Clarissa Kessler Operates a Store That Sells Recorded Music

question 117

Multiple Choice

Clarissa Kessler operates a store that sells recorded music. Her business suffered tremendously when a giant discount store chain opened a store in the area and is able to sell its products for less than Clarissa's wholesale cost. Is this evidence of illegal price discrimination on the part of the discount store chain?

• A) Yes, it is clearly a violation of the Robinson-Patman Act.
• B) No, because it can be argued that the discount store chain is justified in charging lower prices because it is a large-volume buyer and is able to purchase recorded music at a lower wholesale price than Clarissa.
• C) Yes, the discount store chain is engaging in predatory pricing.
• D) No, even if the price discrimination is based on differences in cost, the law states that it is not illegal.

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Definitions:

Negotiation Process

A series of discussions and compromises between two or more parties to reach a mutually acceptable agreement.

Bargaining Zone

The range or area within which an agreement is satisfactory to both parties involved in negotiation, typically between employer and employee or buyer and seller.

Wildcat Strike

A wildcat strike occurs when workers suddenly go on strike, without the authorization (presumably) of the striker’s union and while a binding labor agreement is still in effect.

Binding Labor Agreement

A legally enforceable contract between a labor union and an employer that specifies the terms of employment and worker rights.