DECA Marketing Cluster Practice Exam

What characterizes a tying agreement?

1. A discount for bulk purchases

2. A contract between two unrelated products

3. Sale of one product conditioned on the purchase of another

4. Exclusive rights to market a product

The correct answer is: Sale of one product conditioned on the purchase of another

A tying agreement is characterized by the sale of one product being conditioned on the purchase of another product. This means that a seller requires the buyer to purchase a second product as part of the transaction for the primary product. This practice can potentially limit competition and is often subject to scrutiny under antitrust laws, as it may force consumers to buy products they do not want or need in order to obtain the desired product. The other choices reflect different business arrangements but do not accurately define tying agreements. For instance, discounts for bulk purchases relate to pricing strategies designed to incentivize larger transactions without tying conditions. Similarly, a contract between two unrelated products does not imply that one product purchase is dependent on another, and exclusive rights to market a product indicates a different type of contractual or distributive relationship that does not involve the concept of tying. Thus, the defining characteristic that describes a tying agreement clearly aligns with the conditioning of one product's sale on the purchase of another.