Predatory pricing is a strategy
A)where an incumbent maintains a price below the monopoly level to prevent entry by potential competitors.
B)where a firm enjoys lower costs due to knowledge gained from its past production decisions.
C)where a firm temporarily prices below its marginal cost to drive competitors out of the market.
D)used by a vertically integrated firm to squeeze margins of its competitors.

Question

Quizplus · Accepted Answer

Predatory pricing is a strategy in which a firm temporarily prices below its marginal cost to drive competitors out of the market. The ultimate goal of this strategy is to gain a dominant market position and then raise prices to monopolistic levels.

Predatory Pricing Is a Strategy