It costs $1 to produce an item and there are 2 producers of that item. In order to be competitive, Producer 1 sells the items for $2 to all his purchasers, regardless of where they are located, which gives him a profit of $1 on each item. Producer 2, on the other hand, sells his items for $2 if they are located in an area that competes with Producer 2, but $1.50 if they are located in an area that doesn't compete with Producer 2 and this tactic is used to keep Producer 1 out of the market that's currently not served by him. This is an example of:

Question

Quizplus · Accepted Answer

Price discrimination is an antitrust violation under the Robinson-Patman Act. Price discrimination occurs when different purchasers of the same product are charged differently for an item that costs the same to produce if the purpose is to decrease competition or create a monopoly.

It Costs $1 to Produce an Item and There Are