Predatory Pricing Occurs When a Firm Sells Its Product at a Price

question 50

True/False

Predatory pricing occurs when a firm sells its product at a price below the cost to drive out a competing firm.This reduces long run competition so the firm can then charge much higher prices.

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Definitions:

Standard Hours

The amount of labor time that is expected to be spent on a particular task or to produce a specific quantity of goods under normal conditions.

General Ledger

A comprehensive record of all financial transactions over the life of a company.

Direct Labour Time

The actual time workers spend on the production floor directly working on products or services.

Standard Costing System

An accounting method that uses standard costs for costing inventory and measuring efficiency.