A group of uniform rental companies agreed that they would not charge less than $5 per week per uniform even before the newly opened chicken plant contacted them for bids. This is an example of: price discrimination. a contrivance. collusion. business defamation. a conspiracy.

Question

Carissa Beard

Business

31 May, 06:28

A group of uniform rental companies agreed that they would not charge less than $5 per week per uniform even before the newly opened chicken plant contacted them for bids. This is an example of: price discrimination. a contrivance. collusion. business defamation. a conspiracy.

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Rhett Aguirre · Answer 1

A group of uniform rental companies agreed that they would not charge less than $5 per week per uniform even before the newly opened chicken plant contacted them for bids. This is an example of collusion.

Explanation:

A collusion is defined as an illegal cooperation that aims to deceive. In the example, the suppliers of a good [the uniforms, in this case] are agreeing amongst them to not sell the good below a certain bound so that they can maximize their earnings. This practice is illegal and in many cases is penalized because the collusion goes against the principles of healthy compeititon in a market by preventing it to define its own equilibrium price. It artificially rises the prices and creates distortions in the market.