Clarissa Kessler operates a store that sells toys.Her business suffered tremendously when a giant discount store chain opened a store in the area and is able to sell its products for less than Clarissa's wholesale cost.Is this evidence of illegal price discrimination on the part of the discount store chain?
A)Yes, it is clearly a violation of the Robinson-Patman Act.
B)No, because it can be argued that the discount store chain is justified in charging lower prices because it is a large-volume buyer and is able to purchase toys at a lower wholesale price than Clarissa.
C)Yes, the discount store chain is engaging in predatory pricing.
D)No, even if the price discrimination is based on differences in cost, the law states that it is not illegal.

Question

Quizplus · Accepted Answer

The fact that the discount store chain charges lower prices than Clarissa's wholesale cost does not necessarily indicate illegal price discrimination. They may simply have lower wholesale prices because of their large-volume purchases. However, further investigation may be necessary to determine if the discount store chain is engaging in anti-competitive behavior.

Clarissa Kessler Operates a Store That Sells Toys