Predatory Pricing Is a Strategy

question 25

Multiple Choice

Predatory pricing is a strategy:

• A) whereby an incumbent maintains a price below the monopoly level to prevent entry by potential competitors.
• B) whereby a firm enjoys lower costs due to knowledge gained from its past production decisions.
• C) whereby a firm temporarily prices below its marginal cost to drive competitors out of the market.
• D) used by a vertically integrated firm to squeeze the margins of its competitors.

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Definitions:

Metaphors

Figures of speech that describe an object or action in a way that isn’t literally true, but helps explain an idea or make a comparison.

Analogy

A comparison between two or more similar events or things.

Modus Tollens

A hypothetical syllogism in which the antecedent premise is denied by the consequent premise.

Deductive Arguments

A form of reasoning where the conclusion is logically derived from premises; if the premises are true, the conclusion must be true.