A Coffee Shop Chain Opens Across the Street from a Locally

question 24

Multiple Choice

A coffee shop chain opens across the street from a locally owned coffee shop.The base expenses for coffee and pastries are similar.However, the chain has corporate backing for support and therefore makes a decision to radically lower prices.Thus, it succeeds in attracting customers to its facility and eventually drives the local competitor out of business.This is an example of:

• A)price fixing.
• B)price discrimination.
• C)predatory pricing.
• D)referral selling.
• E)resale price maintenance.

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Definitions:

Per-unit Cost

The cost associated with producing or acquiring one unit of a product or service.

Repairs

Repairs involve fixing or restoring equipment, machinery, or property to its proper condition without significantly altering its original condition.

Maintenance Costs

Expenses incurred in keeping an asset in working condition or restoring it to working condition.

Factory Machine Usage

The extent to which manufacturing equipment is utilized during the production process, often impacting efficiency and costs.