Question

Costs for rent and utilities are fixed by contract, and the two shops produce the same flavor of ice cream. The owner of Company A is considering lowering the price of its ice cream, starting a price war with Company B in an effort to grab market share from its competitor. Would it be a wise decision for Company A to enter a price war with Company B?

Answer 1

It's not a wise decision.

Step-by-step explanation:

It's not the correct call, because costs for rent are always the same, since they have a contract. So, lower prices is gonna get to the Company A a poor profitability in the future. If the do it and they get more costumers, the problem isn't solved, because once they need to rise prices, costumers are gonna leave at the same time.