Consumers value the product- specific services for a new smartphone at $30 and the marginal cost to the retailers for providing the product- specific services is $40. From the manufacturer's perspective, a resale price maintenance agreement________ be successful as it will _________ the equilibrium quantity sold.

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Quizplus · Accepted Answer

Since consumers value the services at $30 and the cost to retailers is $40, retailers are unlikely to provide these services without charging more, leading to a higher price and lower demand. A resale price maintenance agreement that tries to enforce a minimum price to cover these costs would not be successful in increasing sales; it would likely decrease the equilibrium quantity sold.

Consumers Value the Product- Specific Services for a New Smartphone