If a large retailer sold numerous items below cost with the intention of punishing small competitors and gaining higher long-run profits by putting those competitors out of business, the retailer would be guilty of ________.
A) price collusion
B) price fixing
C) predatory pricing
D) competitive pricing
E) penetration pricing

Question

Quizplus · Accepted Answer

The scenario described is an example of predatory pricing, which involves setting prices below cost with the intention of driving competitors out of business. This is illegal under antitrust laws as it harms competition and ultimately leads to higher prices and reduced choices for consumers. Price collusion and price fixing both involve illegal cooperation between competitors to set prices, and competitive pricing and penetration pricing are legal pricing strategies that do not involve anticompetitive behavior.

If a Large Retailer Sold Numerous Items Below Cost with the Intention