A Producer in Philadelphia Uses Zone Pricing

question 110

Multiple Choice

A producer in Philadelphia uses zone pricing.The producer is selling widgets for $150/ton in the Eastern Zone,which includes Richmond and Baltimore.The actual freight cost from its plant to Baltimore is $70/ton and from its plant to Richmond is $80/ton.In this situation,

• A)one ton of widgets costs a Baltimore buyer the same as a Richmond buyer.
• B)both buyers would pay $300 for one ton of widgets.
• C)one ton of widgets delivered to Richmond would cost the buyer $230.
• D)one ton of widgets delivered to Baltimore would cost the buyer $220.
• E)None of these answers is correct.

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