The Deliberate Act of Setting Prices Low to Eliminate Market

question 4

Multiple Choice

The deliberate act of setting prices low to eliminate market competition and then raising prices once the competition is removed is known as:

• A) predatory pricing.
• B) penetration pricing.
• C) dumping.
• D) collusive pricing.

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Definitions:

Long-Run Aggregate Supply

The total output of goods and services that an economy can produce when both labor and capital are fully employed, at full capacity.

Long-Run Phillips Curve

A macroeconomic concept that suggests there is no long-term trade-off between inflation and unemployment, implying that in the long run, the economy reaches a natural rate of unemployment regardless of inflation.

Natural Rate

The natural rate often refers to the natural rate of unemployment, which is the level of unemployment consistent with a stable inflation rate over time.

Phillips Curves

A graphical representation indicating the inverse relationship between the rate of unemployment and the rate of inflation in an economy.