A firm that charges a very low price would be practicing predatory pricing if
A)the price allowed only a small profit.
B)the price would only be profitable if it succeeded in driving a rival out of the market.
C)the price allowed profits that were positive but below those earned by other firms.
D)it only offered the low price to its rivals' customers.

Question

Quizplus · Accepted Answer

Predatory pricing involves setting a low price with the intention of driving competitors out of the market. The price must be below the cost of production for a sustained period of time, making it difficult for rivals to compete. If the firm is only able to profit from the low price if it successfully eliminates competition, then it is practicing predatory pricing.

A Firm That Charges a Very Low Price Would Be