Question

When Lofonift Inc introduced its flagship product, an MP3 player, it captured the MP3 player market by offering its product at the lowest price in the market. This gradually forced many of its competitors out of business. Once its competitors were out of business, Lofonift Inc raised its prices. In this scenario, Lofonift Inc most likely indulged in _____.​

A) ​Predatory pricing
B) ​Price discrimination
C) ​Status quo pricing
D) ​Price fixing

Answer 1

A) Predatory pricing

Step-by-step explanation:

Predatory pricing consists in first: setting a very low price for the product, so that customers are gained, and competitors are driven out of the market, and second, once competitors are no longer in the market, raising the pricing to a more profitable level.

Predatory pricing is illegal in many countries, for example, in Germany, because it is considered an unfair form of competition.