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 Resale Price Predatory Pricing Tying Maintenance Televix is a firm that produces televisions. Suppose Televix sells its televisions to retail stores for $900 each and requires those retailers to charge customers at least $930 for each television. 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. Coolaire is the only firm producing refrigerators. It costs $950 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 $600. 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. O True False
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 Resale Price Predatory Pricing Tying Maintenance Televix is a firm that produces televisions. Suppose Televix sells its televisions to retail stores for $900 each and requires those retailers to charge customers at least $930 for each television. 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. Coolaire is the only firm producing refrigerators. It costs $950 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 $600. 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. O True False
Chapter15: Economic Regulation And Antitrust Policy
Section: Chapter Questions
Problem 3.5P
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Transcribed Image Text: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.
Resale Price
Maintenance
Predatory
Pricing
Scenario
Tying
Televix is a firm that produces televisions. Suppose Televix sells its televisions to retail stores for $900
each and requires those retailers to charge customers at least $930 for each television.
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.
Coolaire is the only firm producing refrigerators. It costs $950 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 $600.
True or False: The only reason for Televix
require
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.
O True
O False
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