Question

Question 1:

Gadgets for Sale ... or Not How come the prices of some gadgets, like the iPod, are the same no matter where you shop? No, the answer isn't that Apple illegally manages prices. In reality, Apple uses an accepted retail strategy called minimum advertised price to discourage resellers from discounting. The minimum advertised price (MAP) is the absolute lowest price of a product that resellers can advertise. Marketing subsidies offered by a manufacturer to its resellers usually keep the price at or above the MAP. Stable prices are important to the company that is both manufacturer and a retailer. If Apple resellers advertised the iPod below cost, they could squeeze the Apple Stores out of their own markets. The downside to the price stability is that by limiting how low sellers can go, MAP keeps prices artificially high (or at least higher than they might otherwise be with unfettered price competition). Source: Slate, December 22, 2006 Describe the practice of resale price maintenance that violates the anti-combine law. Describe the MAP strategy used by Apple and explain how it differs from a resale price maintenance agreement that would violate the anti-combine law. Resale price maintenance that violates the anti-combine law occurs when a The MAP strategy used by Apple manufacturer O A. is an agreement that sets the price at which retailers can sell Apple O A. agrees with a distributor on the price at which the product will be resold products O B. provides a distributor with a good only if the distributor agrees to buy OB. rewards retailers who do not set prices below the MAP by subsidizing other related goods their marketing O c. refuses to supply a retailer OC. punishes retailers who set prices above the MAP by withdrawing marketing subsidies OD. requires a distributor to use the manufacturer's parts in all repairs OD. is an agreement that sets the price so that retailers make maximum economic profit

Answer 1

1. The correct option is A-agrees with a distributor on the price at which the product will be resold.

It is illegal in anti-combine laws to collaborate and decide on price.

2. The correct option is B- rewards retailers who do not set prices below the MAP by subsidizing their marketing.

Apple offers marketing subsidies to retailers who advertise at or above the MAP.

3. The correct option is A- agree with retailers about price.

As explained in part 1, it is illegal to agree on price. And as explained in part 2, apple doesnt agree on price, it rather gives subsidies to those who do not advertise above the price.