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Name a scenario or a condition in which consumers would benefit from price fixing?

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anniesautos | Student, Undergraduate | (Level 1) Salutatorian

Posted April 25, 2012 at 1:44 AM via web

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Name a scenario or a condition in which consumers would benefit from price fixing?

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readerofbooks | College Teacher | (Level 2) Educator Emeritus

Posted April 25, 2012 at 2:44 AM (Answer #1)

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This is a good question. As odd as this sounds at times price fixing can help customers in a great way. There are two main situations when price fixing can help. 

First, if there is a monopoly and one company has too much power, then price fixing can help customers. The reason for this is because the company can hike up the prices without any thought of the people, because they have a monopoly. We can see this in rents, for example. Sometimes, there are laws to limit the rate of rent increases. 

Second, price fixing can help when there is the debasing of the currency and hence inflation. When there is hyper-inflation, then prices usually go through the roof. During these times, the government may have to step in and set prices at a certain level, so that things do not get out of hand. 

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