It is possible for a firm engaging in predatory pricing to make a profit on the good even thought the price is set artificially low.

Question

Quizplus · Accepted Answer

Predatory pricing involves setting prices artificially low in order to drive competitors out of business. In order to do this, the firm must operate at a loss until it has eliminated its competitors. Therefore, it is not profitable in the short run. However, the firm may recoup its losses by raising prices once it has eliminated competition and achieved a monopoly or oligopoly market position.

It Is Possible for a Firm Engaging in Predatory Pricing