A strategy of setting price below the monopoly profit- maximising price but at the highest level that will still result in a loss for a potential entrant into the market is known as
A) limit pricing.
B) entry pricing.
C) unlimited pricing.
D) contestable pricing.

Question

Quizplus · Accepted Answer

Limit pricing is a strategy used by monopolies or dominant firms to deter entry into the market by setting prices at a level where potential competitors cannot compete profitably. This price is lower than the monopoly price but high enough to cover the incumbent's costs and provide a profit, making it unattractive for new entrants to challenge the incumbent's market position.

A Strategy of Setting Price Below the Monopoly Profit- Maximising