4. Libby Corporation produces a wide line of calmed foods--including "Early," one of the leading brands of canned corn. The wholesale selling price for a case (48 cans) of Early corn is $9.60--which includes a 5 percent trade discount for the wholesaler. Libby also gives a 10 percent quantity discount to wholesalers who buy in carload quantities. Wholesalers normally pass the quantity discount along to their customers in the form of lower prices. The identical corn is also sold to a few large food chains for use as dealer brands. The cans are sold under different labels at $8.00 per case (minus the 10 percent quantity discount if earned). Libby allocates 3 percent of its net sales of Early corn toward national advertising. Suppose the Federal Trade Commission were to take a close look at Libby's pricing methods to see whether the manufacturer was violating federal pricing legislation. What aspects of Libby's pricing policies do you think the FTC might question based on what is presented above? Why? What laws might be involved?
4. Libby Corporation produces a wide line of calmed foods--including "Early," one of the leading brands of canned corn. The wholesale selling price for a case (48 cans) of Early corn is $9.60--which includes a 5 percent trade discount for the wholesaler. Libby also gives a 10 percent quantity discount to wholesalers who buy in carload quantities. Wholesalers normally pass the quantity discount along to their customers in the form of lower prices. The identical corn is also sold to a few large food chains for use as dealer brands. The cans are sold under different labels at $8.00 per case (minus the 10 percent quantity discount if earned). Libby allocates 3 percent of its net sales of Early corn toward national advertising. Suppose the Federal Trade Commission were to take a close look at Libby's pricing methods to see whether the manufacturer was violating federal pricing legislation. What aspects of Libby's pricing policies do you think the FTC might question based on what is presented above? Why? What laws might be involved?
