Under what conditions would it be legal for two bakeries in Minneapolis to explicitly agree to raise their prices by 5 percent?
A) if the price rise was not predatory
B) if the price rise did not measurably increase producer surplus
C) never
D) if the price rise did not harm consumers in the long run by reducing competition
E) if the price rise was necessary to keep one or both bakeries from closing.

Question

Quizplus · Accepted Answer

Price-fixing agreements, such as the hypothetical scenario in the question, are illegal under US antitrust laws. Any explicit agreement between two or more competitors to raise prices would be considered a violation of antitrust laws and subject to significant penalties. Therefore, it is never legal for two bakeries in Minneapolis to explicitly agree to raise their prices by 5 percent.

Under What Conditions Would It Be Legal for Two Bakeries