Winston's Ice Cream Shop has been in the same location for two decades.Last week,a new ice cream shop opened up just one block down the street.Winston's decides to sell ice cream below cost in order to drive the new shop out of business.What kind of pricing is Winston's using?
A) Predatory pricing
B) Competitive pricing
C) Ceiling pricing
D) Inelastic pricing
E) Keystoning

Question

Quizplus · Accepted Answer

Predatory pricing is a pricing strategy where a company offers goods or services at a price that is below the cost of production, with the intention to eliminate competitors. By selling below cost, Winston's Ice Cream Shop is hoping to drive the new shop out of business, which is a classic example of predatory pricing.

Winston's Ice Cream Shop Has Been in the Same Location