Asked by Paolina Gonzalez on Jul 23, 2024
Verified
The manufacturer of South Face sells jackets to retail stores for $105 each, and it requires the retail stores to charge customers $135 per jacket. Any retailer that charges less than $135 would violate its contract with South Face. What do economists call this business practice?
A) Predatory pricing
B) Resale price maintenance
C) Tying
D) Leverage
Resale Price Maintenance
An agreement between a manufacturer and distributors or retailers to sell a product to end consumers at a specified minimum price.
Retail Stores
Physical locations where goods are sold directly to consumers, offering a range of products from groceries to clothing.
- Explore the implications of resale price maintenance on market outcomes.
Verified Answer
JD
Jaideep DhillonJul 25, 2024
Final Answer :
B
Explanation :
This business practice is known as resale price maintenance, where the manufacturer sets a minimum retail price for its product, and retailers are required to adhere to this price or higher when selling the product to consumers.
Learning Objectives
- Explore the implications of resale price maintenance on market outcomes.
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