Predatory pricing occurs when a firm:

Question

Quizplus · Accepted Answer

Predatory pricing is a strategy used by dominant firms to eliminate competition by temporarily reducing prices below the cost of production. Firms engage in this behavior to drive their competitors out of the market, and once their competitors are out, they can raise their prices to a monopoly level to gain maximum profits. Therefore, the correct option would be B. Option A is just normal competition pricing. Option C is pricing by firms with monopoly power. Option D is an unrelated concept.

Predatory Pricing Occurs When a Firm