this practice is always economically inefficient True O False

Explanation / Answer

1st scenario is tying in which if you purchase one commodity then you need to purchase the secind commosity also

Second scenario is predatory pricing where incumbent firm charges low price so that new firms dont enter

Third scemario is Resale price maintenance

False when there are economies of scale than this technique is efficient.

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