Predatory pricing occurs when a firm sets ________.
A) prices below the average cost for each product
B) prices below the production cost for each product
C) prices below their competitors' prices
D) prices so low that competitors are driven out of the market

Question

Quizplus · Accepted Answer

Predatory pricing occurs when a firm sets prices so low that competitors are driven out of the market. This can harm competition and result in a monopoly for the predatory firm. Prices below the average cost or production cost are not necessarily predatory unless they are being used to drive competitors out of the market. Lowering prices below competitors' prices may be competitive pricing, not necessarily predatory.

Predatory Pricing Occurs When a Firm Sets ________