Both Lemon Light, Inc, and Orange Mist Corporation are soft drink distributors in Capital City
The soft drink business is highly competitive, profit margins are razor thin, and both companies
are on the brink of bankruptcy.
To save themselves, they agree to not sell soft drinks at a price
below $3 per six-pack. This is a fair price; it allows both of them to make a fair profit; and the
customers still get a relatively inexpensive drink. This action by Lemon Light and Orange Mist
is:
A) Legal, because they set a fair price.
B) Legal, because they did not set an absolute price, but only set a minimum price.
C) Legal, because they were on the brink of bankruptcy.
D) Illegal, because it is vertical price fixing.
E) Illegal, because it is horizontal price fixing.
E
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