Question

Which is an example of price fixing? A large furniture maker charges a price below production cost in order to eliminate small competitors. A group of music companies agrees to charge $20 for CDs. A defense contractor gets its competitors to agree not to seek government work. A coffee maker falsely claims that its drinks reduce the incidence of heart attacks.

Answer 1

Answer:

A group of music companies agrees to charge $20 for CDs.

Explanation:

The example with the music companies is the only example to show price fixing. Instead of conforming to the market needs (demand and supply determining the price of goods and services in a particular market), companies mutually agree to set a fixed price for their product. Nowadays, price fixing is considered unethical and is regulated by antitrust policies.