Explain what is meant by predatory pricing, and the inherent difficulties involved with predatory pricing from a firm's point of view.
What will be an ideal response?
Predatory pricing occurs when a firm charges a price below its cost of production in order to drive other firms out of the market. The problem it causes to firms is that in order to maintain a higher market share, the firm must continue this practice to prevent new potential entrants from entering the market, and thus the firm will continue to have losses.
You might also like to view...
People who come to fear that their wealth is going to be confiscated will acquire a relatively greater incentive to invest in
A) agricultural land. B) human capital. C) machinery and physical equipment. D) urban real estate.
Many economists criticize protectionism because it causes losses to consumers and eliminates jobs in domestic industries that use protected products. Why, then, do some people support protectionism?
A) Supporters of protectionism in high-income countries believe that wages will fall as a result of competition with firms from developing countries. B) Supporters of protectionism believe that free trade will lead to inflation. C) The criticisms of economists are based on theory. In fact, protectionism increases consumer and producer surplus as well as employment. D) Supporters of protectionism believe free trade will cause their countries to lose their comparative advantage.
While economic regulation applies to ________ industries, social regulation applies to ________ firms
A) particular; individual B) particular; all C) all; individual D) utility; healthcare
Refer to the information provided in Figure 6.8 below to answer the question(s) that follow.
Figure 6.8Refer to Figure 6.8. The total utility of the three movies is ________ and the marginal utility of the third movie is ________.
A. 25; 10 B. 15; 0 C. 28; 3 D. 0; 0