What does price fixing refer to in a market?

Price fixing refers to the practice where competitors in the same market come together to establish a fixed price for a product or service rather than allowing the market to determine it through free competition. This collusion undermines the fundamentals of a free market, where prices should be set based on supply, demand, and competition.

When companies engage in price fixing, they limit competition and can manipulate market conditions to maximize their profits at the expense of consumers. This practice is illegal in many jurisdictions because it stifles competition and can lead to higher prices for consumers.

The other options describe related concepts but do not accurately define price fixing. Adjusting prices based on demand fluctuations is a common business practice and is typically part of a functioning market economy. The legal limit on pricing strategies can refer to regulations or laws that govern price setting but do not capture the essence of collusion inherent in price fixing. Finally, a method for calculating the market value of property pertains to valuation and appraisal practices, which are unrelated to the concept of price fixing.