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
pricing.
Scenario
Cubit is the only firm producing office cubicles. It costs $1,500 to produce a office cubicle, and Cubit sells
each office cubicle for $2,100. After In Square, a new firm with the same costs as Cubit, enters the
market for office cubicles, Cubit starts selling its office cubicles for a price of $800.
Rhythm is a firm that produces mp3 players. Supe Rhythm sells its mp3 players to retail stores for
$166 each and requires those retailers to charge customers at least $176 for each mp3 player.
Chug-a-lug sells a wide variety of soft drinks to retail convenience stores. Chug-a-lug recently unveiled
two new soft drinks: a popular orange soda and a much less popular ginger ale. Chug-a-lug requires
convenience stores to buy 10 cases of the ginger ale for every 110 cases of the orange soda ordered.
Resale Price Predatory
Tying Maintenance Pricing
True or False: By bundling the two soft drinks together, Chug-a-lug can force convenience stores to pay more than they would be willing to pay when
purchasing the soft drinks separately.
True
False
