Predatory Pricing Occurs When a Firm

question 379

Multiple Choice

Predatory pricing occurs when a firm

• A)exercises its oligopoly power by raising its price through the formation of a cartel.
• B)exercises its monopoly power by raising its price.
• C)cuts its prices in order make itself more competitive.
• D)cuts its prices temporarily in order to drive out any competition.

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Definitions:

Price-Discriminating

A pricing strategy where a company charges different prices for the same product or service to different market segments based on willingness to pay.

Elastic Demand

Refers to a market situation where the quantity demanded of a product is highly responsive to changes in its price.

Price Discrimination

A pricing strategy where a company charges different prices for the same product or service depending on the customer, market, or region.

Airline Company

A business that provides air transport services for traveling passengers and freight.