The Price of a New Textbook Is $120 in One

question 425

Multiple Choice

The price of a new textbook is $120 in one year and is $150 two years later, while the price of a used copy of the text increased from $40 to $60. The relative price of a new textbook

• A) increased from 3 to 4.5.
• B) decreased from 0.8 to 0.67.
• C) decreased from 3 to 2.5.
• D) remained constant.

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Definitions:

Vertical Price-Fixing

An illegal agreement between parties at different levels of the same supply chain, such as manufacturers and retailers, to control prices.

Horizontal Price-Fixing

An agreement between competitors at the same level of the supply chain to set prices, restrict production, or reduce competition.

Sherman Act Section 1

A provision of U.S. antitrust law that prohibits contracts, combinations, or conspiracies that restrain interstate or foreign trade.

Violation

The act of disregarding or breaking a law, agreement, or rule, resulting in possible legal penalties or consequences.