If American Airlines engages in predatory pricing,it might:
A) Lower fares when a new carrier enters the market and then raise fares as soon as the new carrier gains sufficient business.
B) Raise fares when a new carrier enters the market and then lower fares once the new carrier leaves the market.
C) Lower fares when a new carrier enters the market and then raise fares once the new carrier is driven out of business.
D) Lower fares permanently once a new carrier enters the market in order to keep up in the expanding airline industry.

Question

Quizplus · Accepted Answer

Predatory pricing involves intentionally lowering prices to drive competitors out of business, then raising prices once the competition is gone. This allows the dominant company to gain a larger market share and increase profits. Option C describes this tactic, while the other options do not accurately reflect predatory pricing.

If American Airlines Engages in Predatory Pricing,it Might