The practice of setting prices below cost for the purpose of injuring competitors and eliminating competition is called:
A)premium pricing.
B)psychological pricing.
C)predatory pricing.
D)penetration pricing.

Question

Quizplus · Accepted Answer

Predatory pricing is the practice of setting prices below cost with the intention of driving competitors out of the market. This is illegal under antitrust laws because it harms competition and consumers in the long run. Premium pricing involves setting prices higher than competitors to convey a sense of quality or exclusivity. Psychological pricing attempts to appeal to consumers' emotions by using tactics such as odd-numbered pricing (e.g. $9.99 instead of $10) or price anchoring (e.g. showing an expensive item first to make other items seem more reasonably priced). Penetration pricing involves setting low prices initially to gain market share and then raising prices later once the product is established.

The Practice of Setting Prices Below Cost for the Purpose