The practice of setting prices deliberately below average variable costs in order to put a rival out of business is known as ________ pricing.
A) average variable
B) collusion
C) inversion
D) predatory
E) competitive

Question

Quizplus · Accepted Answer

Predatory pricing is a strategy used by firms to eliminate competition by setting prices below average variable costs. This makes it impossible for competitors to make a profit and eventually drives them out of business.

The Practice of Setting Prices Deliberately Below Average Variable Costs