Question

• Which of the following is a violation of antitrust laws?

• A firm discussing/fixing price with its competitors.

• Making arrangements to stay out each other's markets.

• Merging with the competitor to eliminate competition.

• All of the above

Answer 1

Option D is correct - All of the above

Antitrust laws are also called competition laws. These are the laws that maintain fairness in a competition that does not exploit the market in an open economy. It is against monopolization which leads to overpricing of goods and a limited quantity of goods available to customers. Thus, these laws support fair competition that promotes healthy competition in an open economy that gives consumers fair prices, a better quality of goods, and a greater quantity of goods.

If a firm fixes price with its competitor, then it is trying to act like a monopoly by setting a price too high for the customers and gaining maximum profits. If firms are making arrangements to stay out of each other's markets, then they are forming regional monopoly that further lowers competition and gives them more power to set the prices high and decrease the quantity available to customers. If the firms are merging with competitors to eliminate competition, then this will decrease fair competition in the open economy.

Thus, all the above three things are the violation of antitrust laws.