Which barrier to entry into the market is created when firms engage in predatory pricing?

Question

a. Control of a physical resource
b. Intimidating potential competitors
c. Legal monopoly
d. Natural monopoly

Answer 1

b. Intimidating potential competitors

Businesses have developed a number of schemes for creating barriers to entry by deterring potential competitors from entering the market. One method is known as predatory pricing, in which a firm uses the threat of sharp price cuts to discourage competition. Predatory pricing is a violation of U.S. antitrust law, but it is difficult to prove.