Final answer:
Annie Clarke uses e) value-based pricing to determine the prices for her app development firm, which is based on the perceived value to customers and differs from predatory pricing, an illegal practice aimed at driving competitors out of the market.
Step-by-step explanation:
The method Annie Clarke used to determine her prices for the smartphone app development firm is known as value-based pricing. Value-based pricing involves setting a product's price based on the perceived value to the customer rather than solely on cost. In this method, the firm evaluates what consumers are willing to pay for a product or service and may decide to price the product slightly lower to create a competitive advantage or to provide additional value to customers. Predatory pricing, on the other hand, is when a firm lowers prices to such an extent as to drive competitors out of the market, which is often considered anti-competitive and is illegal under U.S. antitrust law. However, the identification of predatory pricing can be complex and involves assessing if a firm is selling below its average variable cost, which can be challenging to determine in practice.