Temporary price reductions designed to drive out competition are called:
A) Marginal cost pricing.
B) Monopoly pricing.
C) Predatory pricing.
D) Price fixing.

Question

Quizplus · Accepted Answer

Predatory pricing is the practice of temporarily setting prices very low in order to eliminate competition. Once the competition has been driven out of the market, the company can then raise prices again. This is illegal in many countries, including the US, as it is seen as anticompetitive behavior. Marginal cost pricing is when companies set their prices based on their marginal costs, which is not necessarily a strategy to eliminate competition. Monopoly pricing is when a single company controls the market and sets prices accordingly. Price fixing is when companies collude to set prices at a certain level, which is also illegal.

Temporary Price Reductions Designed to Drive Out Competition Are Called