Question

Karen owns a designer clothing store in a small town. Since her store is the only store that offers designer outfits, she charges high prices for them. In the same town, another store deals in similar apparels but offers them at cheaper rates. Karen wants to maintain the exclusivity of her store. She is planning to slash prices. This move may incur losses. However, she is determined to give a tough competition to her competing store and ensure that it goes out of business.

Answer 1

Antitrust law

Step-by-step explanation:

The government uses Antitrust laws to prevent creation of monopolies. These laws ensure that no single firm prevents competition unreasonably. So, Karen's action of cutting down prices to eliminate the competitor will come under government scrutiny.