Question

The use of sharp, temporary price cuts as a form of _________________ would enable traditional US automakers to discourage new competition from smaller electric car manufacturers.

Answer 1

predatory pricing

Step-by-step explanation:

Predatory pricing (or undercutting) is a pricing strategy used to drive away competition. It basically refers to selling your product at such a low cost that other competitors will not be able to match the price and will be forced to exit the market. This practice was very common in the 19th century when huge monopolies grew in the US, until the Sherman Antitrust Act was passed in 1890.

This ultimately hurts consumers because once all competitors are out, the monopolists or oligopolists will increase their prices dramatically to much higher levels than before the predatory pricing was in place.

Answer 2

The correct answer is predatory pricing.

Step-by-step explanation:

When we speak of the legal right "defense of free competition", what we are referring to, in very simple words, is a field of law that seeks to safeguard that competition in the markets occurs "in good and sound fashion", this it is, without cheating, fraud or other "abusive" devices that are apt to achieve, maintain or increase the market power of those who execute them, thereby damaging the collective well-being of the economic agents participating in those markets (and not only the of the individuals directly involved in a certain transaction).