If a company gives away its products or charges a price that is below its cost and plans to raise prices later on in order to recoup earlier losses, the company would have engaged in:
A) trading down.
B) cost-plus pricing.
C) contribution costing.
D) predatory pricing.
E) value-pricing.

Question

Quizplus · Accepted Answer

This strategy is known as predatory pricing. It involves setting prices low with the intention to eliminate competition or discourage new entrants into the market, with plans to raise prices later once the competition has been reduced or eliminated.

If a Company Gives Away Its Products or Charges a Price