The death spiral is:
I. Setting prices very low
II. Two organizations conspiring to set prices
III. A problem of prices based on average cost and declining sales
A) I
B) III
C) I and III
D) II and III

Question

Quizplus · Accepted Answer

The death spiral refers to a problem of prices based on average cost and declining sales, which leads to a vicious cycle of decreasing profits, lower investment, and decreased capacity. Setting prices very low (option I) may be a short-term strategy to attract buyers, but it does not necessarily lead to a death spiral. Conspiring to set prices (option II) is illegal and unethical, and should not be considered as a viable option.

The Death Spiral Is