When is predatory pricing best exemplified
A)when a firm exercises its oligopoly power by raising its price through the formation of a cartel
B)when a firm exercises its monopoly power by raising its price
C)when a firm cuts its prices in order make itself more competitive
D)when a firm cuts its prices temporarily in order to drive out any competition

Question

Quizplus · Accepted Answer

Predatory pricing is best exemplified when a firm cuts its prices temporarily in order to drive out any competition. The predatory firm aims to lower its prices below the cost of production in order to force competitors out of the market. Once competitors have been driven out, the predatory firm can raise its prices again to monopolistic levels, thereby capitalizing on the absence of competition.

When Is Predatory Pricing Best Exemplified