A danger associated with engaging in price competition is that competitors can also change prices quickly and aggressively,which can result in a(n)____ that will be harmful to both companies.
A) reduction in cost
B) price war
C) competitive draw
D) industry collapse
E) advertising battle

Question

Quizplus · Accepted Answer

The term "price war" specifically refers to a situation where competitors engage in a downward spiral of continually reducing prices in an effort to gain an advantage over each other. This ultimately leads to lower profits for both companies involved, and can be detrimental to the entire industry if it persists for an extended period of time. Therefore, price competition should be approached carefully to avoid a full-blown price war.

A Danger Associated with Engaging in Price Competition Is That