Predatory Pricing Occurs When a Company Lowers Its Prices Below

question 21

True/False

Predatory pricing occurs when a company lowers its prices below cost to drive competitors out of business.

---

Definitions:

Long Run

An economic phase where all production elements and expenses can adjust completely, adapting to changes due to their variable nature.

Variable Inputs

Production factors that can be adjusted in the short term to change the level of output, such as labor and raw materials.

Short Run

A period of time in which at least one input in the production process is fixed, influencing decisions made by firms about production levels.

Plant Capacity

Plant capacity refers to the maximum output a manufacturing or production facility can achieve under normal conditions within a given time period.