Clove, a fitness centre, opens a new gym in Boston. Two gyms already exist around the same locality. To attract customers and drive its competitors out of business, Clove, offers a very low enrolment and monthly fee. The owners of the other gyms meet with the director of Clove to negotiate. Finally, all three gyms collude and decide to fix a standard enrolment and monthly fee that customers will have to pay. They also decide to charge a higher fee for men because they spend greater time in the gym.
-All three gyms decide to charge a higher fee from men.This is an example of:
A)predatory pricing.
B)vertical price fixing.
C)external reference allowance.
D)price discrimination.
E)bait and switch.

Question

Quizplus · Accepted Answer

The three gyms colluding to charge a higher fee for men is an example of price discrimination, where they are charging different prices for the same service based on the gender of the customer. This practice is illegal under most jurisdictions.

Clove, a Fitness Centre, Opens a New Gym in Boston