Scenario: In October 2005, the Korean company Samsung pleaded guilty to conspiring with other companies, including Infineon and Hynix Semiconductor, to fix the price of dynamic random access memory (DRAM) chips. Samsung was the third company to be charged in connection with the international cartel and was fined $300 million, the second largest antitrust penalty in U.S. history. In October 2004, four executives from Infineon, a German chip maker, received reduced sentences of 4 to 6 months in federal prison and $250,000 in fines after agreeing to aid the U.S. Department of Justice with their ongoing investigation of the conspiracy. (Source: "Price Fixing," Wikipedia.)
-Refer to the scenario above.Which condition of a perfectly competitive market could most directly be hampered in the market for DRAMs?

Question

Quizplus · Accepted Answer

The collusion among companies like Samsung, Infineon, and Hynix to fix the price of DRAM chips directly contradicts the condition of a perfectly competitive market where each seller produces a negligible fraction of the total market supply. In a perfectly competitive market, no single firm has the market power to influence prices, but in this scenario, the collusion indicates significant market power and the ability to influence prices, thereby hampering this condition.

Scenario: in October 2005, the Korean Company Samsung Pleaded Guilty