If Smyth Industries engages in predatory pricing by slashing its price 50 percent below marginal cost, the present value of current and future profits are
A)-$100 million.
B)$0.
C)$100 million.
D)$200 million.

Question

Quizplus · Accepted Answer

Predatory pricing involves setting prices below marginal cost to eliminate competition, which typically results in losses. Therefore, the present value of current and future profits would be $0, as the strategy is not sustainable and does not generate profit.

If Smyth Industries Engages in Predatory Pricing by Slashing Its