The Sherman Act prohibited
A)marginal cost pricing.
B)setting price above marginal cost.
C)collusive price agreements among rival sellers.
D)selling below average total cost.

Question

Quizplus · Accepted Answer

The Sherman Act prohibited collusive price agreements among rival sellers, which means that competitors cannot coordinate to set prices at a certain level to limit competition and raise prices. Marginal cost pricing (selling at the price equal to the additional cost of producing each additional unit) and selling below average total cost (selling at a price lower than total cost, which is unsustainable in the long run) are not explicitly prohibited by the Sherman Act, although they can have anti-competitive effects in certain circumstances. Setting prices above marginal cost is a common business practice and not necessarily illegal under the Sherman Act, as long as it does not involve collusion or abuse of market power.

The Sherman Act Prohibited