Predatory pricing involves setting a low price with the aim of driving rivals out of the market.

Predatory pricing involves setting a low price with the aim of driving rivals out of the market.

• A. Skimming
• B. Cost-plus pricing
• C. Predatory pricing
• D. Competition-based pricing

Answer: (C)

Predatory pricing is when a firm temporarily cuts prices very low with the aim of forcing rivals to drop out of the market. The goal is to gain a stronger position by removing competition, so the statement matches this tactic exactly. Skimming pricing tries to attract customers by charging high prices first and then lowering them, so it’s not about driving rivals out. Cost-plus pricing adds a markup to costs to set a price, focusing on covering costs rather than competing with others. Competition-based pricing sets prices in relation to rivals’ prices rather than aiming to eliminate competitors.

Predatory pricing is when a firm temporarily cuts prices very low with the aim of forcing rivals to drop out of the market. The goal is to gain a stronger position by removing competition, so the statement matches this tactic exactly.

Skimming pricing tries to attract customers by charging high prices first and then lowering them, so it’s not about driving rivals out. Cost-plus pricing adds a markup to costs to set a price, focusing on covering costs rather than competing with others. Competition-based pricing sets prices in relation to rivals’ prices rather than aiming to eliminate competitors.