Gossip Goose (GG) and Tabloid Chicks (TC) are two magazines renowned for their reporting of unverifiable entertainment news. Steven Hassaloff is the marketing director of GG, and Jasmine Trotter is the advertising manager of TC. Steven and Jasmine met at the local pub one day and decided to both sell their magazines at the same lower-than-average price ($3) , in order to increase their market shares and lower the level of competitive pressure in the market. Steven and Jasmine's agreement is an example of:

A) resale price maintenance, and is illegal.
B) resale price maintenance and is legal only when both parties reach an agreement in the absence of coercion.
C) price-fixing and is illegal.
D) price-fixing and is legal only when both parties reach an agreement in the absence of coercion.

Question

Dmiria Livas · Accepted Answer

Final Answer : C, Explanation :  Steven and Jasmine's agreement to sell their magazines at the same lower-than-average price to increase market shares and lower competition is an example of price-fixing, which is illegal under antitrust laws. Price-fixing involves an agreement between competitors to set prices at a certain level, rather than allowing market forces to determine them.

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