A strategy of setting price below the monopoly profit-maximizing price but at the highest level that will still result in a loss for a potential entrant into the market is known as
A) entry pricing.
B) contestable pricing.
C) limit pricing.
D) unlimited pricing.

Question

Quizplus · Accepted Answer

Limit pricing is a strategy where the incumbent firm sets the price low enough to deter entry by potential competitors, but still higher than the competitive level, ensuring that new entrants cannot make a profit.

A Strategy of Setting Price Below the Monopoly Profit-Maximizing Price