Question

Evidence of the intent to ________ is necessary to prove that a firm is engaged in predatory pricing. a. subsidize competitors so they are not driven out of business b. lower prices after others are driven out of business c. increase quantity after others are driven out of business d. lower average fixed costs after others are driven out of business e. raise prices after others are driven out of business

Answer 1

E.

Step-by-step explanation:

Predatory pricing is a method of pricing where a major player in a particular sector in an industry purposely reduce the price even as low as loss making in order to eject competitors from the market . This price cut is temporary as the are hiked up as soon as the competitors are out in order to recover previous losses suffered.

Therefore ,an evidence of the intent to raise prices after others are driven out of business is key to identify the practice of predatory pricing.