Alpha, an Expensive Brand of Watch That Sell for $5,000

question 197

Multiple Choice

Alpha, an expensive brand of watch that sell for $5,000 (suggested retail price) , sells to fine jewelry stores for $2,500. Irritated that Amer's Jewelry is selling the watches to the public for $4,000, while competitors are selling for $5,000, stops selling the watches to Amer's. Amer's sues Alpha for antitrust violation. It is likely that Amer's will:

• A) win for price fixing violation of the Sherman Act
• B) win for Robinson-Patman Act violation
• C) win for Section 5 FTC Act violation
• D) lose because it violates the Robinson-Patman Act
• E) none of the other choices

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Definitions:

Net Operating Income

The profit calculated after all operating expenses are subtracted from total revenue but before interest and taxes are deducted.

Ending Inventory

The total value of all inventory a company still has on hand at the end of an accounting period, including raw materials, work-in-process, and finished goods.

Variable Production Costs

Costs that vary with the level of output production, including expenses like raw materials and direct labor.

Ending Inventory

The total value of all inventory a company has in stock at the end of an accounting period.