Why is price fixing deemed illegal in commodities trading?

Why is price fixing deemed illegal in commodities trading?

• A. It encourages consumer loyalty
• B. It fills market gaps with counterfeit products
• C. It undermines free competition in the market
• D. It promotes better production practices

Answer: (C)

Price fixing is deemed illegal in commodities trading primarily because it undermines free competition in the market. When businesses or individuals collude to set prices artificially, they disrupt the natural interplay of supply and demand that typically determines prices. This manipulation prevents market forces from functioning as they should, leading to inflated prices for consumers and a decrease in the overall efficiency of the market. In a competitive market, prices are driven by a multitude of factors including consumer preferences, availability of goods, and production costs. Price fixing reduces this competition, leading to a lack of choices for consumers, potentially poorer quality products, and reduced innovation. By enforcing laws against price fixing, regulators aim to protect the competitive nature of the market, ensuring that prices reflect true value and that consumers benefit from fair market practices. This is why it is crucial for trading practices in commodities to adhere to competition laws, promoting a healthier economic environment overall.

Price fixing is deemed illegal in commodities trading primarily because it undermines free competition in the market. When businesses or individuals collude to set prices artificially, they disrupt the natural interplay of supply and demand that typically determines prices. This manipulation prevents market forces from functioning as they should, leading to inflated prices for consumers and a decrease in the overall efficiency of the market.

In a competitive market, prices are driven by a multitude of factors including consumer preferences, availability of goods, and production costs. Price fixing reduces this competition, leading to a lack of choices for consumers, potentially poorer quality products, and reduced innovation. By enforcing laws against price fixing, regulators aim to protect the competitive nature of the market, ensuring that prices reflect true value and that consumers benefit from fair market practices. This is why it is crucial for trading practices in commodities to adhere to competition laws, promoting a healthier economic environment overall.