Texas Crammer Practice Exam

What is the effect of two real estate salespeople agreeing to charge the same fees in order to avoid economic harm?

1. It enhances market competition

2. It is a violation of the Sherman Antitrust Act

3. It is a legal business strategy

4. It helps reduce commission rates

The correct answer is: It is a violation of the Sherman Antitrust Act

The situation where two real estate salespeople agree to charge the same fees to avoid competition is a violation of the Sherman Antitrust Act. This act was established to prevent anti-competitive practices that can harm consumers and the economy. Specifically, such agreements among competing businesses to set prices can result in price-fixing, which undermines the competitive market system by stabilizing the prices at an artificial level, rather than letting them be determined by supply and demand. When competition is limited in this way, it can lead to higher costs for consumers, reduced choice, and less innovation in the market, all of which the Sherman Antitrust Act aims to prevent. Therefore, the act serves as a regulatory framework to promote fair competition, making this agreement between the salespeople illegal and punishable under antitrust laws.