A pricing scheme under which a firm decreases its price in order to drive its rival out of business is known as
A) tie-in sales.
B) colluding.
C) predatory pricing.
D) bundling.

Question

Quizplus · Accepted Answer

Predatory pricing is a tactic used by a dominant firm to set a lower price for its products or services with the goal of driving competitors out of the market. This results in a monopoly for the dominant firm and is illegal in many countries. Tie-in sales, colluding, and bundling are different tactics used by firms to gain market power but do not involve a deliberate attempt to drive a competitor out of business through pricing.

A Pricing Scheme Under Which a Firm Decreases Its Price