Author Question: Suppose that there are only two types of used cars, peaches and lemons and that used cars are pure ... (Read 200 times)

Kikoku · **on:** Jun 29, 2018

Suppose that there are only two types of used cars, peaches and lemons and that used cars are pure experience goods. Peaches are worth 10,000, and lemons are worth 6,000. Three fourths of all used cars are peaches, and one fourth are lemons.

In a market with no signals, for instance, a market without warranties, the average value of cars actually sold will be A) 6,000.
B) 7,000.
C) 9,000.
D) 10,000.

Question 2

Explain how the courts have ruled on price fixing.

What will be an ideal response?

ciecieme · **Reply #1 on:** Jun 29, 2018

Answer to Question 1

A

Answer to Question 2

Price fixing among competitors is always a violation of the antitrust law. This type of price fixing, in and of itself, is a violation of the law. If the government can prove the existence of price fixing, the accused firms are guilty because there are no mitigating circumstances allowed. Price fixing in the form of resale price maintenance is legal as long as it is not anticompetitive.