Consider a market served by a monopolist, FirmA. Anew firm,FirmB, enters the mar
ID: 1253830 • Letter: C
Question
Consider a market served by a monopolist, FirmA. Anew firm,FirmB, enters the market, and as a result, Firnm A lowers its priceto try to drive Firm B out of the market, This practice is knownas. A. resale price maintenance b.predatory typing c.tying d.predatoryConsider a market served by a monopolist, FirmA. Anew firm,FirmB, enters the market, and as a result, Firnm A lowers its priceto try to drive Firm B out of the market, This practice is knownas. A. resale price maintenance b.predatory typing c.tying d.predatory
Explanation / Answer
The answer is predatory pricing. A When a firm with market control reduces prices below ATCwith the goal of forcing competitors to go bankrupt. Predatory price has been outlawed by antitrust laws. BEWare
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