An established provider of high-definition television service does not like the new startup that has decided to offer HD television in the same market area. As such, the established provider lowers their prices to half of what the new startup is charging, in hopes of forcing them into bankruptcy. This activity is known as:
A)Price discrimination
B)Deceptive pricing
C)Price fixing
D)Predatory pricing

Question

Quizplus · Accepted Answer

The established provider's activity is an example of predatory pricing, which is the practice of deliberately lowering prices to drive competitors out of business. This is an anticompetitive behavior that is illegal under antitrust laws. Price discrimination is when different prices are charged to different customers for the same product or service. Deceptive pricing is the use of misleading information or tactics to promote a product or service, while price fixing is when competitors collude to set prices at a certain level. None of these terms apply to the scenario described.

An Established Provider of High-Definition Television Service Does Not Like