Clove, a Fitness Centre, Opens a New Gym in Boston

question 61

Multiple Choice

Clove, a fitness centre, opens a new gym in Boston. Two gyms already exist around the same locality. To attract customers and drive its competitors out of business, Clove, offers a very low enrolment and monthly fee. The owners of the other gyms meet with the director of Clove to negotiate. Finally, all three gyms collude and decide to fix a standard enrolment and monthly fee that customers will have to pay. They also decide to charge a higher fee for men because they spend greater time in the gym.
-All three gyms decide to charge a higher fee from men.This is an example of:

• A)predatory pricing.
• B)vertical price fixing.
• C)external reference allowance.
• D)price discrimination.
• E)bait and switch.

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Definitions:

Sale Price

The final price at which a product or service is sold after any deductions or promotions.

Bargaining Position

The relative power or advantage one party holds during negotiations, affecting their capacity to influence the terms.

Replace Workers

The practice of substituting current employees with new hires or automation technology.

Surplus Extraction

The process or strategy of obtaining excess resources, typically beyond the equilibrium or expected level, from a market or economy.