Penny Bank, a discount store, is highly competitive. When entering a new market, Penny Bank often cuts prices so deeply that it sells below costs, effectively pushing smaller retail stores with less purchasing power out of the market. In this case, Penny Bank is using .
A) market skimming
B) psychological pricing
C) predatory pricing
D) cost-plus pricing
E) deceptive pricing

Question

Quizplus · Accepted Answer

Predatory pricing involves setting prices low with the intent to eliminate competition, which is what Penny Bank is doing by selling below costs to push smaller stores out of the market.

Penny Bank, a Discount Store, Is Highly Competitive