An example of a tying arrangement is: a. a landlord offering free rent for the f
ID: 1198170 • Letter: A
Question
An example of a tying arrangement is:
a. a landlord offering free rent for the first month when a tenant signs a one-year lease.
b. a car manufacturer installing expensive onboard GPS/navigation systems in all the cars it sells.
c. a restaurant offering both Pepsi and Coca-Cola products.
d. two companies competing on price.
e. a coffee shop offering customers the option of having cream with their coffee for an extra 25 cents.
According to the Clayton Act, persons are not allowed to serve as the director on more than __________ board(s) in the same industry.
one
three
two
five
four
one
b.three
c.two
d.five
e.four
Explanation / Answer
Under a Tying arrangement, the good that buyer actually wants to buy is referred to as "Tying product" whereas the extra or additional good that he must purchase so that sale (of good that he actually wants) can be made is referred to as "Tied product'.
Of all the given options, Option (b) reflects tying arrangement. This is because if a buyer wants to purchase car then he also have to purchase the expensive on board GPS/navigation system as well. So, the product (car) that buyer actually wants to purchase comes tied with another product (GPS/navigation system).
Hence, the correct answer is option (b).
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