iStore has been criticized for offering higher discounts to DataCorp,

QUESTION

iStore has been criticized for offering higher discounts to DataCorp, a major computer manufacturer. Which of the following is the most effective defense in this scenario?

A) Other companies offer similar discounts to DataCorp.
B) iStore’s costs are lower on such sales because of higher volumes.
C) iStore has always offered lower rates to DataCorp.
D) DataCorp passes on the price benefit to its end users.
E) DataCorp supplies computers at a lower price to iStore.

ANSWER

Answer: B
Explanation: B) Lower costs are a valid reason for charging a lower price, so Choice B is correct. The fact that other companies do it (Choice A), that iStore has done it in the past (Choice C), that lower prices get passed on (Choice D), or that the buyer offers lower costs back to the seller in return (Choice E) are not defenses to price discrimination charges.