Question

In order for the strategy of tying to work, Hewlett Packard (HP) must tie its printers to HP ink cartridges, and: A) no firm can enter the market for HP ink. B) no firm can enter the market for HP printers. C) HP must sell its printers at relatively high price. D) HP must always sell its printers and ink cartridges in a package

Answer 1

Before getting into the answer firstly we should know the concept of 'tying' strategy

In tying strategy, the selling of one product or service is compulsory with the additional purchase of other product

Both items should be somehow linked otherwise it would be illegal for many goods and services

Tying is illegal as well because some companies might forced to sell an desired good as a tied good

Tying has an advantage but it has a disadvantage as well

For example, many people may not want the additional good but they have to pay for it

so here in the given question, Hewlett Packard should tie its printer to HP ink as a package combination but in the question, it is said that HP should "must" tie is the wrong statement

If hp is tying then it is creating a barrier in hp ink market as it is giving additional ink

Hence the answer is option A