Asked by Joann Quigee on Jun 07, 2024
Verified
Cosmétique Inc. makes and sells cosmetics and related products. By selling its goods at prices substantially below the normal cost of production, the firm hopes to drive its competitors from the market. This is
A) market power pricing.
B) predatory pricing.
C) price discrimination.
D) price-fixing.
Predatory Pricing
A strategy where a company sets very low prices with the intention to drive competitors out of the market or to prevent new entries.
Market Competition
The rivalry between businesses to attract customers and achieve higher sales and market share.
- Assess the consequences of monopolistic strategies and market authority on the competitive landscape and consumer interests.
- Comprehend the judicial benchmarks for assessing monopolization and attempts at monopolizing a market.
Verified Answer
CN
Christopher NallsJun 11, 2024
Final Answer :
B
Explanation :
Predatory pricing is a strategy where a firm sets prices below the cost of production with the intent to eliminate competition. By selling goods at prices substantially below the normal cost of production, Cosmétique Inc. aims to drive its competitors out of the market, which aligns with the definition of predatory pricing.
Learning Objectives
- Assess the consequences of monopolistic strategies and market authority on the competitive landscape and consumer interests.
- Comprehend the judicial benchmarks for assessing monopolization and attempts at monopolizing a market.