Predatory pricing occurs when a firm
A)exercises its oligopoly power by raising its price through the formation of a cartel.
B)exercises its monopoly power by raising its price.
C)cuts its prices in order make itself more competitive.
D)cuts its prices temporarily in order to drive out any competition.

Question

Quizplus · Accepted Answer

Predatory pricing occurs when a firm cuts its prices temporarily in order to drive out any competition. This strategy allows the firm to eventually raise prices and recoup any losses incurred during the price-cutting phase. It is considered an anti-competitive tactic and is often illegal.

Predatory Pricing Occurs When a Firm