Question 1

Price deals that mislead consumers fall into the category of

Accepted Answer

Deceptive pricing refers to price deals that mislead consumers. Predatory pricing refers to pricing strategies that aim to eliminate competitors. Price discrimination refers to charging different prices to different customers based on certain criteria. "Buyer beware" is a general warning to consumers to be cautious in their purchases. Base point pricing is a method used in transportation pricing.

Question 2

Price fixing is illegal under per se under the

Accepted Answer

Price fixing agreements are considered a violation of Section 1 of the Sherman Act. Under the Sherman Act, any agreement or conspiracy which tends to restrain trade or commerce among the states is deemed illegal per se, meaning that it is prohibited regardless of its actual effect on competition.

Question 3

Price fixing refers to

Accepted Answer

Price fixing refers to a conspiracy among firms to set prices for a product. It involves the agreement of competing parties to maintain the same price levels rather than allowing competition to dictate pricing. It is illegal and considered a violation of antitrust laws.

Question 4

In one of its least favorite actions, Amazon.com was caught fiddling with its price tags.Avid videodisc buyers, buying in quantity for resale, found that the online store was offering different customers different prices for the same DVD, and complained vociferously.Amazon was caught red-handed.It was, company officials admitted, trying to see how much it could charge for an item before buyers balked.No matter what the reasoning behind it, Amazon.com was using

Accepted Answer

Amazon.com was offering different prices for the same DVD to different customers, which is a form of price discrimination. This practice is often used to maximize profits by charging different prices to different customers based on their willingness to pay. It is not considered illegal under antitrust laws, but it can sometimes lead to consumer backlash and public relations problems.

Question 5

Vertical price fixing refers to

Accepted Answer

Vertical price fixing involves agreements between independent buyers and sellers where sellers are required to adhere to a minimum retail price, which is different from horizontal price fixing that involves competitors setting prices.

Question 6

To promote their business, some psychics advertise free tarot-card readings and other insights into their customers' futures on television.Unfortunately, this "free reading" has cost some unsuspecting callers as much as $700 in phone charges.This sort of deceptive pricing practice would be primarily monitored by the

Accepted Answer

The Federal Trade Commission is responsible for monitoring and preventing deceptive and unfair business practices, including deceptive pricing practices like the one described in the scenario. The other options listed are not as directly related to this issue.

Question 7

Deceptive pricing is outlawed by the

Accepted Answer

Deceptive pricing falls under the jurisdiction of the Federal Trade Commission (FTC) in the United States. The FTC ensures that companies do not engage in deceptive practices, including misleading or false advertising, that could harm consumers. This is done through regulations and enforcement actions.

Question 8

_________

Accepted Answer

Predatory pricing is a pricing strategy in which a company sets a low price for its products or services with the intention of driving their competitors out of the market. This can lead to a monopoly or near-monopoly situation for the company, giving them control over the market and the ability to increase prices later on. Predatory pricing is often considered illegal and is heavily regulated by antitrust laws.

Question 9

The practice of charging different prices to different buyers for goods of like grade and quality is referred to as

Accepted Answer

Price discrimination involves charging different prices to different buyers for goods of like grade and quality.

Question 10

Resale price maintenance was declared illegal in 1975 under the

Accepted Answer

The answer of Resale price maintenance was declared illegal in...

Question 11

Controlling agreements between independent buyers and sellers whereby sellers are required to not sell products below a minimum retail price are referred to as

Accepted Answer

Controlling agreements between independent buyers and sellers whereby sellers are required to not sell products below a minimum retail price are referred to as vertical price fixing. This is because it involves agreements between parties at different levels of the supply chain (e.g. manufacturers and retailers) rather than between competitors at the same level (which would be horizontal price fixing).

Question 12

Which of the following statements about the legal and regulatory aspect of pricing is most accurate?

Accepted Answer

The Federal Trade Commission Act addresses deceptive pricing practices, ensuring that consumers are not misled by false or misleading price claims.

Question 13

Price discrimination refers to

Accepted Answer

Price discrimination is when a seller charges different prices to different buyers for goods of like grade and quality. This can be based on various factors such as buyer demographics, location, quantity purchased, or time of purchase. It is a common pricing strategy used by businesses to increase profits by maximizing revenue from different customer segments. It is legal as long as it does not lead to anti-competitive behavior or harm consumers.

Question 14

Price discrimination is illegal under the

Accepted Answer

Price discrimination is illegal under the Robinson-Patman Act, which prohibits sellers from charging buyers different prices for the same product if it lessens competition or creates a monopoly. This act is enforced by the Federal Trade Commission.

Question 15

Vertical price fixing involves controlling agreements between independent buyers and sellers whereby sellers are required to not sell products below a minimum retail price.This practice, is also called __________.

Accepted Answer

Resale price maintenance is the practice of manufacturers or wholesalers controlling the prices at which their products are resold by retailers. This is done by setting a minimum resale price or enforcing a price floor, thereby ensuring that all retailers place the same price on their products.

Question 16

A conspiracy among firms to set prices for a product is referred to as

Accepted Answer

Price fixing is the only option in which firms collude to set prices for a product. Price discrimination refers to charging different prices to different customers based on their willingness to pay or other factors. Predatory pricing refers to setting prices low to drive competitors out of business. Tying arrangements refer to selling two products together as a package. Exclusive dealing refers to an agreement in which a seller agrees to sell only to a particular buyer.

Question 17

_________.

Accepted Answer

Deceptive pricing is a pricing strategy that involves using false or misleading information to make a product appear more attractive to consumers. This is unethical and potentially illegal, so it is not the best choice for a pricing strategy. The other options are legitimate pricing strategies, such as range-line pricing, which involves offering products at different price points based on their features or quality, and regional rollbacks, which involve lowering prices in specific locations to attract local customers. Manufacturer managed accounts refer to accounts managed by the manufacturer, which can be used to offer special pricing or discounts. Delayed payment penalties are fees charged to customers who do not pay on time, and are not a pricing strategy in and of themselves.

Question 18

Two or more competitors explicitly or implicitly setting prices is referred to as _________.

Accepted Answer

Horizontal price fixing occurs when two or more competitors agree to set prices at a certain level, rather than allowing market competition to determine prices. This is illegal under antitrust laws. Competitive collusion (A) refers to any agreement between competitors that intentionally harms competition. Vertical price fixing (B) occurs when manufacturers or suppliers set prices for their products sold through resellers, and is also illegal. Subversive competition (D) and price alignment (E) are not commonly used terms in the context of pricing practices.

Question 19

Mark Johnson, the manager of a discount consumer electronics store, has been approached by the manufacturer of a popular and profitable line of compact disk storage racks regarding the retail price charged for the racks at Johnson's store.The manufacturer's representative has implied that if Johnson doesn't raise the retail prices for the storage racks to those charged by the manufacturer's non-discount customers, Johnson's supply of racks may be severely curtailed.The manufacturer is guilty of attempting

Accepted Answer

The manufacturer is attempting resale price maintenance by pressuring Johnson to raise the retail price for the storage racks to the same level as non-discount customers. This is illegal under antitrust laws as it interferes with the retailer's ability to set their own prices. The threat of cutting off supply also suggests an attempt to coerce Johnson's compliance.

Question 20

When a firm offers a very low price on a product to attract customers to a store, and once in the store, the customer is persuaded to purchase a higher-priced item it is referred to as

Accepted Answer

This tactic is known as bait and switch. The customer is baited with a low price on one product, only to have the switch made to a higher-priced item once in the store. This is considered deceptive pricing and is illegal in many countries.

Quiz 12: Pricing Products and Services