Which of the following is the correct definition for tying arrangements?

• A. A situation where firms agree to set prices at a certain level to maximize joint profits.
• B. A practice where a seller requires a buyer to purchase a second product as a condition for obtaining a desired product.
• C. A government policy that sets minimum prices for agricultural goods.
• D. A market structure in which a single firm controls the entire supply of a product.

Answer: (B)

Verified step by step guidance

1. Step 1: Understand the concept of tying arrangements in microeconomics. Tying arrangements occur when a seller requires the buyer to purchase a second product as a condition for obtaining the desired product.
2. Step 2: Review each option carefully and identify which one matches the definition of tying arrangements.
3. Step 3: Recognize that the first option describes price-fixing, which is different from tying arrangements.
4. Step 4: Note that the third option refers to government price controls, unrelated to tying arrangements.
5. Step 5: Understand that the fourth option describes a monopoly market structure, which is also distinct from tying arrangements.