If a Large Retailer Sold Numerous Items Below Cost with the Intention

question 132

Multiple Choice

If a large retailer sold numerous items below cost with the intention of punishing small competitors and gaining higher long-run profits by putting those competitors out of business, the retailer would be guilty of ________.

• A) price collusion
• B) price fixing
• C) predatory pricing
• D) competitive pricing
• E) penetration pricing

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Definitions:

Par Value

The face value of a bond or a stock or the stated value per share, setting the minimum price at which shares can be issued.

Preferred Stock

Preferred Stock is a class of ownership in a corporation that has a higher claim on assets and earnings than common stock, often with fixed dividends.

Stock Dividend

A payment made by a corporation to its shareholders in the form of additional shares, rather than cash, based on the proportion of shares they already own.

Cash Dividend

A payment made by a company out of its profits to its shareholders, usually in the form of cash.