Charlie Ferragamo is a sales representative for the Season-All Spice Company, and sells spices to large food service operations and restaurants. Charlie used to be able to justify selling his products for a higher price than the competition because he believed his spices were of higher quality. However, now the demand for individual brands of spices has become very elastic because buyers perceive few differences among the brands. One of Charlie's regular customers told Charlie that another spice company offered him a significantly lower price on spices, and he asked if Charlie could match the price. Charlie said, "I have to see a written price quote from the competitor. If I lower my price without seeing the price quote, I could be accused by my other customers of engaging in ________________."
A) dumping
B) price discrimination
C) price fixing
D) zone pricing
E) none of the above

Question

Quizplus · Accepted Answer

Price discrimination occurs when a seller charges different prices to different customers for the same product, without a cost justification. Charlie is concerned about being accused of this if he lowers his price for one customer without evidence of a competitor's lower price.

Charlie Ferragamo Is a Sales Representative for the Season-All Spice