ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Collusion-A formal agreement to set price or to otherwise behave in a cooperative manner. Price-Fixing-Agreeing to charge the same or similar prices for a product. Monopoly-market structure with only one seller of a particular product.

Detailed explanation-2: -Price fixing provides firms with the ability to deter away from market competition. It is easier and more profitable for producers to collude and set prices together rather than compete in a competitive environment. It puts less pressure on firms to keep prices competitive and victimizes customers.

Detailed explanation-3: -MONOPOLISTIC COMPETITION-is the market structure that has all the conditions of a perfect competition EXCEPT for identical products.

Detailed explanation-4: -Laissez-faire is an economic philosophy of free-market capitalism that opposes government intervention. The theory of laissez-faire was developed by the French Physiocrats during the 18th century. Laissez-faire advocates that economic success is inhibited when governments are involved in business and markets.

Detailed explanation-5: -These spillover costs and benefits are called externalities. A negative externality occurs when a cost spills over. A positive externality occurs when a benefit spills over. So, externalities occur when some of the costs or benefits of a transaction fall on someone other than the producer or the consumer.