A manufacturer agrees to sell the distributor 1,000 boxes of 2-quart bowls only if he agrees to resell to the retailer at cost plus $1.10 per bowl and the retailer must agree to sell at no less than his cost plus .50 per bowl.This is:
A) horizontal price fixing.
B) vertical price fixing.
C) vertical market allocation.
D) a tying arrangement.

Question

Quizplus · Accepted Answer

This is an example of vertical price fixing, where the manufacturer and distributor agree on a minimum price for the product at the retail level. The agreement between the distributor and retailer is also a form of resale price maintenance, which is a type of vertical price fixing.

A Manufacturer Agrees to Sell the Distributor 1,000 Boxes of 2-Quart