4. Questionable business practices according to antitrust agencies Complete the following table by indicating whether each of the scenarios describes the concept of tying, bottleneck, or predatory pricing. Scenario Snackyville sells a wide variety of snacks to retail grocery stores. Snackyville recently released two new snacks: a popular trail mix and a much less popular granola bar. Snackyville requires grocery stores to buy 15 cases of the granola bar for every 120 cases of the trail mix ordered. Heat-Em-Up is the only firm producing grills. It costs $410 to produce a grill, and Heat-Em-Up sells each grill for $950. After Well Done, a new firm with the same costs as Heat-Em-Up, enters the market for grills, Heat-Em-Up starts selling its grills for a price of $330. Union Southwest is a railroad company that built and owns the only bridge to and from Coronado island. to the mainland United States. Since there are no airports or boating docks in Coronado, any firms that want to ship goods from the mainland United States must use Union Southwest's trains and bridge. This makes it difficult for other shipping and freight companies in the area to compete with Union Southwest. True or False: All economists believe that predatory pricing is a profitable business strategy. True False Predatory Tying Bottleneck Pricing O O O
4. Questionable business practices according to antitrust agencies Complete the following table by indicating whether each of the scenarios describes the concept of tying, bottleneck, or predatory pricing. Scenario Snackyville sells a wide variety of snacks to retail grocery stores. Snackyville recently released two new snacks: a popular trail mix and a much less popular granola bar. Snackyville requires grocery stores to buy 15 cases of the granola bar for every 120 cases of the trail mix ordered. Heat-Em-Up is the only firm producing grills. It costs $410 to produce a grill, and Heat-Em-Up sells each grill for $950. After Well Done, a new firm with the same costs as Heat-Em-Up, enters the market for grills, Heat-Em-Up starts selling its grills for a price of $330. Union Southwest is a railroad company that built and owns the only bridge to and from Coronado island. to the mainland United States. Since there are no airports or boating docks in Coronado, any firms that want to ship goods from the mainland United States must use Union Southwest's trains and bridge. This makes it difficult for other shipping and freight companies in the area to compete with Union Southwest. True or False: All economists believe that predatory pricing is a profitable business strategy. True False Predatory Tying Bottleneck Pricing O O O
Chapter15: Economic Regulation And Antitrust Policy
Section: Chapter Questions
Problem 3.5P
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Transcribed Image Text:4. Questionable business practices according to antitrust agencies
Complete the following table by indicating whether each of the scenarios describes the concept of tying, bottleneck, or predatory pricing.
Scenario
Snackyville sells a wide variety of snacks to retail grocery stores. Snackyville recently released two new
snacks: a popular trail mix and a much less popular granola bar. Snackyville requires grocery stores to
buy 15 cases of the granola bar for every 120 cases of the trail mix ordered.
Heat-Em-Up is the only firm producing grills. It costs $410 to produce a grill, and Heat-Em-Up sells each
grill for $950. After Well Done, a new firm with the same costs as Heat-Em-Up, enters the market for
grills, Heat-Em-Up starts selling its grills for a price of $330.
Union Southwest is a railroad company that built and owns the only bridge to and from Coronado island
to the mainland United States. Since there are no airports or boating docks in Coronado, any firms that
want to ship goods from the mainland United States must use Union Southwest's trains and bridge. This
makes it difficult for other shipping and freight companies in the area to compete with Union Southwest.
True or False: All economists believe that predatory pricing is a profitable business strategy.
True
False
Tying Bottleneck
Predatory
Pricing
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