Answer to Question #25438 in Macroeconomics for Jimmy Vo

Question

What is price-fixing? Provide an example.

Answer 1

Price fixing is an agreement between participants on the same side in a market to buy or sell a product, service, or commodity only at a fixed price, or maintain the market conditions such that the price is
maintained at a given level by controlling supply and demand.

examples of setting a fixed price can be:
- establishment of exchange rate of the national currency against the currencies of other countries price
- fixing at the conclusion of futures contracts
- government regulation of prices in the tobacco industry