Predatory pricing can only take place when ________.

Question

Quizplus · Accepted Answer

Predatory pricing, which involves setting low prices with the intention of driving competitors out of business, can only take place if the price setter has a significant degree of market power. This means that the price setter must have the ability to control prices in the market and potentially raise them once competition has been eliminated. Without market power, the price setter would not be able to sustain the low prices needed to engage in predatory pricing. Choices A, B, C, and D do not accurately describe the conditions necessary for predatory pricing.

Predatory Pricing Can Only Take Place When ________