CPP Legal & Ethical Considerations in Pricing 2

Question 1

Under the Robinson-Patman Act, a seller can legally charge different prices to competing buyers if which condition is met?

Accepted Answer

The price difference reflects a cost justification

Answer

Robinson-Patman allows price differences when they can be justified by actual cost differences in manufacture, sale, or delivery.

Question 2

Which type of pricing agreement between a manufacturer and retailer is most likely to be considered illegal resale price maintenance?

Accepted Answer

Refusing to sell to discounters who cut prices below a specified floor

Answer

Resale price maintenance becomes illegal when a manufacturer enforces minimum prices by refusing to supply retailers who discount below that level.

Question 3

A company sets prices below average variable cost in a market it dominates with the intent to eliminate a competitor. This is best described as:

Accepted Answer

Predatory pricing

Answer

Predatory pricing involves deliberately pricing below cost to drive out competitors, which is illegal under antitrust law when done by a dominant firm with intent to monopolize.

Question 4

The ethical principle of 'price transparency' in B2B pricing primarily requires that:

Accepted Answer

Customers understand the components and rationale behind their pricing

Answer

Price transparency in B2B contexts means customers have enough information about pricing structure and rationale to make informed purchasing decisions.

Question 5

Which scenario most clearly illustrates bid-rigging in a procurement context?

Accepted Answer

Competitors coordinating to submit a losing bid so a designated firm wins the contract

Answer

Bid-rigging occurs when competitors coordinate their bids to predetermine the winner, undermining the competitive bidding process.

(CPP) Certified Pricing Professional Practice Test

(CPP) Certified Pricing Professional Practice Test

CPP Legal & Ethical Considerations in Pricing 2