Scenario 3

question 93

Multiple Choice

Scenario 3.1 Use the following to answer the question.
Meyers Sporting Goods, a national chain, has been doing business with Soljur Sports, a manufacturer of skateboards, for several years. Recently, it came to the attention of Meyers' financial director that the average cost per Soljur Sports skateboard had substantially increased over that of the previous year. The financial director asked the marketing department if they knew what the Soljur skateboards cost at competing sporting goods stores, to see if they too were likely hit with a higher cost.
The marketing department found that the Soljur skateboards were priced at $15 less in the competing store than at Meyers. The financial director found that Soljur Sports was selling a similar number of skateboards to one of Meyers' competitors for $10 less per skateboard. The attorney for Meyers Sporting Goods immediately filed a complaint with the Federal Trade Commission.
Refer to Scenario 3.1. If the Federal Trade Commission believes that Soljur Sports is acting in violation of the law, the first move for the FTC is to

• A) issue a cease-and-desist order.
• B) issue a complaint stating that the business is in violation of the law.
• C) seek a monetary penalty.
• D) issue negative publicity about the company.
• E) contact the sporting goods manufacturers association

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Definitions:

Surplus

The situation where the quantity of a good or service supplied exceeds the quantity demanded, often resulting in a decrease in price.

Price

The amount of money required to purchase a good or service, often determined by the interaction of supply and demand.

Units

The basic measure or quantity of something, used as a standard for expressing and comparing amounts.

Equilibrium Price

The market price at which the quantity of an item demanded by consumers equals the quantity supplied by producers, leading to market stability.