"OJ Everyday" Is One of Several National Distributors of Orange

question 128

Essay

"OJ Everyday" is one of several national distributors of orange juice to retail grocery stores.OJ Everyday wants to help the Megafood retail stores by selling the orange juice to them at a lower price than it sells to other retailers.Because OJ Everyday knows that this would be illegal price discrimination,it provides marketing assistance to Megafood,but to no one else.For example,OJ Everyday runs national advertisements that include statements that state that Megafood has a special system to ensure that OJ Everyday juice is always fresh.These advertisements imply,but do not state,that other stores might sell outdated items.Discuss this situation.

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Definitions:

Consumer Surplus

The difference between the total amount consumers are willing and able to pay for a good or service and the total amount they actually pay.

Demand Curves

A graph showing the relationship between the price of a good and the quantity of the good that consumers are willing and able to purchase at various prices.

Marginal Revenue

The additional revenue that a firm receives from selling one more unit of a good or service.

Price Discriminate

The strategy of selling the same product or service at different prices to different groups of consumers, often based on their willingness to pay.