Distribution Agreements Which Limit Sales by Customer or Territory

question 141

Multiple Choice

Distribution agreements which limit sales by customer or territory:

• A) are always illegal.
• B) may be legal if they are vertical agreements between producers and intermediaries.
• C) are definitely illegal if they are horizontal agreements among competing producers or intermediaries.
• D) are definitely illegal if they are vertical agreements between producers and intermediaries.
• E) Both B and C are true.

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Definitions:

Allocative Efficiency

A state of resource allocation where it is impossible to make any one individual better off without making someone else worse off, effectively maximizing overall social welfare.

Productive Efficiency

A situation where an economy or entity cannot produce more of one good without reducing the output of another good, indicating optimal resource allocation.

Monopoly Power

Monopoly power refers to the ability of a firm to control market prices and production, typically due to lack of competition in the marketplace.

Product Variety

The assortment of different products or services offered by a firm or available in a market.