A coffee shop chain opens across the street from a locally-owned coffee shop.The base expenses for coffee and pastries are similar.However, the chain has corporate backing for support and therefore makes a decision to radically lower prices.Thus, it succeeds in attracting customers to its facility and eventually drives the competition out of business.This is an example of:

Question

Quizplus · Accepted Answer

Predatory pricing occurs when a company sets prices extremely low with the intent to eliminate competition, as described in the scenario.

A Coffee Shop Chain Opens Across the Street from a Locally-Owned