Which of the following scenarios is an example of predatory pricing?
A) Ceramic Corp sells its products below average total costs during off-peak seasons.
B) Almeda flowers has arrived at an informal agreement with other sellers in the area to charge a very high selling price.
C) Anton Inc., sells its products for $25 in the U.S, however it can sell the same product for double the price in its home country.
D) Duyen Inc., is launching a new product and has decided to sell its product below its average variable costs until it drives competitors out of market.

Question

Quizplus · Accepted Answer

Predatory pricing involves selling products at prices below cost for a significant period of time, with the intention of driving competitors out of the market. Option D shows Duyen Inc. launching a new product at prices below average variable cost with the intention of driving competitors out of the market, making it an example of predatory pricing. Option A shows Ceramic Corp pricing below average total costs during off-peak seasons, which is not necessarily predatory pricing. Option B shows an informal agreement to charge a high selling price, which is collusion and price fixing, not predatory pricing. Option C shows price discrimination, which is not predatory pricing.

Which of the Following Scenarios Is an Example of Predatory