Predatory pricing
A) is legal in the United States.
B) occurs when a firm sets a very high price for one or more of its products.
C) is illegal in the United States under both the Sherman Antitrust Act and the Federal Trade Commission Act.
D) is legal in the United States when a company wants to set a very low price to drive its competition out of business.
E) occurs when there are many firms competing for customers in a given market but their products are differentiated.

Question

Quizplus · Accepted Answer

Predatory pricing is illegal in the United States under both the Sherman Antitrust Act and the Federal Trade Commission Act. It is defined as pricing below the cost of production in order to drive competitors out of business and then raise prices later. This can lead to a monopoly and is considered anticompetitive behavior.

Predatory Pricing