The manufacturer of Bozz Radios sells radios to retail stores for $500 each,and it requires the retail stores to charge customers $550 per radio.Any retailer that charges less than $550 would violate its contract with Bozz Radios.What do economists call this business practice?

Question

Quizplus · Accepted Answer

The business practice described is known as resale price maintenance. This is when a manufacturer sets a minimum price that retailers must charge customers for their product. It is done to ensure consistent pricing across locations and to protect the brand image. This practice is legal in some countries, including the United States, but not in others.

The Manufacturer of Bozz Radios Sells Radios to Retail Stores