Predatory pricing occurs when
A)firms collude to set prices. Economists are certain this practice is profitable.
B)firms collude to set prices. Economists are skeptical that this practice is profitable.
C)A monopolist decreases its prices to maintain its monopoly. Economists are certain this practice is profitable.
D)A monopolist decreases its prices to maintain its monopoly. Economists are skeptical that this practice is profitable.

Question

Quizplus · Accepted Answer

Predatory pricing occurs when a dominant firm decreases its prices to drive out competitors and maintain a monopoly position. Economists are generally skeptical of the profitability of this strategy due to the potential for retaliatory actions by surviving competitors, and the cost of maintaining artificially low prices over a prolonged period of time.

Predatory Pricing Occurs When