The Practice of Setting Prices Deliberately Below Average Variable Costs

question 123

Multiple Choice

The practice of setting prices deliberately below average variable costs in order to put a rival out of business is known as:

• A) average variable pricing.
• B) collusion pricing.
• C) inversion pricing.
• D) predatory pricing.
• E) competitive pricing.

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Definitions:

Bargaining Power

The capacity of one party to dominate negotiations due to their leverage or advantage over the other party.

Economic System

The method by which societies or governments organize and distribute available resources, goods, and services across a community or country.

Exclusive Union

A labor union agreement where the employer agrees to hire and negotiate only with one union.

American Medical Association

A professional association for physicians and medical students in the United States aimed at advancing public health, medical education, and standards of care.