Final answer:
The agreement between all brokerages in Metropolis to set their commission rates at 9% is an example of price fixing, which is an anti-competitive practice where market participants agree on price levels rather than allowing them to be determined by market forces.
Step-by-step explanation:
The scenario described where all the brokerages in Metropolis agreed to set their commission rates at 9% is an example of price fixing. Price fixing is an illegal agreement between participants on the same side in a market to buy or sell a product, service, or commodity only at a fixed price, or maintain the market conditions such that the price is maintained at a given level by controlling supply and demand. This is contrasted with competitive pricing, where the price is determined by the interaction of supply and demand, leading to market equilibrium. Commission standardization would typically refer to an industry standard or regulation set by a governing body, not an agreement between separate entities, and does not have the same implication of collusion that price fixing does.
Collusion occurs when firms in an oligopoly work together to control market prices, which is akin to what the brokerages in Metropolis are doing by fixing the commission rate. This practice is generally prohibited by antitrust laws because it stifles competition and harms consumers. By contrast, when a decision is made that prices should be set equal to marginal costs, it aims to mimic outcomes found in a perfectly competitive market, ensuring efficient allocation of resources and lower prices for consumers.The agreement among all the brokerages in Metropolis to set their commission rates at 9% is an example of price fixing. Price fixing occurs when competitors agree to set prices at a certain level, reducing competition and potentially harming consumers. In this case, by setting their commission rates at the same level, the brokerages eliminate price competition and maintain higher profits.