A new Home Depot opened up down the street from Hank's Hardware and has drastically reduced prices on many of the same products that Hank sells,forcing him to go out of business.After Hank closed his store,he noticed that Home Depot began raising its prices to more normal levels.This is an example of
A)predatory pricing.
B)deceptive pricing.
C)price inflation.
D)price fixing.
E)price discrimination.

Question

Quizplus · Accepted Answer

This scenario is an example of predatory pricing, where a larger company (Home Depot) temporarily lowers their prices to drive a smaller competitor (Hank's Hardware) out of business, and then raises them back up to normal levels once they have eliminated the competition.

A New Home Depot Opened Up Down the Street from Hank's