Predatory Pricing Is a Type of Price Discrimination That

question 15

Multiple Choice

Predatory pricing is a type of price discrimination that

• A)allows prices to be cut to the level of variable costs.
• B)is required when a company declares bankruptcy so that it can sell its remaining goods quickly.
• C)is used in the food industry for perishable goods.
• D)deliberately sets prices very low, sometimes even below costs, so as to minimize competition.
• E)actually ensures more supply access as high prices reduce demand.

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Definitions:

Intrinsic Value

The actual value of a company, asset, or currency determined through fundamental analysis without reference to its market value.

Return

The gain or loss made on an investment over a specified period, typically expressed as a percentage of the investment’s initial cost.

ROE

Return on Equity, a measure of financial performance calculated by dividing net income by shareholders' equity, indicating how effectively a company uses investments to generate earnings growth.

Dividend Growth Rate

The annual percentage rate at which a company's dividend payments to shareholders increase.