A firm is concerned that if it lowers its prices, its competitors will not only match its price cuts but may also retaliate by making even deeper cuts.This is referred to as:
A)price wars.
B)healthy competition.
C)the capitalist system at work.
D)unfair trade practices.

Question

Quizplus · Accepted Answer

Price wars occur when competitors lower their prices in response to each others' price reductions. This can create a cycle of continuous price cutting that can harm all companies involved in the long run.

A Firm Is Concerned That If It Lowers Its Prices