A producer in Philadelphia uses "zone pricing." It's selling widgets for $150/ton in the Eastern Zone—which includes Richmond and Baltimore. The actual freight cost from its plant to Baltimore is $70/ton and from its plant to Richmond is $80/ton. In this situation:
A. one ton of widgets costs a Baltimore buyer the same as an Richmond buyer.
B. both buyers would pay $225 for one ton of widgets.
C. one ton of widgets delivered to Richmond would cost the buyer $230.
D. one ton of widgets delivered to Baltimore would cost the buyer $220.
E. Both C and D.
Answer: A. one ton of widgets costs a Baltimore buyer the same as an Richmond buyer.